Record service revenue of $60.3 million,
growing 19.7% year over year
GAAP net loss per share of $(0.12); non-GAAP
net income per share of $0.10
Annual recurring revenue (ARR) ended at $235.0
million, growing 21.4% year over year (1)
Free cash flow (FCF) of $25.6 million with FCF
margin of 10.2% in the first half of 2024 (2)
Surpassed 4 million subscribers in July
2024
Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home
security company, today reported financial results for the second
quarter ended June 30, 2024.
“Arlo’s service business continues its strong growth path,
recently surpassing 4 million paid accounts and 76% non-GAAP gross
margin, while reaching nearly 50% of the company’s total revenue.
This outstanding performance drove non-GAAP net income per share of
$0.19 and free cash flow to over $25 million for the first half of
the year; an increase of 177% in non-GAAP net income over the first
half of 2023,” said Matthew McRae, Chief Executive Officer of Arlo
Technologies. “Arlo is well set up for the holiday season across
our channels and is seeing an increased level of engagement from
strategic partners, positioning us well to meet or exceed our
long-range plan targets that we rolled out earlier this year.”
Financial and Business Highlights
- Q2 total revenue of $127.4 million, an increase of 10.8% year
over year.
- Record Q2 service revenue of $60.3 million, an increase of
19.7% year over year.
- Q2 GAAP services gross margin of 75.8% and non-GAAP services
gross margin of 76.4%.
- GAAP gross profit of $46.9 million, an increase of 11.9% year
over year; non-GAAP gross profit of $48.3 million, an increase of
12.4% year over year.
- GAAP gross margin of 36.8%; non-GAAP gross margin of
37.9%.
- GAAP net loss per share of $(0.12); non-GAAP net income per
share of $0.10 for the three months ended June 30, 2024, and GAAP
net loss per share of $(0.22); non-GAAP net income per share of
$0.19 for the six months ended June 30, 2024.
- Cumulative paid accounts increased to 3.98 million, growing
73.9% year over year; surpassed 4.0 million subscribers in July
2024.
- Ended the quarter with ARR(1) of $235.0 million, growing 21.4%
year over year.
- Ended with cash and cash equivalents and short-term investments
of $144.0 million, up $20.3 million year over year.
- Announced a strategic partnership with Allstate in July 2024
offering protection plans to Arlo customers’ security devices
purchases.
Three Months Ended
Six Months Ended
June 30,
2024
March 31,
2024
July 2,
2023
June 30,
2024
July 2,
2023
(In thousands, except percentage
and per share data)
Revenue
$
127,447
$
124,200
$
115,076
$
251,647
$
226,080
GAAP Gross Margin
36.8
%
38.1
%
36.4
%
37.4
%
34.1
%
Non-GAAP Gross Margin (3)
37.9
%
39.4
%
37.3
%
38.6
%
35.0
%
GAAP Net Loss per Share - Basic and
Diluted
$
(0.12
)
$
(0.10
)
$
(0.08
)
$
(0.22
)
$
(0.24
)
Non-GAAP Net Income per Share - Basic and
Diluted (3)
$
0.10
$
0.09
$
0.06
$
0.19
$
0.07
(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.
Third 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 September 29,
2024
Revenue
Net Income (Loss)
per Diluted Share
(In millions, except per share
data)
GAAP
$132 - $142
$(0.07) - $(0.01)
Estimated adjustment for stock-based
compensation and other expense
—
0.15
Non-GAAP
$132 - $142
$0.08 - $0.14
(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 second quarter 2024 results and discuss
management’s expectations for the third quarter 2024 today,
Thursday, August 8, 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 (833) 470-1428. The international dial-in number
for the live audio call is (404) 975-4839. The conference ID for
the call is 838472. 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; strategic objectives and initiatives; the recurring
revenue business model; expectations regarding market expansion and
future growth, including with respect to our 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, separation expense,
amortization of development of software cost, litigation reserves,
net, 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;
- 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
ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
As of
June 30,
2024
December 31,
2023
(In thousands, except share and
per share data)
ASSETS
Current assets:
Cash and cash equivalents
$
62,928
$
56,522
Short-term investments
81,077
79,974
Accounts receivable, net
61,746
65,360
Inventories
45,227
38,408
Prepaid expenses and other current
assets
12,253
10,271
Total current assets
263,231
250,535
Property and equipment, net
3,771
4,761
Operating lease right-of-use assets,
net
10,242
11,450
Goodwill
11,038
11,038
Restricted cash
3,624
4,131
Other non-current assets
3,900
3,623
Total assets
$
295,806
$
285,538
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
74,084
$
55,201
Deferred revenue
23,505
18,041
Accrued liabilities
80,024
88,209
Total current liabilities
177,613
161,451
Non-current operating lease
liabilities
15,399
17,021
Other non-current liabilities
3,526
3,790
Total liabilities
196,538
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:
98,326,212 at June 30, 2024 and 95,380,281 at December 31, 2023
98
95
Additional paid-in capital
487,644
470,322
Accumulated other comprehensive income
191
320
Accumulated deficit
(388,665
)
(367,461
)
Total stockholders’ equity
99,268
103,276
Total liabilities and stockholders’
equity
$
295,806
$
285,538
ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
June 30,
2024
March 31,
2024
July 2,
2023
June 30,
2024
July 2,
2023
(In thousands, except percentage
and per share data)
Revenue:
Products
$
67,186
$
67,493
$
64,749
$
134,679
$
131,809
Services
60,261
56,707
50,327
116,968
94,271
Total revenue
127,447
124,200
115,076
251,647
226,080
Cost of revenue:
Products
66,036
63,224
60,446
129,260
124,487
Services
14,557
13,596
12,772
28,153
24,518
Total cost of revenue
80,593
76,820
73,218
157,413
149,005
Gross profit
46,854
47,380
41,858
94,234
77,075
Gross margin
36.8
%
38.1
%
36.4
%
37.4
%
34.1
%
Operating expenses:
Research and development
19,561
20,793
17,618
40,354
35,368
Sales and marketing
17,698
17,370
16,921
35,068
32,274
General and administrative
21,430
19,348
15,007
40,778
30,629
Others
966
479
341
1,445
973
Total operating expenses
59,655
57,990
49,887
117,645
99,244
Loss from operations
(12,801
)
(10,610
)
(8,029
)
(23,411
)
(22,169
)
Operating margin
(10.0
)%
(8.5
)%
(7.0
)%
(9.3
)%
(9.8
)%
Interest income, net
1,495
1,386
835
2,881
1,561
Other income (loss), net
(18
)
(25
)
52
(43
)
13
Loss before income taxes
(11,324
)
(9,249
)
(7,142
)
(20,573
)
(20,595
)
Provision for income taxes
236
395
221
631
1,013
Net loss
$
(11,560
)
$
(9,644
)
$
(7,363
)
$
(21,204
)
$
(21,608
)
Net loss per share - basic and diluted
$
(0.12
)
$
(0.10
)
$
(0.08
)
$
(0.22
)
$
(0.24
)
Weighted average shares used to compute
net loss per share - basic and diluted
97,843
96,264
92,337
97,051
90,984
ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
2024
July 2,
2023
(In thousands)
Cash flows from operating activities:
Net loss
$
(21,204
)
$
(21,608
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Stock-based compensation expense
39,470
27,564
Depreciation and amortization
1,684
2,353
Allowance for credit losses and non-cash
changes to reserves
(225
)
613
Deferred income taxes
(5
)
243
Others
(1,615
)
(567
)
Changes in assets and liabilities:
Accounts receivable
3,805
8,734
Inventories
(6,785
)
6,411
Prepaid expenses and other assets
(2,254
)
(5,624
)
Accounts payable
18,785
9,836
Deferred revenue
5,582
6,198
Accrued and other liabilities
(10,970
)
(11,245
)
Net cash provided by operating
activities
26,268
22,908
Cash flows from investing activities:
Purchases of property and equipment
(651
)
(1,954
)
Purchases of short-term investments
(111,519
)
(61,152
)
Proceeds from maturities of short-term
investments
111,902
29,956
Net cash used in investing activities
(268
)
(33,150
)
Cash flows from financing activities:
Proceeds related to employee benefit
plans
2,380
4,611
Restricted stock unit withholdings
(22,481
)
(16,562
)
Net cash used in financing activities
(20,101
)
(11,951
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
5,899
(22,193
)
Cash, cash equivalents and restricted
cash, at beginning of period
60,653
88,179
Cash, cash equivalents and restricted
cash, at end of period
$
66,552
$
65,986
Non-cash investing activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
233
$
433
ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES
TO NON-GAAP MEASURES
UNAUDITED STATEMENT OF OPERATIONS
DATA:
Three Months Ended
Six Months Ended
June 30,
2024
March 31,
2024
July 2,
2023
June 30,
2024
July 2,
2023
(In thousands, except percentage
data)
GAAP gross profit:
Products
$
1,150
$
4,269
$
4,303
$
5,419
$
7,322
Services
45,704
43,111
37,555
88,815
69,753
Total GAAP gross profit
46,854
47,380
41,858
94,234
77,075
GAAP gross margin:
Products
1.7
%
6.3
%
6.6
%
4.0
%
5.6
%
Services
75.8
%
76.0
%
74.6
%
75.9
%
74.0
%
Total GAAP gross margin
36.8
%
38.1
%
36.4
%
37.4
%
34.1
%
Stock-based compensation expense -
Products
1,127
1,114
848
2,241
1,760
Stock-based compensation expense -
Services
165
257
119
422
68
Amortization of development of software
cost - Services
151
151
151
302
302
Non-GAAP gross profit:
Products
2,277
5,383
5,151
7,660
9,082
Services
46,020
43,519
37,825
89,539
70,123
Total Non-GAAP gross profit
$
48,297
$
48,902
$
42,976
$
97,199
$
79,205
Non-GAAP gross margin:
Products
3.4
%
8.0
%
8.0
%
5.7
%
6.9
%
Services
76.4
%
76.7
%
75.2
%
76.6
%
74.4
%
Total Non-GAAP gross margin
37.9
%
39.4
%
37.3
%
38.6
%
35.0
%
GAAP research and development
$
19,561
$
20,793
$
17,618
$
40,354
$
35,368
Stock-based compensation expense
(4,778
)
(4,904
)
(3,311
)
(9,682
)
(7,222
)
Non-GAAP research and development
$
14,783
$
15,889
$
14,307
$
30,672
$
28,146
Percentage of revenue
11.6
%
12.8
%
12.4
%
12.2
%
12.4
%
GAAP sales and marketing
$
17,698
$
17,370
$
16,921
$
35,068
$
32,274
Stock-based compensation expense
(2,176
)
(2,240
)
(1,670
)
(4,416
)
(3,392
)
Non-GAAP sales and marketing
$
15,522
$
15,130
$
15,251
$
30,652
$
28,882
Percentage of revenue
12.2
%
12.2
%
13.3
%
12.2
%
12.8
%
GAAP general and administrative
$
21,430
$
19,348
$
15,007
$
40,778
$
30,629
Stock-based compensation expense
(12,674
)
(10,035
)
(7,025
)
(22,709
)
(15,122
)
Non-GAAP general and administrative
$
8,756
$
9,313
$
7,982
$
18,069
$
15,507
Percentage of revenue
6.9
%
7.5
%
6.9
%
7.2
%
6.9
%
ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES
TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Six Months Ended
June 30,
2024
March 31,
2024
July 2,
2023
June 30,
2024
July 2,
2023
(In thousands, except percentage
data)
GAAP total operating expenses
$
59,655
$
57,990
$
49,887
$
117,645
$
99,244
Stock-based compensation expense
(19,628
)
(17,179
)
(12,006
)
(36,807
)
(25,736
)
Others
(966
)
(479
)
(341
)
(1,445
)
(973
)
Non-GAAP total operating expenses
$
39,061
$
40,332
$
37,540
$
79,393
$
72,535
GAAP operating loss
$
(12,801
)
$
(10,610
)
$
(8,029
)
$
(23,411
)
$
(22,169
)
GAAP operating margin
(10.0
)%
(8.5
)%
(7.0
)%
(9.3
)%
(9.8
)%
Stock-based compensation expense
20,920
18,550
12,973
39,470
27,564
Others
1,117
630
492
1,747
1,275
Non-GAAP operating income
$
9,236
$
8,570
$
5,436
$
17,806
$
6,670
Non-GAAP operating margin
7.2
%
6.9
%
4.7
%
7.1
%
3.0
%
GAAP provision for income taxes
$
236
$
395
$
221
$
631
$
1,013
GAAP income tax rate
(2.1
)%
(4.3
)%
(3.1
)%
(3.1
)%
(4.9
)%
Non-GAAP provision for income taxes
$
236
$
395
$
221
$
631
$
1,013
Non-GAAP income tax rate
2.2
%
4.0
%
3.5
%
3.1
%
12.3
%
ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES
TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Six Months Ended
June 30,
2024
March 31,
2024
July 2,
2023
June 30,
2024
July 2,
2023
(In thousands, except percentage
and per share data)
GAAP net loss
$
(11,560
)
$
(9,644
)
$
(7,363
)
$
(21,204
)
$
(21,608
)
Stock-based compensation expense
20,920
18,550
12,973
39,470
27,564
Others
1,117
630
492
1,747
1,275
Non-GAAP net income
$
10,477
$
9,536
$
6,102
$
20,013
$
7,231
GAAP net loss per share - basic
$
(0.12
)
$
(0.10
)
$
(0.08
)
$
(0.22
)
$
(0.24
)
Stock-based compensation expense
0.21
0.18
0.14
0.39
0.30
Others
0.01
0.01
—
0.02
0.01
Non-GAAP net income per share -
diluted
$
0.10
$
0.09
$
0.06
$
0.19
$
0.07
Shares used in computing GAAP net loss -
basic
97,843
96,264
92,337
97,051
90,984
Shares used in computing non-GAAP net
income - diluted
106,127
103,803
99,187
105,441
96,800
Free cash flow:
Net cash provided by operating
activities
$
6,463
$
19,806
$
12,578
$
26,268
$
22,908
Less: Purchases of property and
equipment
(295
)
(356
)
(1,031
)
(651
)
(1,954
)
Free cash flow (1)
$
6,168
$
19,450
$
11,547
$
25,617
$
20,954
Free cash flow margin (1)
4.8
%
15.7
%
10.0
%
10.2
%
9.3
%
(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
June 30,
2024
March 31,
2024
December 31,
2023
October 1,
2023
July 2,
2023
(In thousands, except headcount
and per share data)
Cash, cash equivalents and short-term
investments
$
144,005
$
142,863
$
136,496
$
126,049
$
123,675
Accounts receivable, net
$
61,746
$
56,496
$
65,360
$
70,313
$
57,327
Days sales outstanding
44
41
44
49
45
Inventories
$
45,227
$
44,676
$
38,408
$
53,496
$
39,429
Inventory turns
5.8
5.7
7.6
5.5
6.1
Weeks of channel inventory:
U.S. retail channel
14.8
12.9
11.1
10.9
9.7
U.S. distribution channel
12.5
11.4
20.5
7.4
9.3
APAC distribution channel
3.9
6.4
3.9
7.2
7.7
Deferred revenue
(current and non-current)
$
23,695
$
21,540
$
18,114
$
17,706
$
17,702
Cumulative registered accounts (1)
9,987
9,173
8,652
8,193
7,860
Cumulative paid accounts (2)
3,980
3,235
2,813
2,486
2,289
Annual recurring revenue (ARR) (3)
$
234,981
$
226,968
$
210,078
$
199,993
$
193,633
Headcount
362
373
363
353
345
Non-GAAP diluted shares
106,127
103,803
101,938
102,116
99,187
(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
Six Months Ended
June 30,
2024
March 31,
2024
July 2,
2023
June 30,
2024
July 2,
2023
(In thousands, except percentage
data)
Americas
$
65,294
51.2
%
$
57,169
46.0
%
$
78,136
67.9
%
$
122,463
48.7
%
$
134,768
59.6
%
EMEA
56,827
44.6
%
61,380
49.4
%
30,958
26.9
%
118,207
47.0
%
79,430
35.1
%
APAC
5,326
4.2
%
5,651
4.6
%
5,982
5.2
%
10,977
4.3
%
11,882
5.3
%
Total
$
127,447
100.0
%
$
124,200
100.0
%
$
115,076
100.0
%
$
251,647
100.0
%
$
226,080
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808648891/en/
Arlo Investor Relations Tahmin Clarke investors@arlo.com
Arlo Technologies (NYSE:ARLO)
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