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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 FORM 8-K
 
 CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 10, 2023
 
 ARLO TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware001-3861838-4061754
(State or other jurisdiction of incorporation)(Commission File Number)(I.R.S. Employer Identification Number)
2200 Faraday Ave.,Suite #150
Carlsbad,California92008
(Address of principal executive offices)(Zip Code)

(408) 890-3900
(Registrant's telephone number, including area code)  
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):  

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareARLONew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐


Item 2.02    Results of Operations and Financial Condition.

On August 10, 2023, Arlo Technologies, Inc. issued a press release announcing its financial results for the second quarter ended July 2, 2023. A copy of this press release is attached hereto as Exhibit 99.1.

The information in this Item 2.02, including Exhibit 99.1 hereto, are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, unless expressly incorporated by specific reference in such a filing.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits
    
Exhibit NumberDescription
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


    




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.    


ARLO TECHNOLOGIES, INC.
Registrant
/s/ KURTIS BINDER
Kurtis Binder
Chief Financial Officer

Dated: August 10, 2023    





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NEWS RELEASE

Arlo Reports Second Quarter 2023 Results

Revenue of $115 million, at the top end of guidance range
ARR ended at $194 million, growing 66% year over year
Free cash flow (FCF) of $12 million with FCF margin of 10% (1)
Service gross profit exceeds non-GAAP operating expenses
GAAP EPS of $(0.08); Record non-GAAP EPS of $0.06

Carlsbad, California - August 10, 2023 - Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home security brand, today reported financial results for the second quarter ended July 2, 2023.

“The continued acceleration of our services business drove outstanding results in Q2 across all of our key metrics. Strong demand, increased subscriptions, higher ARPU, and record gross margin are fueling Arlo’s trajectory of improving performance and profitability," said Matthew McRae, Chief Executive Officer of Arlo Technologies. “Our strategy and excellent execution also produced a significant increase in the long-term value of our subscribers which expands shareholder value.”

Financial and Business Highlights (2)

•Q2 total revenue of $115.1 million, a decrease of 3.3% year over year.
•Record Q2 service revenue of $50.3 million, growing 53.5% year over year.
•Ended the quarter with ARR (3) of $193.6 million, growing 66.1% year over year.
•Added 245,000 paid accounts (4) in Q2, ending cumulative paid accounts around 2.3 million, growing 54.9% year over year.
•Record Q2 GAAP services gross margin of 74.6% and non-GAAP services gross margin of 75.2%.
•GAAP net loss per share of $(0.08); Record non-GAAP earnings per diluted share of $0.06.
•Ending cash and cash equivalents and short-term investments balance of $123.7 million, up $5.0 million sequentially.
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Three Months EndedSix Months Ended
July 2,
2023		April 2,
2023		July 3,
2022		July 2, 2023July 3, 2022
(In thousands, except percentage and per share data)
Revenue$115,076 $111,004 $118,979 $226,080 $243,730 
GAAP Gross Margin36.4 %31.7 %28.4 %34.1 %27.6 %
Non-GAAP Gross Margin (2)
37.3 %32.6 %29.5 %35.0 %28.5 %
GAAP Net Loss per Share$(0.08)$(0.16)$(0.13)$(0.24)$(0.23)
Non-GAAP Net Income per Diluted Share (2)
$0.06 $0.01 $0.01 $0.07 $0.02 
_________________________
(1)    Free cash flow is calculated as net cash provided by (used in) operating activities less capital expenditures. Free cash flow margin is the free cash flow divided by revenue.

(2)    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.

(3)    ARR is calculated by taking our recurring paid service revenue for the last calendar month in the fiscal quarter, multiplied by 12 months. Recurring paid service revenue represents the revenue we recognized from our paid accounts and excludes prepaid service revenue.

(4)    The 245,000 new paid accounts in Q2 includes a number of paid accounts in our EMEA region which were managed by Verisure and now onboarded with us. This does not have an impact to our financial statements and key business metrics other than our number of cumulative paid accounts.

Third Quarter 2023 Business Outlook (5)

A reconciliation of our business outlook on a GAAP and non-GAAP basis is provided in the following table:
Three Months Ended October 1, 2023
RevenueNet Income (Loss)
per Diluted Share
(In millions, except per share data)
GAAP
$122 - $132
$(0.07) - $(0.01)
Estimated adjustment for stock-based compensation and other expense—0.11
Non-GAAP
$122 - $132
$0.04 - $0.10
_________________________
(5)    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.

Page 2

Investor Conference Call / Webcast Details

Arlo will review the second quarter 2023 results and discuss management’s expectations for the third quarter of 2023 today, Thursday, August 10, 2023 at 5:00 p.m. ET (2:00 p.m. PT). The toll-free dial-in number for the live audio call is (888) 660-6387. The international dial-in number for the live audio call is +1 (929) 203-1909. The conference ID for the call is 7749064. A live webcast of the conference call will be available on Arlo’s Investor Relations website at https://investor.arlo.com. A replay of the call will be available via the web at https://investor.arlo.com.

About Arlo Technologies, Inc.

Arlo is the award-winning, industry leader that is transforming the way people experience the connected lifestyle. Arlo’s deep expertise in product design, wireless connectivity, cloud infrastructure and cutting-edge AI capabilities focuses on delivering a seamless, smart home experience for Arlo users that is easy to setup and interact with every day. Arlo’s cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. To date, Arlo has launched several categories of award-winning smart connected devices, software and services, including wire-free smart Wi-Fi and LTE-enabled security cameras, audio and video doorbells, a floodlight, home security systems, and the Arlo Apps: Arlo Secure, and Arlo Safe, AI-based subscription services designed to maximize security through personalized notifications and emergency services for quicker help during a crisis.

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.

© 2023 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.




Contact:

Arlo Investor Relations
Erik Bylin
investors@arlo.com
(510) 315-1004

Page 3

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 margin; strategic objectives and initiatives; the recurring revenue business model; expectations regarding market expansion and future growth; 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; we may fail to manage costs and cost saving initiatives, including restructuring 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 ability to make more meaningful period-to-period comparisons of our on-going operating results;
Page 4

•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:

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

***Financial Tables Attached***
Page 5

ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of
July 2,
2023		December 31,
2022
(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents$61,951 $84,024 
Short-term investments61,724 29,700 
Accounts receivable, net57,327 65,960 
Inventories39,429 46,554 
Prepaid expenses and other current assets12,318 6,544 
Total current assets232,749 232,782 
Property and equipment, net6,421 7,336 
Operating lease right-of-use assets, net11,089 12,809 
Goodwill11,038 11,038 
Restricted cash4,035 4,155 
Other non-current assets3,689 4,081 
Total assets$269,021 $272,201 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$61,221 $52,132 
Deferred revenue17,639 11,291 
Accrued liabilities88,217 98,855 
Total current liabilities167,077 162,278 
Non-current operating lease liabilities17,141 19,279 
Other non-current liabilities3,047 2,949 
Total liabilities187,265 184,506 
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: 93,653,934 at July 2, 2023 and 88,887,139 at December 31, 2022
94 89 
Additional paid-in capital448,543 433,138 
Accumulated other comprehensive income (loss)152 (107)
Accumulated deficit(367,033)(345,425)
Total stockholders’ equity81,756 87,695 
Total liabilities and stockholders’ equity$269,021 $272,201 

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ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months EndedSix Months Ended
July 2,
2023		April 2,
2023		July 3,
2022		July 2,
2023		July 3,
2022
(In thousands, except percentage and per share data)
Revenue:
Products$64,749 $67,060 $86,191 $131,809 $181,016 
Services50,327 43,944 32,788 94,271 62,714 
Total revenue115,076 111,004 118,979 226,080 243,730 
Cost of revenue:
Products60,446 64,041 73,829 124,487 154,606 
Services12,772 11,746 11,410 24,518 21,809 
Total cost of revenue73,218 75,787 85,239 149,005 176,415 
Gross profit41,858 35,217 33,740 77,075 67,315 
Gross margin36.4 %31.7 %28.4 %34.1 %27.6 %
Operating expenses:
Research and development17,618 17,750 17,402 35,368 33,781 
Sales and marketing16,921 15,353 14,506 32,274 27,674 
General and administrative15,007 15,622 13,149 30,629 25,770 
Others341 632 25 973 104 
Total operating expenses49,887 49,357 45,082 99,244 87,329 
Loss from operations(8,029)(14,140)(11,342)(22,169)(20,014)
Operating margin(7.0)%(12.7)%(9.5)%(9.8)%(8.2)%
Interest income, net835 726 129 1,561 124 
Other income (expense), net52 (39)(116)13 295 
Loss before income taxes(7,142)(13,453)(11,329)(20,595)(19,595)
Provision for income taxes221 792 228 1,013 441 
Net loss$(7,363)$(14,245)$(11,557)$(21,608)$(20,036)
Net loss per share - basic and diluted$(0.08)$(0.16)$(0.13)$(0.24)$(0.23)
Weighted average shares used to compute net loss per share - basic and diluted92,337 89,653 86,868 90,984 85,966 

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ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 Six Months Ended
July 2,
2023		July 3,
2022
(In thousands)
Cash flows from operating activities:
Net loss$(21,608)$(20,036)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Stock-based compensation expense27,564 21,834 
Depreciation and amortization2,353 2,523 
Allowance for credit losses and inventory reserves613 (120)
Deferred income taxes243 133 
Others(567)89 
Changes in assets and liabilities:
Accounts receivable, net 8,734 5,498 
Inventories6,411 (628)
Prepaid expenses and other assets (5,624)767 
Accounts payable 9,836 (6,565)
Deferred revenue6,198 (16,763)
Accrued and other liabilities(11,245)(16,113)
Net cash provided by (used in) operating activities22,908 (29,381)
Cash flows from investing activities:
Purchases of property and equipment (1,954)(451)
Purchases of short-term investments(61,152)(59,490)
Proceeds from maturities of short-term investments29,956 9,512 
Net cash used in investing activities(33,150)(50,429)
Cash flows from financing activities:
Proceeds related to employee benefit plans4,611 3,171 
Restricted stock unit withholdings(16,562)(13,555)
Net cash used in financing activities(11,951)(10,384)
Net decrease in cash, cash equivalents and restricted cash
(22,193)(90,194)
Cash, cash equivalents and restricted cash, at beginning of period88,179 179,856 
Cash, cash equivalents and restricted cash, at end of period$65,986 $89,662 
Non-cash investing activities:
Purchases of property and equipment included in accounts payable and accrued liabilities$433 $333 
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ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

UNAUDITED STATEMENT OF OPERATIONS DATA:
Three Months EndedSix Months Ended
July 2,
2023		April 2,
2023		July 3,
2022		July 2,
2023		July 3,
2022
(In thousands, except percentage data)
GAAP gross profit:
Products$4,303 $3,019 $12,362 $7,322 $26,410 
Services37,555 32,198 21,378 69,753 40,905 
Total GAAP gross profit41,858 35,217 33,740 77,075 67,315 
GAAP gross margin:
Products6.6 %4.5 %14.3 %5.6 %14.6 %
Services74.6 %73.3 %65.2 %74.0 %65.2 %
Total GAAP gross margin36.4 %31.7 %28.4 %34.1 %27.6 %
Stock-based compensation expense - Products848 912 1,148 1,760 2,003 
Stock-based compensation expense - Services119 (51)187 68 242 
Amortization of development of software cost - Services151 151 — 302 — 
Non-GAAP gross profit:
Products5,151 3,931 13,510 9,082 28,413 
Services37,825 32,298 21,565 70,123 41,147 
Total Non-GAAP gross profit$42,976 $36,229 $35,075 $79,205 $69,560 
Non-GAAP gross margin:
Products8.0 %5.9 %15.7 %6.9 %15.7 %
Services75.2 %73.5 %65.8 %74.4 %65.6 %
Total Non-GAAP gross margin37.3 %32.6 %29.5 %35.0 %28.5 %
GAAP research and development$17,618 $17,750 $17,402 $35,368 $33,781 
Stock-based compensation expense(3,311)(3,911)(3,621)(7,222)(5,923)
Non-GAAP research and development$14,307 $13,839 $13,781 $28,146 $27,858 
Percentage of revenue12.4 %12.5 %11.6 %12.4 %11.4 %
GAAP sales and marketing$16,921 $15,353 $14,506 $32,274 $27,674 
Stock-based compensation expense(1,670)(1,722)(1,790)(3,392)(3,170)
Non-GAAP sales and marketing$15,251 $13,631 $12,716 $28,882 $24,504 
Percentage of revenue13.3 %12.3 %10.7 %12.8 %10.1 %
GAAP general and administrative$15,007 $15,622 $13,149 $30,629 $25,770 
Stock-based compensation expense(7,025)(8,097)(5,499)(15,122)(10,496)
Litigation reserves, net— — (65)— (112)
Non-GAAP general and administrative$7,982 $7,525 $7,585 $15,507 $15,162 
Percentage of revenue6.9 %6.8 %6.4 %6.9 %6.2 %

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ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):
Three Months EndedSix Months Ended
July 2,
2023		April 2,
2023		July 3,
2022		July 2,
2023		July 3,
2022
(In thousands, except percentage data)
GAAP total operating expenses$49,887 $49,357 $45,082 $99,244 $87,329 
Stock-based compensation expense(12,006)(13,730)(10,910)(25,736)(19,589)
Others(341)(632)(90)(973)(216)
Non-GAAP total operating expenses$37,540 $34,995 $34,082 $72,535 $67,524 
GAAP operating loss$(8,029)$(14,140)$(11,342)$(22,169)$(20,014)
GAAP operating margin(7.0)%(12.7)%(9.5)%(9.8)%(8.2)%
Stock-based compensation expense12,973 14,591 12,245 27,564 21,834 
Others492 783 90 1,275 216 
Non-GAAP operating income$5,436 $1,234 $993 $6,670 $2,036 
Non-GAAP operating margin4.7 %1.1 %0.8 %3.0 %0.8 %
GAAP other income (expense), net$52 $(39)$(116)$13 $295 
Employee retention credit— — (26)— (65)
Non-GAAP other income (expense), net$52 $(39)$(142)$13 $230 
GAAP provision for income taxes$221 $792 $228 $1,013 $441 
GAAP income tax rate(3.1)%(5.9)%(2.0)%(4.9)%(2.3)%
Non-GAAP provision for income taxes$221 $792 $228 $1,013 $441 
Non-GAAP income tax rate3.5 %41.2 %23.3 %12.3 %18.5 %


Page 10

ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):
Three Months EndedSix Months Ended
July 2,
2023		April 2,
2023		July 3,
2022		July 2,
2023		July 3,
2022
(In thousands, except percentage and per share data)
GAAP net loss$(7,363)$(14,245)$(11,557)$(21,608)$(20,036)
Stock-based compensation expense12,973 14,591 12,245 27,564 21,834 
Others492 783 64 1,275 151 
Non-GAAP net income$6,102 $1,129 $752 $7,231 $1,949 
GAAP net loss per share - basic and diluted$(0.08)$(0.16)$(0.13)$(0.24)$(0.23)
Stock-based compensation expense0.14 0.17 0.14 0.30 0.25 
Others— — — 0.01 — 
Non-GAAP net income - diluted $0.06 $0.01 $0.01 $0.07 $0.02 
Shares used in computing GAAP net loss - basic92,337 89,653 86,868 90,984 85,966 
Shares used in computing non-GAAP net income - diluted99,187 93,236 91,787 96,800 92,687 
Free cash flow (usage):
Net cash provided by (used in) operating activities$12,578 $10,329 $(4,824)$22,908 $(29,381)
Less: Purchases of property and equipment(1,031)(923)(153)(1,954)(451)
Free cash flow (usage) (1)
$11,547 $9,406 $(4,977)$20,954 $(29,832)
Free cash flow (usage) margin (1)
10.0 %8.5 %(4.2)%9.3 %(25.1)%
_________________________
(1)    Free cash flow (usage) is calculated as net cash provided by (used in) operating activities less capital expenditures. Free cash flow (usage) margin is the free cash flow (usage) divided by revenue.
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ARLO TECHNOLOGIES, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

Three Months Ended
July 2,
2023		April 2,
2023		December 31,
2022		October 2,
2022		July 3,
2022
(In thousands, except headcount and per share data)
Cash, cash equivalents and short-term investments$123,675 $118,673 $113,724 $125,272 $135,258 
Cash, cash equivalents and short-term investments per diluted share$1.25 $1.27 $1.28 $1.42 $1.47 
Accounts receivable, net$57,327 $52,837 $65,960 $82,707 $73,998 
Days sales outstanding45 44 50 59 57 
Inventories$39,429 $39,922 $46,554 $73,243 $39,208 
Inventory turns6.1 6.4 6.4 4.3 7.5 
Weeks of channel inventory:
U.S. retail channel 9.7 14.6 11.9 13.6 11.9 
U.S. distribution channel9.3 17.6 14.1 5.5 7.4 
APAC distribution channel7.7 5.8 4.7 9.4 9.8 
Deferred revenue
(current and non-current)		$17,702 $15,289 $11,503 $12,242 $14,022 
Cumulative registered accounts (1)
7,860 7,510 7,220 6,930 6,640 
Cumulative paid accounts (2)
2,289 2,044 1,862 1,673 1,478 
Annual recurring revenue (ARR) (3)
$193,633 $182,583 $137,764 $125,402 $116,601 
Headcount345 334 343 360 354 
Non-GAAP diluted shares99,187 93,236 88,743 88,124 91,787 
_________________________
(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)    ARR represents the amount of paid service revenue that we expect to recur annually and is calculated by taking our recurring paid service revenue for the last calendar month in the fiscal quarter, multiplied by 12 months. Recurring paid service revenue represents the revenue we recognize from our paid accounts and excludes prepaid service revenue. ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items.

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REVENUE BY GEOGRAPHY

Three Months EndedSix Months Ended
July 2,
2023		April 2,
2023		July 3,
2022		July 2,
2023		July 3,
2022
(In thousands, except percentage data)
Americas$78,136 67.9 %$56,632 51.0 %$60,345 50.7 %$134,768 59.6 %$128,811 52.8 %
EMEA30,958 26.9 %48,472 43.7 %54,483 45.8 %79,430 35.1 %104,458 42.9 %
APAC5,982 5.2 %5,900 5.3 %4,151 3.5 %11,882 5.3 %10,461 4.3 %
Total$115,076 100.0 %$111,004 100.0 %$118,979 100.0 %$226,080 100.0 %$243,730 100.0 %


Page 13
v3.23.2
Cover Page
Aug. 10, 2023
Cover [Abstract]  
Entity Ex Transition Period false
Entity Central Index Key 0001736946
Entity Emerging Growth Company true
Title of 12(b) Security Common Stock, par value $0.001 per share
Pre-commencement Issuer Tender Offer false
Pre-commencement Tender Offer false
Soliciting Material false
Written Communications false
City Area Code 408
Entity Tax Identification Number 38-4061754
Document Type 8-K
Document Period End Date Aug. 10, 2023
Entity Registrant Name ARLO TECHNOLOGIES, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-38618
Entity Address, Address Line Two Suite #150
Entity Address, Address Line One 2200 Faraday Ave.,
Entity Address, City or Town Carlsbad,
Entity Address, State or Province CA
Entity Address, Postal Zip Code 92008
Local Phone Number 890-3900
Trading Symbol ARLO
Security Exchange Name NYSE
Amendment Flag false
Arlo Technologies (NYSE:ARLO)
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