Exceeded Revenue and EPS Guidance
53% Service Revenue Growth Year over
Year
Maintained Cash, Cash Equivalents and
Short-term Investments of $205.5 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 28, 2020.
Financial Highlights (1)
- Revenue of $66.6 million, a decrease of 20.3% year over
year.
- GAAP gross margin of 8.2%; non-GAAP gross margin of 9.6%.
- GAAP net loss per diluted share of $(0.38); non-GAAP net loss
per diluted share of $(0.31).
- Cash, cash equivalents and short-term investments of $205.5
million and no debt at the end of Q2.
“I am extraordinarily proud of the team at Arlo for their
remarkable execution in outperforming our expectations for the
quarter, delivering top and bottom line results above the upper end
of our guidance, despite supply and go-to-market challenges,” said
Matthew McRae, Chief Executive Officer of Arlo Technologies.
“Importantly, our new business model that includes a free 90-day
trial of Arlo Smart continues to show very strong conversion rates
and once again we set records for registered accounts, paid
accounts and service revenue. The launch of the Arlo Essential
Spotlight Camera, the latest addition to our award-winning smart
home security ecosystem, completes our transition to this new
business model and addresses the fastest growing price segment in
the market. I believe the second quarter marks an inflection point
in our subscription business and expect this momentum to
continue.”
Three Months Ended
Six Months Ended
June 28, 2020
March 29, 2020
June 30, 2019
June 28, 2020
June 30, 2019
(in thousands, except
percentage and per share data)
Revenue
$
66,632
$
65,450
$
83,598
$
132,082
$
141,478
GAAP Gross Margin
8.2
%
6.0
%
11.5
%
7.1
%
8.2
%
Non-GAAP Gross Margin
9.6
%
7.4
%
12.5
%
8.5
%
9.3
%
GAAP Net Income (Loss) per Diluted
Share
$
(0.38)
$
(0.51)
$
(0.45)
$
(0.89)
$
(1.01)
Non-GAAP Net Income (Loss) per Diluted
Share
$
(0.31)
$
(0.34)
$
(0.36)
$
(0.64)
$
(0.83)
_________________________
(1)
Reconciliation of financial measures
computed on a GAAP basis to financial measures computed on a
non-GAAP basis are provided at the end of this press release.
Business Highlights
- Added a record 43,000 paid accounts in Q2, a sequential
increase of 72% over Q1.
- Cash, cash equivalents, and short term investments balance of
$205.5 million and no debt at the end of Q2.
- 59.4% year over year paid account growth in Q2.
- Service revenue of $17.0 million for Q2, for growth of 52.7%
year over year.
- Announced an agreement with Securitas Security Services USA for
integration of Arlo SmartCloud and our award winning cameras into
their platform, enabling centralized, remote monitoring of their
commercial assets and efficient deployment of their Remote Guarding
services for their commercial clients.
- Launched the all-new Arlo Essential Spotlight Camera, which
features high definition video, two-way audio, an integrated
spotlight, color night vision, and six months of battery life. The
Essential Spotlight Camera can connect directly to a Wi-Fi network
without the optional smart hub, providing users greater
flexibility, and is also paired with a three month subscription to
Arlo Smart.
Third Quarter 2020 Business Outlook (2)
- Revenue of $85.0 million to $95.0 million.
- GAAP net loss per diluted share of $(0.41) to $(0.32), and
non-GAAP net loss per diluted share of $(0.33) to $(0.24).
Due to the uncertainty presented by the ongoing COVID-19
pandemic Arlo has suspended providing full year guidance.
A reconciliation of our business outlook on a GAAP and non-GAAP
basis is provided in the following table:
Three Months Ending September
27, 2020
Revenue
Net Loss per Diluted
Share
(in millions, except per share
data)
GAAP
$85.0 - $95.0
($0.41) - ($0.32)
Estimated adjustments for (2):
Stock-based compensation expense
—
0.08
Tax effects of non-GAAP adjustments
—
—
Non-GAAP
$85.0 - $95.0
($0.33) - ($0.24)
_________________________
(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 2020 results and discuss
management’s expectations for the third quarter of 2020 today,
Wednesday, August 5, 2020 at 5:00 p.m. ET (2:00 p.m. PT). The toll
free dial-in number for the live audio call is (866) 393-4306. The
international dial-in number for the live audio call is (734)
385-2616. The conference ID for the call is 9584805. A live webcast
of the conference call will be available on Arlo’s Investor
Relations website at https://investor.arlo.com. A replay of the
call will be available via the web at
https://investor.arlo.com.
About Arlo Technologies, Inc.
Arlo (NYSE: ARLO) is the award-winning, industry leader that is
transforming the way people experience the connected lifestyle.
Arlo’s deep expertise in product design, wireless connectivity,
cloud infrastructure and cutting-edge AI capabilities focuses on
delivering a seamless, smart home experience for Arlo users that is
easy to setup and interact with every day. Arlo’s cloud-based
platform provides users with visibility, insight and a powerful
means to help protect and connect in real-time with the people and
things that matter most, from any location with a Wi-Fi or a
cellular connection. To date, Arlo has launched several categories
of award-winning smart connected devices, including wire-free smart
Wi-Fi and LTE-enabled cameras, video doorbells and floodlight
cameras.
With a mission to bring users peace of mind, Arlo is as
passionate about protecting user privacy as it is about
safeguarding homes and families. Arlo is committed to supporting
industry standards for data protection designed to keep users’
personal information private and in their control. Arlo does not
monetize personal data, provides enhanced controls for user data,
supports privacy legislation, keeps user data safely secure, and
puts security at the forefront of company culture.
© 2020 Arlo Technologies, Inc., Arlo and the Arlo logo are
trademarks and/or registered trademarks of Arlo Technologies, Inc.
and/or certain of its affiliates in the United States and/or other
countries. Other brand and product names are for identification
purposes only and may be trademarks or registered trademarks of
their respective holder(s). The information contained herein is
subject to change without notice. Arlo shall not be liable for
technical or editorial errors or omissions contained herein. All
rights reserved.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. The words “anticipate,” “expect,” “believe,” “will,” “may,”
“should,” “estimate,” “project,” “outlook,” “forecast” or other
similar words are used to identify such forward-looking statements.
However, the absence of these words does not mean that the
statements are not forward-looking. The forward-looking statements
represent Arlo Technologies, Inc.’s expectations or beliefs
concerning future events based on information available at the time
such statements were made and include statements regarding: Arlo’s
future operating performance and financial condition, expected
revenue, GAAP and non-GAAP gross margins, operating margins, and
tax expense; expectations regarding market expansion and future
growth; plans to invest in product innovation; Arlo's future
product offerings; and the quote from Arlo's Chief Executive
Officer. These statements are based on management's current
expectations and are subject to certain risks and uncertainties,
including the following: future demand for the Company's products
may be lower than anticipated; consumers may choose not to adopt
the Company's new product offerings or adopt competing products;
product performance may be adversely affected by real world
operating conditions; the Company may be unsuccessful or experience
delays in manufacturing and distributing its new and existing
products; telecommunications service providers may choose to slow
their deployment of the Company's products or utilize competing
products; the Company may be unable to collect receivables as they
become due; the Company may fail to manage costs, including the
cost of developing new products and manufacturing and distribution
of its existing offerings; the Company may incur additional costs
and charges associated with the transactions contemplated by the
Verisure partnership; the Company may not receive the minimum
commitment amounts from Verisure; the COVID-19 pandemic could have
an adverse impact on the Company's business, operations and the
markets and communities in which Arlo and its partners and
customers operate; the Company may fail to successfully continue to
effect operating expense savings; changes in the level of Arlo's
cash resources and the Company's planned usage of such resources;
changes in the Company's stock price and developments in the
business that could increase the Company's cash needs; fluctuations
in foreign exchange rates; the actions and financial health of the
Company's customers; the anticipated financial capacity under
Arlo's revolving credit line may not be available when expected, or
at all; and the Company may not be able to carry out its
restructuring plan. Further, certain forward-looking statements are
based on assumptions as to future events that may not prove to be
accurate. Therefore, actual outcomes and results may differ
materially from what is expressed or forecast in such
forward-looking statements. Further information on potential risk
factors that could affect Arlo and its business are detailed in the
Company's periodic filings with the Securities and Exchange
Commission, including, but not limited to, those risks and
uncertainties listed in the section entitled “Part II - Item 1A.
Risk Factors,” in the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 29, 2020, filed with the Securities
and Exchange Commission on May 11, 2020 and other periodic filings
with the Securities and Exchange Commission. Given these
circumstances, you should not place undue reliance on these
forward-looking statements. Arlo undertakes no obligation to
release publicly any revisions to any forward-looking statements
contained herein to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information:
To supplement our unaudited selected financial data presented on
a basis consistent with U.S. Generally Accepted Accounting
Principles (“GAAP”), we disclose certain non-GAAP financial
measures that exclude certain charges, including non-GAAP gross
profit, non-GAAP gross margin, non-GAAP research and development,
non-GAAP sales and marketing, non-GAAP general and administrative,
non-GAAP total operating expenses, non-GAAP operating income
(loss), non-GAAP operating margin, non-GAAP provision for income
taxes, non-GAAP net income (loss) and non-GAAP net income (loss)
per diluted share. These supplemental measures exclude adjustments
for separation expense, stock-based compensation expense,
amortization of intangibles, activist shareholder response costs,
restructuring and other charges, strategic initiative and
transaction expenses, gain on sale of business, litigation
reserves, and the related tax effects. These non-GAAP measures are
not in accordance with or an alternative for GAAP, and may be
different from similarly-titled non-GAAP measures used by other
companies. We believe that these non-GAAP measures have limitations
in that they do not reflect all of the amounts associated with our
results of operations as determined in accordance with GAAP and
that these measures should only be used to evaluate our results of
operations in conjunction with the corresponding GAAP measures. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for the most directly
comparable GAAP measures. We compensate for the limitations of
non-GAAP financial measures by relying upon GAAP results to gain a
complete picture of our performance.
In calculating non-GAAP financial measures, we exclude certain
items to facilitate a review of the comparability of our operating
performance on a period-to-period basis because such items are not,
in our view, related to our ongoing operational performance. We use
non-GAAP measures to evaluate the operating performance of our
business, for comparison with forecasts and strategic plans, and
for benchmarking performance externally against competitors. In
addition, management’s incentive compensation is determined using
certain non-GAAP measures. Since we find these measures to be
useful, we believe that investors benefit from seeing results
“through the eyes” of management in addition to seeing GAAP
results. We believe that these non-GAAP measures, when read in
conjunction with our GAAP measures, provide useful information to
investors by offering:
– the ability to make more meaningful period-to-period
comparisons of our on-going operating results;
– the ability to better identify trends in our underlying
business and perform related trend analyses;
– a better understanding of how management plans and measures
our underlying business; and
– an easier way to compare our operating results against analyst
financial models and operating results of competitors that
supplement their GAAP results with non-GAAP financial measures.
The following are explanations of the adjustments that we
incorporate into non-GAAP measures, as well as the reasons for
excluding them in the reconciliations of these non-GAAP financial
measures:
Separation expense consists of expenses that are related to the
separation of our business from NETGEAR. These consist primarily of
third-party consulting fees, legal fees, IT costs, employee bonuses
for services related to the separation, and other one-time expenses
incurred to complete the separation. We consider our operating
results without these charges when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such charges when presenting non-GAAP financial measures.
We believe that the assessment of our operations excluding these
costs is relevant to our assessment of internal operations and
comparisons to the performance of our competitors.
Stock-based compensation expense consists of non-cash charges
for the estimated fair value of stock options, performance-based
stock options, restricted stock units and shares under the employee
stock purchase plan granted to employees. We believe that the
exclusion of these charges provides for more accurate comparisons
of our operating results to peer companies due to the varying
available valuation methodologies, subjective assumptions and the
variety of award types. In addition, we believe it is useful to
investors to understand the specific impact stock-based
compensation expense has on our operating results.
Amortization of intangibles consists primarily of non-cash
charges that can be impacted by, among other things, the timing and
magnitude of acquisitions. We consider our operating results
without these charges when evaluating our ongoing performance and
forecasting our earnings trends, and therefore exclude such charges
when presenting non-GAAP financial measures. We believe that the
assessment of our operations excluding these costs is relevant to
an assessment of our internal operations and comparisons to our
prior and future periods and to the performance of our
competitors.
Activist shareholder response costs primarily consist of legal
fees and third-party consulting costs incurred. We consider our
operating results without these charges when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such charges when presenting non-GAAP financial measures.
We believe that the assessment of our operations excluding these
costs is relevant to our assessment of internal operations and
comparisons to the performance of our competitors.
Strategic initiative and transaction expenses consist of legal
fees associated with the strategic review of the Company and legal
fees, accounting fees and other one-time costs incurred to complete
the Verisure transaction. We consider our operating results without
these charges when evaluating our ongoing performance and
forecasting our earnings trends, and therefore exclude such charges
when presenting non-GAAP financial measures. We believe that the
assessment of our operations excluding these costs is relevant to
our assessment of internal operations and comparisons to the
performance of our competitors.
Gain on sale of business represents gain from sale of the
Company's commercial operations in Europe. We consider our
operating results without this gain when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such gain when presenting non-GAAP financial measures. We
believe that the assessment of our operations excluding the gain is
relevant to our assessment of internal operations and comparisons
to the performance of our competitors.
Other items are the result of either unique or unplanned events,
including, when applicable: restructuring and other charges and
litigation reserves, net. It is difficult to predict the occurrence
or estimate the amount or timing of these items in advance.
Although these events are reflected in our GAAP financial
statements, these unique transactions may limit the comparability
of our on-going operations with prior and future periods. The
amounts result from events that often arise from unforeseen
circumstances, which often occur outside of the ordinary course of
continuing operations. Therefore, the amounts do not accurately
reflect the underlying performance of our continuing business
operations for the period in which they are incurred.
Tax effects consist of the various above adjustments that we
incorporate into non-GAAP measures in order to provide a more
meaningful measure on non-GAAP net income. We also believe
providing financial information with and without the income tax
effects relating to our non-GAAP financial measures provides our
management and users of the financial statements with better
clarity regarding the on-going performance of our business.
Source: Arlo-F
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
As of
June 28, 2020
December 31,
2019
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
185,424
$
236,680
Short-term investments
20,030
19,990
Accounts receivable, net
46,466
127,317
Inventories
65,814
68,624
Prepaid expenses and other current
assets
9,948
16,958
Total current assets
327,682
469,569
Property and equipment, net
18,210
21,352
Operating lease right-of-use assets,
net
26,048
31,300
Intangibles, net
594
1,306
Goodwill
11,038
11,038
Restricted cash
4,141
4,139
Other non-current assets
2,244
4,008
Total assets
$
389,957
$
542,712
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
52,902
$
111,650
Deferred revenue
44,287
50,362
Accrued liabilities
99,423
127,400
Income tax payable
3,491
4,489
Total current liabilities
200,103
293,901
Non-current deferred revenue
10,259
15,736
Non-current operating lease
liabilities
27,026
29,001
Non-current income taxes payable
92
92
Other non-current liabilities
573
606
Total liabilities
238,053
339,336
Stockholders’ Equity:
Preferred stock: $0.001 par value;
50,000,000 shares authorized; none issued or outstanding
—
—
Common stock: : $0.001 par value;
500,000,000 shares authorized; shares issued and outstanding:
78,089,035 at June 28, 2020 and 75,785,952 at December 31, 2019
78
76
Additional paid-in capital
351,913
334,821
Accumulated other comprehensive income
14
(2)
Accumulated deficit
(200,101)
(131,519)
Total stockholders’ equity
151,904
203,376
Total liabilities and stockholders’
equity
$
389,957
$
542,712
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
June 28, 2020
March 29, 2020
June 30, 2019
June 28, 2020
June 30, 2019
(in thousands, except
percentage and per share data)
Revenue:
Products
$
49,603
$
50,723
$
72,445
$
100,326
$
119,053
Services
17,029
14,727
11,153
31,756
22,425
Total revenue
66,632
65,450
83,598
132,082
141,478
Cost of revenue:
Products
51,186
52,188
67,839
103,374
118,123
Services
9,957
9,309
6,109
19,266
11,760
Total cost of revenue
61,143
61,497
73,948
122,640
129,883
Gross profit
5,489
3,953
9,650
9,442
11,595
Gross margin
8.2
%
6.0
%
11.5
%
7.1
%
8.2
%
Operating expenses:
Research and development
14,192
15,243
17,594
29,435
35,755
Sales and marketing
11,713
11,038
14,511
22,751
28,732
General and administrative
9,837
18,784
10,914
28,621
21,450
Separation expense
82
79
717
161
1,623
Gain on sale of business
—
(292)
—
(292)
—
Total operating expenses
35,824
44,852
43,736
80,676
87,560
Loss from operations
(30,335)
(40,899)
(34,086)
(71,234)
(75,965)
Operating margin
(45.5)
%
(62.5)
%
(40.8)
%
(53.9)
%
(53.7)
%
Interest income
151
535
712
686
1,574
Other income (expense), net
1,111
1,183
31
2,294
(16)
Loss before income taxes
(29,073)
(39,181)
(33,343)
(68,254)
(74,407)
Provision for income taxes
183
145
349
328
569
Net loss
$
(29,256)
$
(39,326)
$
(33,692)
$
(68,582)
$
(74,976)
Net loss per share:
Basic
$
(0.38)
$
(0.51)
$
(0.45)
$
(0.89)
$
(1.01)
Diluted
$
(0.38)
$
(0.51)
$
(0.45)
$
(0.89)
$
(1.01)
Weighted average shares used to compute
net loss per share:
Basic
77,885
76,560
74,729
77,229
74,569
Diluted
77,885
76,560
74,729
77,229
74,569
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 28, 2020
June 30, 2019
(In thousands)
Cash flows from operating
activities:
Net loss
$
(68,582)
$
(74,976)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
5,476
4,980
Stock-based compensation expense
17,337
10,042
Allowance for (Release of) credit losses
and inventory reserves
1,182
(51)
Gain on sale of business
(292)
—
Deferred income taxes
27
74
Premium amortization / discount accretion
on investments, net
44
(274)
Changes in assets and liabilities:
Accounts receivable, net
80,650
85,916
Inventories
1,827
28,042
Prepaid expenses and other assets
8,745
1,784
Accounts payable
(58,669)
(59,865)
Deferred revenue
(11,553)
(2,527)
Accrued and other liabilities
(24,875)
(47,806)
Net cash used in operating activities
(48,683)
(54,661)
Cash flows from investing
activities:
Purchases of property and equipment
(1,184)
(7,116)
Purchases of short-term investments
(25,094)
(24,793)
Maturities of short-term investments
25,000
30,000
Net cash used in investing activities
(1,278)
(1,909)
Cash flows from financing
activities:
Proceeds related to employee benefit
plans
1,856
12
Restricted stock unit withholdings
(3,149)
(1,682)
Net cash used in financing activities
(1,293)
(1,670)
Net decrease in cash and cash equivalents
and restricted cash
(51,254)
(58,240)
Cash and cash equivalents and restricted
cash, at beginning of period
240,819
155,424
Cash and cash equivalents and restricted
cash, at end of period
$
189,565
$
97,184
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
1,523
$
(2,753)
De-recognition of build-to-suit assets and
liabilities
$
—
$
(21,610)
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
STATEMENT OF OPERATIONS DATA:
Three Months Ended
Six Months Ended
June 28, 2020
March 29, 2020
June 30, 2019
June 28, 2020
June 30, 2019
(in thousands, except
percentage data)
GAAP gross profit
$
5,489
$
3,953
$
9,650
$
9,442
$
11,595
GAAP gross margin
8.2
%
6.0
%
11.5
%
7.1
%
8.2
%
Stock-based compensation expense
562
503
450
1,065
819
Amortization of intangibles
357
356
382
713
763
Restructuring and other charges
—
23
—
23
—
Non-GAAP gross profit
$
6,408
$
4,835
$
10,482
$
11,243
$
13,177
Non-GAAP gross margin
9.6
%
7.4
%
12.5
%
8.5
%
9.3
%
GAAP research and development
$
14,192
$
15,243
$
17,594
$
29,435
$
35,755
Stock-based compensation expense
(1,729)
(1,660)
(1,635)
(3,389)
(2,932)
Restructuring and other charges
—
—
—
—
—
Non-GAAP research and development
$
12,463
$
13,583
$
15,959
$
26,046
$
32,823
GAAP sales and marketing
$
11,713
$
11,038
$
14,511
$
22,751
$
28,732
Stock-based compensation expense
(984)
(751)
(991)
(1,735)
(1,931)
Restructuring and other charges
—
—
—
—
—
Non-GAAP sales and marketing
$
10,729
$
10,287
$
13,520
$
21,016
$
26,801
GAAP general and administrative
$
9,837
$
18,784
$
10,914
$
28,621
$
21,450
Stock-based compensation expense
(1,289)
(9,859)
(2,313)
(11,148)
(4,360)
Restructuring and other charges
—
(21)
—
(21)
—
Strategic initiative and transaction
expenses
(206)
(545)
—
(751)
—
Litigation reserves, net
(249)
(7)
—
(256)
—
Non-GAAP general and administrative
$
8,093
$
8,352
$
8,601
$
16,445
$
17,090
GAAP total operating expenses
$
35,824
$
44,852
$
43,736
$
80,676
$
87,560
Separation expense
(82)
(79)
(717)
(161)
(1,623)
Strategic initiative and transaction
expenses
(206)
(545)
—
(751)
—
Stock-based compensation expense
(4,002)
(12,270)
(4,939)
(16,272)
(9,223)
Restructuring and other charges
—
(21)
—
(21)
—
Litigation reserves, net
(249)
(7)
—
(256)
—
Activist shareholder response costs
—
—
(237)
—
(237)
Gain on sale of business
—
292
—
292
—
Non-GAAP total operating expenses
$
31,285
$
32,222
$
37,843
$
63,507
$
76,477
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Six Months Ended
June 28, 2020
March 29, 2020
June 30, 2019
June 28, 2020
June 30, 2019
(in thousands, except
percentage and per share data)
GAAP operating loss
$
(30,335)
$
(40,899)
$
(34,086)
$
(71,234)
$
(75,965)
GAAP operating margin
(45.5)
%
(62.5)
%
(40.8)
%
(53.9)
%
(53.7)
%
Separation expense
82
79
717
161
1,623
Strategic initiative and transaction
expenses
206
545
—
751
—
Stock-based compensation expense
4,564
12,773
5,389
17,337
10,042
Amortization of intangibles
357
356
382
713
763
Restructuring and other charges
—
44
—
44
—
Litigation reserves, net
249
7
—
256
—
Activist shareholder response costs
—
—
237
—
237
Gain on sale of business
—
(292)
—
(292)
—
Non-GAAP operating loss
$
(24,877)
$
(27,387)
$
(27,361)
$
(52,264)
$
(63,300)
Non-GAAP operating margin
(37.3)
%
(41.8)
%
(32.7)
%
(39.6)
%
(44.7)
%
GAAP provision for income taxes
$
183
$
145
$
349
$
328
$
569
GAAP income tax rate
(0.6)
%
(0.4)
%
(1.0)
%
(0.5)
%
(0.8)
%
Tax effects
2
29
142
31
142
Non-GAAP provision for income taxes
$
181
$
116
$
207
$
297
$
427
Non-GAAP income tax rate
(0.8)
%
(0.5)
%
(0.8)
%
(0.6)
%
(0.7)
%
GAAP net loss
$
(29,256)
$
(39,326)
$
(33,692)
$
(68,582)
$
(74,976)
Separation expense
82
79
717
161
1,623
Strategic initiative and transaction
expenses
206
545
—
751
—
Stock-based compensation expense
4,564
12,773
5,389
17,337
10,042
Amortization of intangibles
357
356
382
713
763
Restructuring and other charges
—
44
—
44
—
Litigation reserves, net
249
7
—
256
—
Activist shareholder response costs
—
—
237
—
237
Gain on sale of business
—
(292)
—
(292)
—
Tax effects
2
29
142
31
142
Non-GAAP net loss
$
(23,796)
$
(25,785)
$
(26,825)
$
(49,581)
$
(62,169)
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Six Months Ended
June 28, 2020
March 29, 2020
June 30, 2019
June 28, 2020
June 30, 2019
(in thousands, except
percentage and per share data)
NET INCOME (LOSS) PER DILUTED SHARE:
GAAP net income (loss) per diluted
share
$
(0.38)
$
(0.51)
$
(0.45)
$
(0.89)
$
(1.01)
Separation expense
—
—
0.01
0.01
0.02
Strategic initiative and transaction
expenses
—
0.01
—
0.01
—
Stock-based compensation expense
0.06
0.16
0.07
0.22
0.15
Amortization of intangibles
0.01
—
0.01
0.01
0.01
Restructuring and other charges
—
—
—
—
—
Litigation reserves, net
—
—
—
—
—
Gain on sale of business
—
—
—
—
—
Tax effects
—
—
—
—
0.00
Non-GAAP net loss per diluted share
$
(0.31)
$
(0.34)
$
(0.36)
$
(0.64)
$
(0.83)
Shares used in computing GAAP net income
(loss) per diluted share
77,885
76,560
74,729
77,229
74,569
Shares used in computing non-GAAP net
income (loss) per diluted share
77,885
76,560
74,729
77,229
74,569
ARLO TECHNOLOGIES,
INC.
UNAUDITED SUPPLEMENTAL
FINANCIAL INFORMATION
Three Months Ended
June 28, 2020
March 29, 2020
December 31,
2019
September 29, 2019
June 30, 2019
(in thousands, except
headcount and per share data)
Cash, cash equivalents and short-term
investments
$
205,454
$
206,582
$
256,670
$
153,811
$
137,927
Cash, cash equivalents and short-term
investments per diluted share
$
2.64
$
2.70
$
3.37
$
2.04
$
1.85
Accounts receivable, net
$
46,466
$
61,376
$
127,317
$
99,698
$
79,707
Days sales outstanding
63
83
97
85
87
Inventories
$
65,814
$
61,027
$
68,624
$
74,117
$
97,222
Inventory turns
3.1
3.4
5.9
4.8
2.8
Weeks of channel inventory:
U.S. retail channel
6.6
13.7
6.3
13.3
10.1
U.S. distribution channel
8.4
20.3
8.0
3.3
8.9
APAC distribution channel
6.8
6.0
3.6
4.3
5.1
Deferred revenue (current and
non-current)
$
54,546
$
59,848
$
66,098
$
47,995
$
47,464
Cumulative registered accounts (1)
4,518
4,245
4,015
3,691
3,397
Cumulative paid accounts (2)
298
255
230
211
187
Headcount
355
356
349
406
402
Non-GAAP diluted shares
77,885
76,560
76,090
75,337
74,729
_________________________
(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 28, 2020
March 29, 2020
June 30, 2019
June 28, 2020
June 30, 2019
(in thousands, except
percentage data)
Americas
$
50,971
76
%
$
50,158
77
%
$
64,564
77
%
$
101,129
77
%
$
108,930
77
%
EMEA
11,263
17
%
7,573
11
%
15,066
18
%
18,836
14
%
24,368
17
%
APAC
4,398
7
%
7,719
12
%
3,968
5
%
12,117
9
%
8,180
6
%
Total
$
66,632
100
%
$
65,450
100
%
$
83,598
100
%
$
132,082
100
%
$
141,478
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805005901/en/
Arlo Investor Relations Erik Bylin investors@arlo.com (510)
315-1004
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