Added More Than $100 million to Cash and
Equivalents in the Quarter, Ending Year at $256.7 million
Closed the Verisure Partnership to Drive
Growth in Europe
Restructuring on Track to Deliver More than
$25 Million in Cost Savings
59.7% Paid Account Growth Year over
Year
Arlo Technologies, Inc. (NYSE: ARLO), a global network connected
camera company that delivers innovative internet connected products
to consumers and businesses, today reported financial results for
the fourth quarter and year ended December 31, 2019.
Financial Highlights (1)
- Fourth quarter revenue of $122.4 million, an increase of 0.2%
year over year.
- Fourth quarter GAAP gross margin of 11.2%; non-GAAP gross
margin of 12.2%.
- Fourth quarter GAAP net income per diluted share of $0.26,
non-GAAP net loss per diluted share of $(0.26).
- 2019 revenue of $370.0 million.
- 2019 GAAP gross margin of 9.7%; non-GAAP gross margin of
10.6%.
- 2019 GAAP net loss per diluted share of $(1.14), non-GAAP net
loss per diluted share of $(1.42).
“Arlo finished 2019 with strong execution in the market, meeting
or beating our guidance, while delivering on our strategic and
operational initiatives to position us to make greater strides in
2020. We closed on our strategic partnership with Verisure,
securing future revenue growth and channel expansion opportunities
while improving our liquidity and our path to profitability,” said
Matthew McRae, Chief Executive Officer of Arlo Technologies. “While
the Pro 3 and video doorbell hit retailers in Q4 to instant
acclaim, we continued our innovation and expanded our leading
product portfolio with the addition of the Floodlight Camera, the
first wire-free integrated floodlight camera in the market, and
launched Arlo SmartCloud, a SaaS version of our Arlo Smart service
platform. Combined with our restructuring plan to drive
efficiencies, we have positioned Arlo well for 2020 with greatly
improved liquidity and a slate of award winning, best-in-class
products.”
Three Months Ended
Twelve Months Ended
December 31, 2019
September 29, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(in thousands, except
percentage and per share data)
Revenue
$
122,413
$
106,116
$
122,158
$
370,007
$
464,918
GAAP Gross Margin
11.2
%
9.9
%
4.1
%
9.7
%
19.8
%
Non-GAAP Gross Margin
12.2
%
10.7
%
4.6
%
10.6
%
20.4
%
GAAP Net Income (Loss) per Diluted
Share
$
0.26
$
(0.41
)
$
(0.53
)
$
(1.14
)
$
(1.12
)
Non-GAAP Net Income (Loss) per Diluted
Share
$
(0.26
)
$
(0.32
)
$
(0.43
)
$
(1.42
)
$
(0.49
)
________________________
(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 $46.8 million, for growth of 23.7%
year over year.
- 59.7% year over year paid account growth in Q4.
- 40.9% year over year cumulative registered account growth in
Q4.
- Launched the Arlo SmartCloud, a SaaS version of our Arlo Smart
service platform. This robust offering delivers reliable and
scalable security cloud services to any company, community, or
smart city, making Arlo the ideal choice for those looking to bring
intelligent subscription services to their customers.
- Announced our all-new Arlo Floodlight Camera, the first
wire-free integrated floodlight camera on the market, featuring
powerful LEDs, an integrated 2K HDR camera, 160-degree field of
view, two-way audio, custom lighting configurations, a rechargeable
battery, and a built-in siren. The Floodlight Camera is paired with
a three month subscription to Arlo Smart.
- Announced our Privacy Pledge, reaffirming our commitment to our
users’ right to privacy and control of their personal information,
clearly differentiating Arlo from others in our industry.
- Arlo products garnered numerous awards at CES, including the
CES 2020 Innovation Award Honoree and Best of CES awards for our
newly announced Floodlight Camera. Our Video Doorbell was awarded
the CNET Editor’s Choice Award, and the Pro 3 camera also was named
a CES 2020 Innovation Award Honoree and won numerous Editor’s
Choice awards across CNET, PC Magazine, TechHive, Digital Trends,
and Gotta Be Mobile.
- Closed our strategic partnership with Verisure, a leading
provider of professionally monitored security solutions. This
partnership will provide cash, revenue, and diversification for
Arlo on both a regional and channel basis. Verisure paid Arlo $50
million for Arlo's European commercial operations. Additionally,
Verisure committed to purchase a minimum of $500 million
cumulatively of Arlo products over the next five years to be
distributed by Verisure and will also purchase associated Arlo
cloud services.
First Quarter 2020 Business Outlook (2)
- Revenue of $60.0 million to $70.0 million.
- GAAP gross margin between 6.1% and 9.4%, and non-GAAP gross
margin between 8.0% and 11.0%.
- GAAP net loss per diluted share of $(0.44) to $(0.47), and
non-GAAP net loss per diluted share of $(0.33) to $(0.36).
A reconciliation of our business outlook on a GAAP and non-GAAP
basis is provided in the following table:
Three Months Ending March 29,
2020
Revenue
Gross Margin Rate
Net Loss per Diluted
Share
(in millions, except percent
and per share data)
GAAP
$60.0 - $70.0
6.1% - 9.4%
($0.44) - ($0.47)
Estimated adjustments for (2):
Stock-based compensation expense
—
1.2%
0.1
Strategic initiative expense
—
—
0.01
Amortization of intangibles
—
0.6%
—
Restructuring and other charges
—
—
—
Tax effects of non-GAAP adjustments
—
—
—
Non-GAAP
$60.0 - $70.0
8.0% - 11.0%
($0.33) - ($0.36)
________________________
(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.
Full Year 2020 Business Outlook (3)
- Revenue of $370.0 million to $400.0 million.
- GAAP loss from operations between $(97.6 million) and $(107.6
million), and non-GAAP loss from operations between $(65.0 million)
and $(75.0 million).
A reconciliation of our business outlook on a GAAP and non-GAAP
basis is provided in the following table:
Year Ending December 31,
2020
Revenue
Loss from Operations
(in millions)
GAAP
$370.0 - $400.0
($97.6) - ($107.6)
Estimated adjustments for (3):
Stock-based compensation expense
—
30.1
Strategic initiative expense
—
0.9
Amortization of intangibles
—
1.5
Restructuring and other charges
—
0.1
Non-GAAP
$370.0 - $400.0
($65.0) - ($75.0)
________________________
(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 fourth quarter of 2019 results and discuss
management’s expectations for the first quarter of 2020 today,
Monday, February 24, 2020 at 5:00 p.m. ET (2:00 p.m. PT). The toll
free dial-in number for the live audio call is (866) 393-4306. The
international dial-in number for the live audio call is (734)
385-2616. The conference ID for the call is 6093615. 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; health epidemics and other
outbreaks; 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 29, 2019, filed with the
Securities and Exchange Commission on November 7, 2019. Given these
circumstances, you should not place undue reliance on these
forward-looking statements. Arlo undertakes no obligation to
release publicly any revisions to any forward-looking statements
contained herein to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information:
To supplement our unaudited selected financial data presented on
a basis consistent with U.S. Generally Accepted Accounting
Principles (“GAAP”), we disclose certain non-GAAP financial
measures that exclude certain charges, including non-GAAP gross
profit, non-GAAP gross margin, non-GAAP research and development,
non-GAAP sales and marketing, non-GAAP general and administrative,
non-GAAP total operating expenses, non-GAAP operating income
(loss), non-GAAP operating margin, non-GAAP provision for income
taxes, non-GAAP net income (loss) and non-GAAP net income (loss)
per diluted share. These supplemental measures exclude adjustments
for separation expense, stock-based compensation expense,
amortization of intangibles, activist shareholder response costs,
restructuring and other charges, strategic initiative and
transaction expenses, gain on sale of business, litigation
reserves, and the related tax effects. These non-GAAP measures are
not in accordance with or an alternative for GAAP, and may be
different from similarly-titled non-GAAP measures used by other
companies. We believe that these non-GAAP measures have limitations
in that they do not reflect all of the amounts associated with our
results of operations as determined in accordance with GAAP and
that these measures should only be used to evaluate our results of
operations in conjunction with the corresponding GAAP measures. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for the most directly
comparable GAAP measures. We compensate for the limitations of
non-GAAP financial measures by relying upon GAAP results to gain a
complete picture of our performance.
In calculating non-GAAP financial measures, we exclude certain
items to facilitate a review of the comparability of our operating
performance on a period-to-period basis because such items are not,
in our view, related to our ongoing operational performance. We use
non-GAAP measures to evaluate the operating performance of our
business, for comparison with forecasts and strategic plans, and
for benchmarking performance externally against competitors. In
addition, management’s incentive compensation is determined using
certain non-GAAP measures. Since we find these measures to be
useful, we believe that investors benefit from seeing results
“through the eyes” of management in addition to seeing GAAP
results. We believe that these non-GAAP measures, when read in
conjunction with our GAAP measures, provide useful information to
investors by offering:
– the ability to make more meaningful period-to-period
comparisons of our on-going operating results;
– the ability to better identify trends in our underlying
business and perform related trend analyses;
– a better understanding of how management plans and measures
our underlying business; and
– an easier way to compare our operating results against analyst
financial models and operating results of competitors that
supplement their GAAP results with non-GAAP financial measures.
The following are explanations of the adjustments that we
incorporate into non-GAAP measures, as well as the reasons for
excluding them in the reconciliations of these non-GAAP financial
measures:
Separation expense consists of expenses that are related to the
separation of our business from NETGEAR. These consist primarily of
third-party consulting fees, legal fees, IT costs, employee bonuses
for services related to the separation, and other one-time expenses
incurred to complete the separation. We consider our operating
results without these charges when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such charges when presenting non-GAAP financial measures.
We believe that the assessment of our operations excluding these
costs is relevant to our assessment of internal operations and
comparisons to the performance of our competitors.
Stock-based compensation expense consists of non-cash charges
for the estimated fair value of stock options, performance-based
stock options, restricted stock units and shares under the employee
stock purchase plan granted to employees. We believe that the
exclusion of these charges provides for more accurate comparisons
of our operating results to peer companies due to the varying
available valuation methodologies, subjective assumptions and the
variety of award types. In addition, we believe it is useful to
investors to understand the specific impact stock-based
compensation expense has on our operating results.
Amortization of intangibles consists primarily of non-cash
charges that can be impacted by, among other things, the timing and
magnitude of acquisitions. We consider our operating results
without these charges when evaluating our ongoing performance and
forecasting our earnings trends, and therefore exclude such charges
when presenting non-GAAP financial measures. We believe that the
assessment of our operations excluding these costs is relevant to
an assessment of our internal operations and comparisons to our
prior and future periods and to the performance of our
competitors.
Activist shareholder response costs primarily consist of legal
fees and third-party consulting costs incurred. We consider our
operating results without these charges when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such charges when presenting non-GAAP financial measures.
We believe that the assessment of our operations excluding these
costs is relevant to our assessment of internal operations and
comparisons to the performance of our competitors.
Strategic initiative and transaction expenses consist of legal
fees associated with the strategic review of the Company and legal
fees, accounting fees and other one-time costs incurred to complete
the Verisure transaction. We consider our operating results without
these charges when evaluating our ongoing performance and
forecasting our earnings trends, and therefore exclude such charges
when presenting non-GAAP financial measures. We believe that the
assessment of our operations excluding these costs is relevant to
our assessment of internal operations and comparisons to the
performance of our competitors.
Gain on sale of business represents gain from sale of the
Company's commercial operations in Europe. We consider our
operating results without this gain when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such gain when presenting non-GAAP financial measures. We
believe that the assessment of our operations excluding the gain is
relevant to our assessment of internal operations and comparisons
to the performance of our competitors.
Other items are the result of either unique or unplanned events,
including, when applicable: restructuring and other charges and
litigation reserves, net. It is difficult to predict the occurrence
or estimate the amount or timing of these items in advance.
Although these events are reflected in our GAAP financial
statements, these unique transactions may limit the comparability
of our on-going operations with prior and future periods. The
amounts result from events that often arise from unforeseen
circumstances, which often occur outside of the ordinary course of
continuing operations. Therefore, the amounts do not accurately
reflect the underlying performance of our continuing business
operations for the period in which they are incurred.
Tax effects consist of the various above adjustments that we
incorporate into non-GAAP measures in order to provide a more
meaningful measure on non-GAAP net income. We also believe
providing financial information with and without the income tax
effects relating to our non-GAAP financial measures provides our
management and users of the financial statements with better
clarity regarding the on-going performance of our business.
Source: Arlo-F
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
As of
December 31, 2019
December 31, 2018
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
236,680
$
151,290
Short-term investments
19,990
49,737
Accounts receivable, net
127,317
166,045
Inventories
68,624
124,791
Prepaid expenses and other current
assets
16,958
23,611
Total current assets
469,569
515,474
Property and equipment, net
21,352
49,428
Operating lease right-of-use assets,
net
31,300
—
Intangibles, net
1,306
2,823
Goodwill
11,038
15,638
Restricted cash
4,139
4,134
Other non-current assets
4,008
8,449
Total assets
$
542,712
$
595,946
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
111,650
$
82,542
Deferred revenue
50,362
26,678
Accrued liabilities
127,400
172,036
Income tax payable
4,489
734
Total current liabilities
293,901
281,990
Non-current deferred revenue
15,736
23,313
Non-current operating lease
liabilities
29,001
—
Non-current financing lease obligation
—
19,978
Non-current income taxes payable
92
22
Other non-current liabilities
606
1,141
Total liabilities
339,336
326,444
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:
75,785,952 at December 31, 2019 and 74,247,250 at December 31,
2018
76
74
Additional paid-in capital
334,821
315,277
Accumulated other comprehensive income
(2
)
—
Accumulated deficit
(131,519
)
(45,849
)
Total stockholders’ equity
203,376
269,502
Total liabilities and stockholders’
equity
$
542,712
$
595,946
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Twelve Months Ended
December 31, 2019
September 29, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(in thousands, except
percentage and per share data)
Revenue:
Products
$
109,883
$
94,306
$
111,435
$
323,242
$
427,113
Services
12,530
11,810
10,723
46,765
37,805
Total revenue
122,413
106,116
122,158
370,007
464,918
Cost of revenue:
Products
100,470
88,755
112,215
307,348
354,023
Services
8,237
6,858
4,962
26,855
18,820
Total cost of revenue
108,707
95,613
117,177
334,203
372,843
Gross profit
13,706
10,503
4,981
35,804
92,075
Gross margin
11.2
%
9.9
%
4.1
%
9.7
%
19.8
%
Operating expenses:
Research and development
16,928
16,701
16,865
69,384
58,794
Sales and marketing
14,596
13,657
15,470
56,985
52,593
General and administrative
15,112
11,062
8,656
47,624
28,209
Separation expense
153
137
3,603
1,913
27,252
Gain on sale of business
(54,881
)
—
—
(54,881
)
—
Total operating expenses
(8,092
)
41,557
44,594
121,025
166,848
Income (loss) from operations
21,798
(31,054
)
(39,613
)
(85,221
)
(74,773
)
Operating margin
17.8
%
(29.3
)%
(32.4
)%
(23.0
)%
(16.1
)%
Interest income
567
596
736
2,737
1,239
Other income (expense), net
775
154
(254
)
913
(1,177
)
Income (loss) before income taxes
23,140
(30,304
)
(39,131
)
(81,571
)
(74,711
)
Provision for income taxes
3,525
286
(58
)
4,380
772
Net income (loss)
$
19,615
$
(30,590
)
$
(39,073
)
$
(85,951
)
$
(75,483
)
Net income (loss) per share:
Basic
$
0.26
$
(0.41
)
$
(0.53
)
$
(1.14
)
$
(1.12
)
Diluted
$
0.26
$
(0.41
)
$
(0.53
)
$
(1.14
)
$
(1.12
)
Weighted average shares used to compute
net income (loss) per share:
Basic
75,805
75,337
74,247
75,074
67,231
Diluted
76,090
75,337
74,247
75,074
67,231
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
December 31, 2019
December 31, 2018
(In thousands)
Cash flows from operating
activities:
Net loss
$
(85,951
)
$
(75,483
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
10,681
5,307
Stock-based compensation
22,894
8,831
Provision for (release of) bad debts and
inventory
(2,921
)
6,739
Gain on sale of business
(54,881
)
—
Deferred income taxes
(210
)
(1,108
)
Premium amortization / discount accretion
on investments, net
(461
)
(120
)
Changes in assets and liabilities:
Accounts receivable, net
38,247
(118,778
)
Inventories
53,604
(48,934
)
Prepaid expenses and other assets
11,525
(16,592
)
Accounts payable
28,791
87,307
Deferred revenue
22,567
11,253
Accrued and other liabilities
(34,714
)
123,892
Net cash provided by (used in) operating
activities
9,171
(17,686
)
Cash flows from investing
activities:
Purchases of property and equipment
(6,664
)
(21,666
)
Proceeds from sale of business
52,694
—
Purchases of short-term investments
(29,768
)
(54,619
)
Maturities of short-term investments
60,000
5,000
Net cash provided by (used in) used in
investing activities
76,262
(71,285
)
Cash flows from financing
activities:
Proceeds from initial public offering, net
of offering costs
—
173,395
Proceeds related to employee benefit
plans
1,837
—
Restricted stock unit withholdings
(1,875
)
—
Net investment from NETGEAR
—
70,892
Net cash provided by (used in) financing
activities
(38
)
244,287
Net increase (decrease) in cash and cash
equivalents and restricted cash
85,395
155,316
Cash and cash equivalents and restricted
cash, at beginning of period
155,424
108
Cash and cash equivalents and restricted
cash, at end of period
$
240,819
$
155,424
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
1,086
$
16,003
De-recognition of build-to-suit assets and
liabilities
$
(21,610
)
$
—
Estimated fair value of a facility under
build-to-suit lease
$
—
$
28,357
Supplemental cash flow information:
Cash paid for income taxes
$
960
$
89
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
STATEMENT OF OPERATIONS DATA:
Three Months Ended
Twelve Months Ended
December 31, 2019
September 29, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(in thousands, except
percentage data)
GAAP gross profit
$
13,706
$
10,503
$
4,981
$
35,804
$
92,075
GAAP gross margin
11.2
%
9.9
%
4.1
%
9.7
%
19.8
%
Stock-based compensation expense
727
467
272
2,013
1,191
Amortization of intangibles
373
381
382
1,517
1,526
Restructuring and other charges
69
—
—
69
—
Non-GAAP gross profit
$
14,875
$
11,351
$
5,635
$
39,403
$
94,792
Non-GAAP gross margin
12.2
%
10.7
%
4.6
%
10.6
%
20.4
%
GAAP research and development
$
16,928
$
16,701
$
16,865
$
69,384
$
58,794
Stock-based compensation expense
(2,367
)
(1,569
)
(892
)
(6,868
)
(3,474
)
Restructuring and other charges
(262
)
—
—
(262
)
—
Non-GAAP research and development
$
14,299
$
15,132
$
15,973
$
62,254
$
55,320
GAAP sales and marketing
$
14,596
$
13,657
$
15,470
$
56,985
$
52,593
Stock-based compensation expense
(1,137
)
(791
)
(753
)
(3,859
)
(2,961
)
Restructuring and other charges
(198
)
—
—
(198
)
—
Non-GAAP sales and marketing
$
13,261
$
12,866
$
14,717
$
52,928
$
49,632
GAAP general and administrative
$
15,112
$
11,062
$
8,656
$
47,624
$
28,209
Stock-based compensation expense
(3,402
)
(2,392
)
(1,578
)
(10,154
)
(5,253
)
Restructuring and other charges
(102
)
—
—
(102
)
(74
)
Strategic initiative and transaction
expenses
(1,868
)
(502
)
—
(2,370
)
—
Activist shareholder response costs
—
—
—
(237
)
—
Litigation reserves, net
(1,287
)
(140
)
—
(1,427
)
—
Non-GAAP general and administrative
$
8,453
$
8,028
$
7,078
$
33,334
$
22,882
GAAP total operating expenses
$
(8,092
)
$
41,557
$
44,594
$
121,025
$
166,848
Separation expense
(154
)
(136
)
(3,603
)
(1,913
)
(27,252
)
Strategic initiative and transaction
expenses
(1,868
)
(502
)
—
(2,370
)
—
Stock-based compensation expense
(6,906
)
(4,752
)
(3,223
)
(20,881
)
(11,688
)
Restructuring and other charges
(562
)
—
—
(562
)
(74
)
Litigation reserves, net
(1,287
)
(140
)
—
(1,427
)
—
Activist shareholder response costs
—
—
—
(237
)
—
Gain on sale of business
54,881
—
—
54,881
—
Non-GAAP total operating expenses
$
36,012
$
36,027
$
37,768
$
148,516
$
127,834
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, 2019
September 29, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(in thousands, except
percentage and per share data)
GAAP operating income (loss)
$
21,798
$
(31,054
)
$
(39,613
)
$
(85,221
)
$
(74,773
)
GAAP operating margin
17.8
%
(29.3
)%
(32.4
)%
(23.0
)%
(16.1
)%
Separation expense
154
136
3,603
1,913
27,252
Strategic initiative and transaction
expenses
1,868
502
2,370
—
Stock-based compensation expense
7,633
5,219
3,495
22,894
12,879
Amortization of intangibles
373
381
382
1,517
1,526
Restructuring and other charges
631
—
—
631
74
Litigation reserves, net
1,287
140
—
1,427
—
Activist shareholder response costs
—
—
—
237
—
Gain on sale of business
(54,881
)
—
—
(54,881
)
—
Non-GAAP operating loss
$
(21,137
)
$
(24,676
)
$
(32,133
)
$
(109,113
)
$
(33,042
)
Non-GAAP operating margin
(17.3
)%
(23.3
)%
(26.3
)%
(29.5
)%
(7.1
)%
GAAP provision for (benefit from) income
taxes
$
3,525
$
286
$
(58
)
$
4,380
$
772
GAAP income tax rate
15.2
%
(0.9
)%
0.1
%
(5.4
)%
(1.0
)%
Tax effects
3,241
(46
)
200
3,337
423
Non-GAAP provision for (benefit from)
income taxes
$
284
$
332
$
(258
)
$
1,043
$
349
Non-GAAP income tax rate
(1.4
)%
(1.4
)%
—
%
(1.0
)%
(1.1
)%
GAAP net income (loss)
$
19,615
$
(30,590
)
$
(39,073
)
$
(85,951
)
$
(75,483
)
Separation expense
154
136
3,603
1,913
27,252
Strategic initiative and transaction
expenses
1,868
502
—
2,370
—
Stock-based compensation expense
7,633
5,219
3,495
22,894
12,879
Amortization of intangibles
373
381
382
1,517
1,526
Restructuring and other charges
631
—
—
631
74
Litigation reserves, net
1,287
140
—
1,427
—
Activist shareholder response costs
—
—
—
237
—
Gain on sale of business
(54,881
)
—
—
(54,881
)
—
Tax effects
3,241
(46
)
200
3,337
423
Non-GAAP net loss
$
(20,079
)
$
(24,258
)
$
(31,393
)
$
(106,506
)
$
(33,329
)
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, 2019
September 29, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(in thousands, except
percentage and per share data)
NET INCOME (LOSS) PER DILUTED SHARE:
GAAP net income (loss) per diluted
share
$
0.26
$
(0.41
)
$
(0.53
)
$
(1.14
)
$
(1.12
)
Separation expense
—
—
0.05
0.02
0.41
Strategic initiative and transaction
expenses
0.02
0.01
—
0.03
—
Stock-based compensation expense
0.10
0.07
0.05
0.31
0.19
Amortization of intangibles
—
0.01
—
0.02
0.02
Restructuring and other charges
0.01
—
—
0.01
—
Litigation reserves, net
0.02
—
—
0.02
—
Activist shareholder response costs
—
—
—
—
—
Gain on sale of business
(0.72
)
—
—
(0.72
)
—
Tax effects
0.05
—
—
0.04
0.01
Non-GAAP net loss per diluted share
$
(0.26
)
$
(0.32
)
$
(0.43
)
$
(1.42
)
$
(0.49
)
Shares used in computing GAAP net income
(loss) per diluted share
76,090
75,337
74,247
75,074
67,231
Shares used in computing non-GAAP net
income (loss) per diluted share
76,090
75,337
74,247
75,074
67,231
ARLO TECHNOLOGIES,
INC.
UNAUDITED SUPPLEMENTAL
FINANCIAL INFORMATION
Three Months Ended
December 31, 2019
September 29, 2019
June 30, 2019
March 31, 2019
December 31, 2018
(in thousands, except
headcount and per share data)
Cash, cash equivalents and short-term
investments
$
256,670
$
153,811
$
137,927
$
180,374
$
201,027
Cash, cash equivalents and short-term
investments per diluted share
$
3.37
$
2.04
$
1.85
$
2.42
$
2.71
Accounts receivable, net
$
127,317
$
99,698
$
79,707
$
71,566
$
166,045
Days sales outstanding
97
85
87
111
125
Inventories
$
68,624
$
74,117
$
97,222
$
131,227
$
124,791
Ending inventory turns
5.9
4.8
2.8
1.5
3.6
Weeks of channel inventory:
U.S. retail channel
6.3
13.3
10.1
14.5
8.1
U.S. distribution channel
8.0
3.3
8.9
8.9
10.9
APAC distribution channel
3.6
4.3
5.1
6.7
6.0
Deferred revenue (current and
non-current)
$
66,098
$
47,995
$
47,464
$
47,737
$
49,991
Cumulative registered accounts (1)
4,015
3,691
3,397
3,126
2,850
Cumulative paid accounts (2)
230
211
187
162
*
144
Headcount
349
406
402
401
386
Non-GAAP diluted shares
76,090
75,337
74,729
74,409
74,247
________________________
*
We factored in an adjustment to our Q1’19
paid account number and have subsequently revised the Q1’19 total
to 162,000.
(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, 2019
September 29, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(in thousands, except
percentage data)
Americas
$
94,668
77
%
$
85,562
81
%
$
102,552
84
%
$
289,160
78
%
$
376,805
81
%
EMEA
19,862
16
%
13,002
12
%
15,046
12
%
57,232
15
%
65,462
14
%
APAC
7,883
7
%
7,552
7
%
4,560
4
%
23,615
7
%
22,651
5
%
Total
$
122,413
100
%
$
106,116
100
%
$
122,158
100
%
$
370,007
100
%
$
464,918
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200224005872/en/
Arlo Investor Relations Erik Bylin investors@arlo.com (510)
315-1004
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