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Classified in: Science and technology, Business
Subjects: EARNINGS, Conference Call, Webcast

Arlo Reports First Quarter 2024 Results


Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home security company, today reported financial results for the first quarter ended March 31, 2024.

"Arlo continued its strong track record of execution, leveraging an innovative product portfolio and a steadily growing and highly profitable services offering to more than double its free cash flow to a record $19.5 million compared to the same period last year. Arlo's $227 million in ARR drove remarkable leverage in the business and allowed us to improve our non-GAAP EPS by 8 cents year over year," said Matthew McRae, Chief Executive Officer of Arlo Technologies. "Our singular focus on delivering a superior customer experience in smart security has positioned Arlo for success in 2024 and beyond. Our first quarter results represent a strong start to the year and our continued operational excellence reaffirms our confidence that we can achieve our updated long-range plan targets of 10 million paid accounts, $700 million in ARR, and 25% non-GAAP operating margins."

Financial and Business Highlights

 

Three Months Ended

 

March 31,
2024

 

December 31,
2023

 

April 2,
2023

 

(In thousands, except percentage and per share data)

Revenue

$

124,200

 

 

$

135,093

 

 

$

111,004

 

GAAP Gross Margin

 

38.1

%

 

 

35.0

%

 

 

31.7

%

Non-GAAP Gross Margin (3)

 

39.4

%

 

 

35.8

%

 

 

32.6

%

GAAP Net Income (Loss) per Share - Basic and Diluted

$

(0.10

)

 

$

0.01

 

 

$

(0.16

)

Non-GAAP Net Income per Share - Basic and Diluted (3)

$

0.09

 

 

$

0.11

 

 

$

0.01

 

_________________________

(1)

In the first fiscal quarter of 2024, we changed the methodology on paid service revenue recognition from a mid-month convention to a daily recognition model which recognizes paid service revenue based on the number of service days within the fiscal reporting period, commencing on the start date of the subscription and continuing over the term of the arrangement. Accordingly, the methodology used to calculate ARR was also changed as of March 31, 2024 and is now calculated by taking the average daily paid service revenue of the last calendar month in the fiscal quarter, multiplied by 365 days. We believe the daily recognition model aligns with our customers' subscription period and service usage and allows for a more precise measurement of paid service revenue relative to the former methodology of a mid-month convention, which was based on paid service revenue for the last calendar month in the fiscal quarter, multiplied by 12 months. This change in calculation methodology has no material impact on our financial statements or any previously reported ARR numbers.

 

(2)

 

FCF is calculated as net cash provided by operating activities less capital expenditures. FCF margin is the FCF divided by revenue.

 

(3)

Reconciliation of financial measures computed on a GAAP basis to the most directly comparable financial measures computed on a non-GAAP basis is provided at the end of this press release.

Second Quarter 2024 Business Outlook (4)

A reconciliation of our business outlook on a GAAP and non-GAAP basis is provided in the following table:

 

Three Months Ended June 30, 2024

 

Revenue

 

Net Income (Loss)

per Diluted Share

 

(In millions, except per share data)

GAAP

$120 - $130

 

$(0.11) - $(0.05)

Estimated adjustment for stock-based compensation and other expense

?

 

0.17

Non-GAAP

$120 - $130

 

$0.06 - $0.12

_________________________

(4)

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; 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 first quarter 2024 results and discuss management's expectations for the second quarter 2024 today, Thursday, May 9, 2024 at 5:00 p.m. ET (2:00 p.m. PT). To view the accompanying presentation a live webcast of the conference call will be available on Arlo's Investor Relations website at https://investor.arlo.com. The toll-free dial-in number for the live audio call is (888) 660-6387. The international dial-in number for the live audio call is (929) 203-1909. The conference ID for the call is 7749064. A replay of the call will be available via the web at https://investor.arlo.com.

About Arlo Technologies, Inc.

Arlo is an award-winning, industry leader that is transforming the ways in which people can protect everything that matters to them with advanced home, business, and personal security solutions. Arlo's deep expertise in AI- and CV-powered analytics, cloud services, user experience and product design, and innovative wireless and RF connectivity enables the delivery of a seamless, smart security experience for Arlo users that is easy to set up 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 connected devices, software and services. These include wire-free, smart Wi-Fi and LTE-enabled security cameras, video doorbells, floodlights, security system, and Arlo's subscription services: Arlo Secure, and Arlo Safe.

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 implementing 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.

© 2024 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 for Arlo Technologies, Inc.:

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 our 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 and profitability (and related timing), GAAP and non-GAAP gross margins, operating margins, tax rates, expenses, cash outlook, free cash flow and free cash flow margins; the ability of our singular focus on delivering a superior customer experience in smart security to position us for a successful 2024; strategic objectives and initiatives; the recurring revenue business model; expectations regarding market expansion and future growth, including with respect to our updated long-range plan targets; and others. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for our products may be lower than anticipated, including due to inflation, fluctuating consumer confidence, banking failures and rising interest rates; we may be unsuccessful in developing and expanding our sales and marketing capabilities; we may not be able to increase sales of our paid subscription services; consumers may choose not to adopt our new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; we may be unsuccessful or experience delays in manufacturing and distributing our new and existing products; and we may fail to manage costs and cost saving initiatives, the cost of developing new products and manufacturing and distribution of our existing offerings. 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 our business are detailed in our periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Risk Factors" in the most recently filed Annual Report and Quarterly Report filed with the Securities and Exchange Commission (the "SEC") and subsequent filings with the SEC. Given these circumstances, you should not place undue reliance on these forward-looking statements. We undertake 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 stock-based compensation expense, restructuring charges, impairment charges, separation expense, amortization of development of software cost, litigation reserves, net, employee retention credit and the related tax effects. In addition, we use free cash flow as non-GAAP measure when assessing the sources of liquidity, capital resources, and quality of earnings. We believe that free cash flow (usage) is helpful in understanding our capital requirements and provides an additional means to reflect the cash flow trends in our business. 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 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:

Stock-based compensation expense consists of non-cash charges for the estimated fair value of stock options, performance-based stock options, restricted stock units (RSU), performance-based restricted stock units, shares under the employee stock purchase plan granted to employees and employees' annual bonus in RSU form. We believe that the exclusion of these charges provides for more accurate comparisons of our operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, we believe it is useful to investors to understand the specific impact stock-based compensation expense has on our operating results.

Other non-GAAP items are the result of either unique or unplanned events, including, when applicable: restructuring charges, impairment charges, separation expense, amortization of development of software cost, litigation reserves, net and employee retention credit. It is difficult to predict the occurrence or estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, these unique transactions may limit the comparability of our on-going operations with prior and future periods. The amounts result from events that often arise from unforeseen circumstances, which often occur outside of the ordinary course of continuing operations. Therefore, the amounts do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred.

Source: Arlo-F

ARLO TECHNOLOGIES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

As of

 

March 31,
2024

 

December 31,
2023

 

(In thousands, except share and per share data)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

62,054

 

 

$

56,522

 

Short-term investments

 

80,809

 

 

 

79,974

 

Accounts receivable, net

 

56,496

 

 

 

65,360

 

Inventories

 

44,676

 

 

 

38,408

 

Prepaid expenses and other current assets

 

11,896

 

 

 

10,271

 

Total current assets

 

255,931

 

 

 

250,535

 

Property and equipment, net

 

4,311

 

 

 

4,761

 

Operating lease right-of-use assets, net

 

10,697

 

 

 

11,450

 

Goodwill

 

11,038

 

 

 

11,038

 

Restricted cash

 

4,183

 

 

 

4,131

 

Other non-current assets

 

3,602

 

 

 

3,623

 

Total assets

$

289,762

 

 

$

285,538

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

69,878

 

 

$

55,201

 

Deferred revenue

 

21,394

 

 

 

18,041

 

Accrued liabilities

 

79,100

 

 

 

88,209

 

Total current liabilities

 

170,372

 

 

 

161,451

 

Non-current operating lease liabilities

 

16,133

 

 

 

17,021

 

Other non-current liabilities

 

3,320

 

 

 

3,790

 

Total liabilities

 

189,825

 

 

 

182,262

 

Commitments and contingencies

 

 

 

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: 97,202,042 at March 31, 2024 and 95,380,281 at December 31, 2023

 

97

 

 

 

95

 

Additional paid-in capital

 

476,665

 

 

 

470,322

 

Accumulated other comprehensive income

 

280

 

 

 

320

 

Accumulated deficit

 

(377,105

)

 

 

(367,461

)

Total stockholders' equity

 

99,937

 

 

 

103,276

 

Total liabilities and stockholders' equity

$

289,762

 

 

$

285,538

 

ARLO TECHNOLOGIES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

 

March 31,
2024

 

December 31,
2023

 

April 2,
2023

 

(In thousands, except percentage and per share data)

Revenue:

 

 

 

 

 

Products

$

67,493

 

 

$

79,168

 

 

$

67,060

 

Services

 

56,707

 

 

 

55,925

 

 

 

43,944

 

Total revenue

 

124,200

 

 

 

135,093

 

 

 

111,004

 

Cost of revenue:

 

 

 

 

 

Products

 

63,224

 

 

 

73,143

 

 

 

64,041

 

Services

 

13,596

 

 

 

14,601

 

 

 

11,746

 

Total cost of revenue

 

76,820

 

 

 

87,744

 

 

 

75,787

 

Gross profit

 

47,380

 

 

 

47,349

 

 

 

35,217

 

Gross margin

 

38.1

%

 

 

35.0

%

 

 

31.7

%

Operating expenses:

 

 

 

 

 

Research and development

 

20,793

 

 

 

16,450

 

 

 

17,750

 

Sales and marketing

 

17,370

 

 

 

18,004

 

 

 

15,353

 

General and administrative

 

19,348

 

 

 

13,282

 

 

 

15,622

 

Others

 

479

 

 

 

71

 

 

 

632

 

Total operating expenses

 

57,990

 

 

 

47,807

 

 

 

49,357

 

Loss from operations

 

(10,610

)

 

 

(458

)

 

 

(14,140

)

Operating margin

 

(8.5

)%

 

 

(0.3

)%

 

 

(12.7

)%

Interest income, net

 

1,386

 

 

 

1,199

 

 

 

726

 

Other income (loss), net

 

(25

)

 

 

84

 

 

 

(39

)

Income (loss) before income taxes

 

(9,249

)

 

 

825

 

 

 

(13,453

)

Provision for income taxes

 

395

 

 

 

133

 

 

 

792

 

Net income (loss)

$

(9,644

)

 

$

692

 

 

$

(14,245

)

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

Basic

$

(0.10

)

 

$

0.01

 

 

$

(0.16

)

Diluted

$

(0.10

)

 

$

0.01

 

 

$

(0.16

)

Weighted average shares used to compute net income (loss) per share:

 

 

 

 

 

Basic

 

96,264

 

 

 

94,819

 

 

 

89,653

 

Diluted

 

96,264

 

 

 

101,938

 

 

 

89,653

 

ARLO TECHNOLOGIES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

Three Months Ended

 

March 31,
2024

 

April 2,
2023

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net loss

$

(9,644

)

 

$

(14,245

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Stock-based compensation expense

 

18,550

 

 

 

14,591

 

Depreciation and amortization

 

903

 

 

 

1,149

 

Allowance for credit losses and non-cash changes to reserves

 

(107

)

 

 

198

 

Deferred income taxes

 

68

 

 

 

127

 

Other

 

(792

)

 

 

(124

)

Changes in assets and liabilities:

 

 

 

Accounts receivable

 

8,978

 

 

 

13,216

 

Inventories

 

(6,275

)

 

 

6,341

 

Prepaid expenses and other assets

 

(1,672

)

 

 

(900

)

Accounts payable

 

14,561

 

 

 

(6,093

)

Deferred revenue

 

3,427

 

 

 

3,785

 

Accrued and other liabilities

 

(8,191

)

 

 

(7,716

)

Net cash provided by operating activities

 

19,806

 

 

 

10,329

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(356

)

 

 

(923

)

Purchases of short-term investments

 

(40,802

)

 

 

(36,755

)

Proceeds from maturities of short-term investments

 

40,718

 

 

 

15,006

 

Net cash used in investing activities

 

(440

)

 

 

(22,672

)

Cash flows from financing activities:

 

 

 

Proceeds related to employee benefit plans

 

573

 

 

 

3

 

Restricted stock unit withholdings

 

(14,355

)

 

 

(4,694

)

Net cash used in financing activities

 

(13,782

)

 

 

(4,691

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

5,584

 

 

 

(17,034

)

Cash, cash equivalents and restricted cash, at beginning of period

 

60,653

 

 

 

88,179

 

Cash, cash equivalents and restricted cash, at end of period

$

66,237

 

 

$

71,145

 

 

 

 

 

Non-cash investing activities:

 

 

 

Purchases of property and equipment included in accounts payable and accrued liabilities

$

180

 

 

$

894

 

ARLO TECHNOLOGIES, INC.

 

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

 

UNAUDITED STATEMENT OF OPERATIONS DATA:

 

 

 

 

 

 

 

Three Months Ended

 

March 31,
2024

 

December 31,
2023

 

April 2,
2023

 

(In thousands, except percentage data)

GAAP gross profit:

 

 

 

 

 

Products

$

4,269

 

 

$

6,025

 

 

$

3,019

 

Services

 

43,111

 

 

 

41,324

 

 

 

32,198

 

Total GAAP gross profit

 

47,380

 

 

 

47,349

 

 

 

35,217

 

GAAP gross margin:

 

 

 

 

 

Products

 

6.3

%

 

 

7.6

%

 

 

4.5

%

Services

 

76.0

%

 

 

73.9

%

 

 

73.3

%

Total GAAP gross margin

 

38.1

%

 

 

35.0

%

 

 

31.7

%

Stock-based compensation expense - Products

 

1,114

 

 

 

692

 

 

 

912

 

Stock-based compensation expense - Services

 

257

 

 

 

145

 

 

 

(51

)

Amortization of development of software cost - Services

 

151

 

 

 

151

 

 

 

151

 

Non-GAAP gross profit:

 

 

 

 

 

Products

 

5,383

 

 

 

6,717

 

 

 

3,931

 

Services

 

43,519

 

 

 

41,620

 

 

 

32,298

 

Total Non-GAAP gross profit

$

48,902

 

 

$

48,337

 

 

$

36,229

 

Non-GAAP gross margin:

 

 

 

 

 

Products

 

8.0

%

 

 

8.5

%

 

 

5.9

%

Services

 

76.7

%

 

 

74.4

%

 

 

73.5

%

Total Non-GAAP gross margin

 

39.4

%

 

 

35.8

%

 

 

32.6

%

 

 

 

 

 

 

GAAP research and development

$

20,793

 

 

$

16,450

 

 

$

17,750

 

Stock-based compensation expense

 

(4,904

)

 

 

(2,631

)

 

 

(3,911

)

Non-GAAP research and development

$

15,889

 

 

$

13,819

 

 

$

13,839

 

Percentage of revenue

 

12.8

%

 

 

10.2

%

 

 

12.5

%

 

 

 

 

 

 

GAAP sales and marketing

$

17,370

 

 

$

18,004

 

 

$

15,353

 

Stock-based compensation expense

 

(2,240

)

 

 

(1,283

)

 

 

(1,722

)

Non-GAAP sales and marketing

$

15,130

 

 

$

16,721

 

 

$

13,631

 

Percentage of revenue

 

12.2

%

 

 

12.4

%

 

 

12.3

%

 

 

 

 

 

 

GAAP general and administrative

$

19,348

 

 

$

13,282

 

 

$

15,622

 

Stock-based compensation expense

 

(10,035

)

 

 

(5,346

)

 

 

(8,097

)

Non-GAAP general and administrative

$

9,313

 

 

$

7,936

 

 

$

7,525

 

Percentage of revenue

 

7.5

%

 

 

5.9

%

 

 

6.8

%

ARLO TECHNOLOGIES, INC.

 

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

 

UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):

 

 

 

 

 

 

 

Three Months Ended

 

March 31,
2024

 

December 31,
2023

 

April 2,
2023

 

(In thousands, except percentage data)

GAAP total operating expenses

$

57,990

 

 

$

47,807

 

 

$

49,357

 

Stock-based compensation expense

 

(17,179

)

 

 

(9,260

)

 

 

(13,730

)

Others

 

(479

)

 

 

(71

)

 

 

(632

)

Non-GAAP total operating expenses

$

40,332

 

 

$

38,476

 

 

$

34,995

 

 

 

 

 

 

 

GAAP operating loss

$

(10,610

)

 

$

(458

)

 

$

(14,140

)

GAAP operating margin

 

(8.5

)%

 

 

(0.3

)%

 

 

(12.7

)%

Stock-based compensation expense

 

18,550

 

 

 

10,097

 

 

 

14,591

 

Others

 

630

 

 

 

222

 

 

 

783

 

Non-GAAP operating income

$

8,570

 

 

$

9,861

 

 

$

1,234

 

Non-GAAP operating margin

 

6.9

%

 

 

7.3

%

 

 

1.1

%

 

 

 

 

 

 

GAAP provision for income taxes

$

395

 

 

$

133

 

 

$

792

 

GAAP income tax rate

 

(4.3

)%

 

 

16.1

%

 

 

(5.9

)%

Non-GAAP provision for income taxes

$

395

 

 

$

133

 

 

$

792

 

Non-GAAP income tax rate

 

4.0

%

 

 

1.2

%

 

 

41.2

%

ARLO TECHNOLOGIES, INC.

 

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

 

UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):

 

 

 

 

 

 

 

Three Months Ended

 

March 31,
2024

 

December 31,
2023

 

April 2,
2023

 

(In thousands, except percentage and per share data)

GAAP net income (loss)

$

(9,644

)

 

$

692

 

 

$

(14,245

)

Stock-based compensation expense

 

18,550

 

 

 

10,097

 

 

 

14,591

 

Others

 

630

 

 

 

222

 

 

 

783

 

Non-GAAP net income

$

9,536

 

 

$

11,011

 

 

$

1,129

 

 

 

 

 

 

 

GAAP net income (loss) per share - basic and diluted

$

(0.10

)

 

$

0.01

 

 

$

(0.16

)

Stock-based compensation expense

 

0.18

 

 

 

0.10

 

 

 

0.17

 

Others

 

0.01

 

 

 

?

 

 

 

?

 

Non-GAAP net income - diluted

$

0.09

 

 

$

0.11

 

 

$

0.01

 

 

 

 

 

 

 

Shares used in computing GAAP net income (loss) - basic and diluted

 

96,264

 

 

 

94,819

 

 

 

89,653

 

Shares used in computing non-GAAP net income - diluted

 

103,803

 

 

 

101,938

 

 

 

93,236

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

Net cash provided by operating activities

$

19,806

 

 

$

7,935

 

 

$

10,329

 

Less: Purchases of property and equipment

 

(356

)

 

 

(399

)

 

 

(923

)

Free cash flow (1)

$

19,450

 

 

$

7,536

 

 

$

9,406

 

Free cash flow margin (1)

 

15.7

%

 

 

5.6

%

 

 

8.5

%

_________________________

(1)

Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Free cash flow margin is the free cash flow divided by revenue.

ARLO TECHNOLOGIES, INC.

 

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

 

 

As of and for the three months ended

 

March 31,
2024

 

December 31,
2023

 

October 1,
2023

 

July 2,
2023

 

April 2,
2023

 

(In thousands, except headcount and per share data)

Cash, cash equivalents and short-term investments

$

142,863

 

$

136,496

 

$

126,049

 

$

123,675

 

$

118,673

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

$

56,496

 

$

65,360

 

$

70,313

 

$

57,327

 

$

52,837

Days sales outstanding

 

41

 

 

44

 

 

49

 

 

45

 

 

44

 

 

 

 

 

 

 

 

 

 

Inventories

$

44,676

 

$

38,408

 

$

53,496

 

$

39,429

 

$

39,922

Inventory turns

 

5.7

 

 

7.6

 

 

5.5

 

 

6.1

 

 

6.4

 

 

 

 

 

 

 

 

 

 

Weeks of channel inventory:

 

 

 

 

 

 

 

 

 

U.S. retail channel

 

12.9

 

 

11.1

 

 

10.9

 

 

9.7

 

 

14.6

U.S. distribution channel

 

11.4

 

 

20.5

 

 

7.4

 

 

9.3

 

 

17.6

APAC distribution channel

 

6.4

 

 

3.9

 

 

7.2

 

 

7.7

 

 

5.8

 

 

 

 

 

 

 

 

 

 

Deferred revenue

(current and non-current)

$

21,540

 

$

18,114

 

$

17,706

 

$

17,702

 

$

15,289

 

 

 

 

 

 

 

 

 

 

Cumulative registered accounts (1)

 

9,173

 

 

8,652

 

 

8,193

 

 

7,860

 

 

7,510

Cumulative paid accounts (2)

 

3,235

 

 

2,813

 

 

2,486

 

 

2,289

 

 

2,044

Annual recurring revenue (ARR) (3)

$

226,968

 

$

210,078

 

$

199,993

 

$

193,633

 

$

182,583

 

 

 

 

 

 

 

 

 

 

Headcount

 

373

 

 

363

 

 

353

 

 

345

 

 

334

Non-GAAP diluted shares

 

103,803

 

 

101,938

 

 

102,116

 

 

99,187

 

 

93,236

_________________________

(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 period. 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 end-users to monitor the devices attached to that household.

 

 

(2)

Paid accounts are defined as any account worldwide where a subscription to a paid service is being collected (either by us or by our customers or channel partners, including Verisure).

 

 

(3)

In the first fiscal quarter of 2024, we changed the methodology on paid service revenue recognition from a mid-month convention to a daily recognition model which recognizes paid service revenue based on the number of service days within the fiscal reporting period, commencing on the start date of the subscription and continuing over the term of the arrangement. Accordingly, the methodology used to calculate ARR was also changed as of March 31, 2024 and is now calculated by taking the average daily paid service revenue of the last calendar month in the fiscal quarter, multiplied by 365 days. We believe the daily recognition model aligns with our customers' subscription period and service usage and allows for a more precise measurement of paid service revenue relative to the former methodology of a mid-month convention, which was based on paid service revenue for the last calendar month in the fiscal quarter, multiplied by 12 months. This change in calculation methodology has no material impact on our financial statements or any previously reported ARR numbers.

REVENUE BY GEOGRAPHY

 

Three Months Ended

 

March 31,
2024

 

December 31,
2023

 

April 2,
2023

 

(In thousands, except percentage data)

Americas

$

57,169

46.0

%

 

$

86,702

64.2

%

 

$

56,632

51.0

%

EMEA

 

61,380

49.4

%

 

 

42,433

31.4

%

 

 

48,472

43.7

%

APAC

 

5,651

4.6

%

 

 

5,958

4.4

%

 

 

5,900

5.3

%

Total

$

124,200

100.0

%

 

$

135,093

100.0

%

 

$

111,004

100.0

%

 


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