Arlo Reports Second Quarter 2019 Results

Exceeded Revenue and EPS Guidance
83.3% Paid Subscriber Growth Year Over Year
Right-sized Channel Inventory

SAN JOSE, Calif.--()--Arlo Technologies, Inc. (NYSE: ARLO), the #1 network connected camera brand (1), today reported financial results for the second quarter ended June 30, 2019.

Second Quarter 2019 Financial Highlights

  • Revenue of $83.6 million
  • GAAP gross margin of 11.5%; non-GAAP gross margin of 12.5%.
  • GAAP net loss per diluted share of $0.45, non-GAAP net loss per diluted share of $0.36.

“In the second quarter, Arlo again delivered a solid quarter through strong execution with a focus on costs, while continuing our innovation. Bringing our channel inventory in line with historical norms allowed us to continue our progress on the top line, achieving 44% sequential growth. Aided by our first full quarter of Ultra in the market, we maintained our leading market share position and performed well against our guidance metrics,” said Matthew McRae, Chief Executive Officer of Arlo Technologies. “We continue to exhibit the innovation Arlo is known for and will be adding a new camera introduction to the doorbell that will hit the market in the coming quarters. I am excited about the trajectory Arlo is on and look forward to accelerating growth in the back half of the year.”

Business Highlights

  • Service revenue of $11.2 million for Q2’19, for growth of 23.3% year over year
  • 83.3% year over year paid subscriber growth in Q2
  • 54.1% year over year cumulative registered user growth in Q2
  • Ultra named an Editor’s Choice by PC Magazine.
  • Announced that HomeKit, Apple’s smart home platform, is now supported on Arlo Pro and Arlo Pro 2 Security Camera Systems, allowing unique functionality through the Apple Home app and Siri voice commands.
  • Launched direct-to-consumer sales on Arlo.com, enabling a unique platform to engage with our customers, gain new insights into their preferences and drive greater lifetime value.
  • Announcing a new camera with 2K resolution and will include the same great wire-free design, range and battery performance customers enjoy with all of our cameras.

_________________________

(1) The NPD Group, Inc., U.S. Retail Tracking Service, Security & Monitoring, Camera Technology: Decentralized IP Camera and Centralized IP Camera, based on Dollars, Jan 2018-Dec 2018.

Third Quarter 2019 Business Outlook (1)

  • Revenue of $95 million to $105 million
  • GAAP gross margin between 8.1% and 11.1%, and non-GAAP gross margin between 9.0% and 12.0%
  • GAAP net loss per diluted share of ($0.53) to ($0.47), and non-GAAP net loss per diluted share of ($0.43) to ($0.37)

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

 

Three Months Ending September 29, 2019

 

Gross

Margin Rate

 

Net Loss

per Diluted Share

 

Tax

Expense

 

 

 

 

 

(in thousands)

GAAP

8.1% - 11.1%

 

($0.53) - ($0.47)

 

$300

Estimated adjustments for (1):

 

 

 

 

 

Separation expense

__

 

$0.01

 

__

Stock-based compensation expense

0.5%

 

$0.08

 

__

Amortization of intangibles

0.4%

 

$0.01

 

__

Tax effects of non-GAAP adjustments

__

 

__

 

__

Non-GAAP

9.0% - 12.0%

 

($0.43) - ($0.37)

 

$300

_________________________

(1) 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: restructuring and other charges; 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 2019 results and discuss management’s expectations for the third quarter of 2019 today, Tuesday, August 6, 2019 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 9492805. A live webcast of the conference call will be available on Arlo’s Investor Relations website at https://investor.arlo.com. A replay of the call will be available via the web at https://investor.arlo.com.

About Arlo Technologies, Inc.

Arlo (NYSE: ARLO) is the award-winning, industry leader that is transforming the way people experience the connected lifestyle. Arlo’s deep expertise in product design, wireless connectivity, cloud infrastructure and cutting-edge AI capabilities focuses on delivering a seamless, smart home experience for Arlo users that is easy to setup and interact with every day. Arlo’s cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. To date, Arlo has launched several categories of award-winning smart connected devices, including wire-free smart Wi-Fi and LTE-enabled cameras, advanced baby monitors and smart security lights.

© 2019 Arlo Technologies, Inc., Arlo and the Arlo logo are trademarks and/or registered trademarks of Arlo Technologies, Inc. and/or certain of its affiliates in the United States and/or other countries. Other brand and product names are for identification purposes only and may be trademarks or registered trademarks of their respective holder(s). The information contained herein is subject to change without notice. Arlo shall not be liable for technical or editorial errors or omissions contained herein. All rights reserved.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent Arlo Technologies, Inc.’s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding: Arlo’s future operating performance and financial condition, expected revenue, GAAP and non-GAAP gross margins, operating margins, and tax expense; expectations regarding market expansion and future growth; and plans to invest in product innovation. 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 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; and the actions and financial health of the Company's customers. 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 31, 2019, filed with the Securities and Exchange Commission on May 3, 2019. Given these circumstances, you should not place undue reliance on these forward-looking statements. Arlo undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Information:

To supplement our unaudited selected financial data presented on a basis consistent with 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 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, 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.

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 30,
2019

 

December 31,
2018

 

(in thousands)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

 

93,050

 

 

$

 

151,290

 

Short-term investments

 

44,877

 

 

 

49,737

 

Accounts receivable, net

 

79,707

 

 

 

166,045

 

Inventories

 

97,222

 

 

 

124,791

 

Prepaid expenses and other current assets

 

11,459

 

 

 

23,611

 

Total current assets

 

326,315

 

 

 

515,474

 

Property and equipment, net

 

27,964

 

 

 

49,428

 

Operating lease right-of-use assets, net

 

32,654

 

 

 

Intangibles, net

 

2,060

 

 

 

2,823

 

Goodwill

 

15,638

 

 

 

15,638

 

Restricted cash

 

4,134

 

 

 

4,134

 

Other non-current assets

 

6,697

 

 

 

8,449

 

Total assets

$

 

415,462

 

 

$

 

595,946

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

 

22,312

 

 

$

 

82,542

 

Deferred revenue

 

26,854

 

 

 

26,678

 

Accrued liabilities

 

110,040

 

 

 

172,036

 

Income tax payable

 

792

 

 

 

734

 

Total current liabilities

 

159,998

 

 

 

281,990

 

Non-current deferred revenue

 

20,610

 

 

 

23,313

 

Non-current operating lease liabilities

 

31,592

 

 

 

Non-current financing lease obligation

 

 

 

19,978

 

Non-current income taxes payable

 

22

 

 

 

22

 

Other non-current liabilities

 

10

 

 

 

1,141

 

Total liabilities

 

212,232

 

 

 

326,444

 

Stockholders’ Equity:

 

 

 

Common stock

 

75

 

 

 

74

 

Additional paid-in capital

 

323,648

 

 

 

315,277

 

Accumulated other comprehensive income

 

51

 

 

 

Accumulated deficit

 

(120,544

)

 

 

(45,849

)

Total stockholders’ equity

 

203,230

 

 

 

269,502

 

Total liabilities and stockholders’ equity

$

 

415,462

 

 

$

 

595,946

 

ARLO TECHNOLOGIES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

 

Six Months Ended

 

June 30,
2019

 

March 31,
2019

 

July 1,

2018 (1)

 

June 30,
2019

 

July 1,

2018 (1)

 

(in thousands, except percentage and per share data)

 

Revenue:

 

 

 

 

 

 

 

 

 

Products

$

72,445

 

 

$

46,608

 

 

$

101,900

 

 

$

119,053

 

 

$

194,331

 

Services

11,153

 

 

11,272

 

 

9,048

 

 

22,425

 

 

17,255

 

Total revenue

83,598

 

 

57,880

 

 

110,948

 

 

141,478

 

 

211,586

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

Products

67,839

 

 

50,284

 

 

77,211

 

 

118,123

 

 

145,054

 

Services

6,109

 

 

5,651

 

 

5,443

 

 

11,760

 

 

9,185

 

Total cost of revenue

73,948

 

 

55,935

 

 

82,654

 

 

129,883

 

 

154,239

 

Gross profit

9,650

 

 

1,945

 

 

28,294

 

 

11,595

 

 

57,347

 

Gross margin

11.5

%

 

3.4

%

 

25.5

%

 

8.2

%

 

27.1

%

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

17,594

 

 

18,161

 

 

13,804

 

 

35,755

 

 

25,829

 

Sales and marketing

14,511

 

 

14,221

 

 

13,068

 

 

28,732

 

 

24,280

 

General and administrative

10,914

 

 

10,536

 

 

6,318

 

 

21,450

 

 

11,196

 

Separation expense

717

 

 

906

 

 

11,269

 

 

1,623

 

 

17,826

 

Total operating expenses

43,736

 

 

43,824

 

 

44,459

 

 

87,560

 

 

79,131

 

Loss from operations

(34,086

)

 

(41,879

)

 

(16,165

)

 

(75,965

)

 

(21,784

)

Operating margin

(40.8

)%

 

(72.4

)%

 

(14.6

)%

 

(53.7

)%

 

(10.3

)%

Interest income

712

 

 

862

 

 

 

 

1,574

 

 

 

Other income (expense), net

31

 

 

(47

)

 

(1,369

)

 

(16

)

 

(794

)

Loss before income taxes

(33,343

)

 

(41,064

)

 

(17,534

)

 

(74,407

)

 

(22,578

)

Provision for income taxes

349

 

 

220

 

 

288

 

 

569

 

 

607

 

Net loss

$

(33,692

)

 

$

(41,284

)

 

$

(17,822

)

 

$

(74,976

)

 

$

(23,185

)

Net loss per share:

 

 

 

 

 

 

 

 

 

Basic

$

(0.45

)

 

$

(0.55

)

 

$

(0.29

)

 

$

(1.01

)

 

$

(0.37

)

Diluted

$

(0.45

)

 

$

(0.55

)

 

$

(0.29

)

 

$

(1.01

)

 

$

(0.37

)

Weighted average shares used to compute net loss per share:

 

 

 

 

 

 

 

 

 

Basic

74,729

 

 

74,409

 

 

62,500

 

 

74,569

 

 

62,500

 

Diluted

74,729

 

 

74,409

 

 

62,500

 

 

74,569

 

 

62,500

 

 

________________________

(1) The three and six months ended July 1, 2018 were based on carve-out financials whereas financial periods after July 1, 2018 were based on standalone financials. Further detail regarding carve-out financials was contained in our SEC filings, including our previously filed Form 10-K, Form S-1 and related public offering prospectus, standalone financials represents our actual results for the period as a standalone public company.

ARLO TECHNOLOGIES, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Six Months Ended

 

June 30,
2019

 

July 1,
2018

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net loss

$

(74,976

)

 

$

(23,185

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

7,087

 

 

1,956

 

Premium amortization / discount accretion on investments, net

(274

)

 

 

Stock-based compensation

10,042

 

 

1,899

 

Deferred income taxes

74

 

 

 

Changes in assets and liabilities:

 

 

 

Accounts receivable, net

86,338

 

 

47,395

 

Inventories

27,569

 

 

(40,620

)

Prepaid expenses and other assets

1,784

 

 

(4,558

)

Accounts payable

(59,865

)

 

4,385

 

Deferred revenue

(2,527

)

 

4,553

 

Accrued and other liabilities

(49,913

)

 

5,437

 

Net cash used in operating activities

(54,661

)

 

(2,738

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(7,116

)

 

(7,534

)

Purchases of short-term investments

(24,793

)

 

 

Maturities of short-term investments

30,000

 

 

 

Net cash used in investing activities

(1,909

)

 

(7,534

)

Cash flows from financing activities:

 

 

 

Proceeds related to employee benefit plans

12

 

 

 

Restricted stock unit withholdings

(1,682

)

 

 

Net investment from parent

 

 

10,297

 

Net cash provided by (used in) financing activities

(1,670

)

 

10,297

 

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

(58,240

)

 

25

 

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

155,424

 

 

108

 

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

$

97,184

 

 

$

133

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

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

$

(2,753

)

 

$

2,166

 

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 30,
2019

 

March 31,
2019

 

July 1,
2018

 

June 30,
2019

 

July 1,
2018

 

(in thousands, except percentage data)

GAAP gross profit

$

9,650

 

 

$

1,945

 

 

$

28,294

 

 

$

11,595

 

 

$

57,347

 

GAAP gross margin

11.5

%

 

3.4

%

 

25.5

%

 

8.2

%

 

27.1

%

Stock-based compensation expense

450

 

 

369

 

 

347

 

 

819

 

 

683

 

Amortization of intangibles

382

 

 

381

 

 

381

 

 

763

 

 

763

 

Non-GAAP gross profit

$

10,482

 

 

$

2,695

 

 

$

29,022

 

 

$

13,177

 

 

$

58,793

 

Non-GAAP gross margin

12.5

%

 

4.7

%

 

26.2

%

 

9.3

%

 

27.8

%

 

 

 

 

 

 

 

 

 

 

GAAP research and development

$

17,594

 

 

$

18,161

 

 

$

13,804

 

 

$

35,755

 

 

$

25,829

 

Stock-based compensation expense

(1,635

)

 

(1,297

)

 

(977

)

 

(2,932

)

 

(1,710

)

Non-GAAP research and development

$

15,959

 

 

$

16,864

 

 

$

12,827

 

 

$

32,823

 

 

$

24,119

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing

$

14,511

 

 

$

14,221

 

 

$

13,068

 

 

$

28,732

 

 

$

24,280

 

Stock-based compensation expense

(991

)

 

(940

)

 

(782

)

 

(1,931

)

 

(1,454

)

Non-GAAP sales and marketing

$

13,520

 

 

$

13,281

 

 

$

12,286

 

 

$

26,801

 

 

$

22,826

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative

$

10,914

 

 

$

10,536

 

 

$

6,318

 

 

$

21,450

 

 

$

11,196

 

Stock-based compensation expense

(2,313

)

 

(2,047

)

 

(1,146

)

 

(4,360

)

 

(2,100

)

Restructuring and other charges

 

 

 

 

(74

)

 

 

 

(74

)

Non-GAAP general and administrative

$

8,601

 

 

$

8,489

 

 

$

5,098

 

 

$

17,090

 

 

$

9,022

 

 

 

 

 

 

 

 

 

 

 

GAAP total operating expenses

$

43,736

 

 

$

43,824

 

 

$

44,459

 

 

$

87,560

 

 

$

79,131

 

Separation expense

(717

)

 

(906

)

 

(11,269

)

 

(1,623

)

 

(17,826

)

Stock-based compensation expense

(4,939

)

 

(4,284

)

 

(2,905

)

 

(9,223

)

 

(5,264

)

Restructuring and other charges

 

 

 

 

(74

)

 

 

 

(74

)

Activist shareholder response costs

(237

)

 

 

 

 

 

(237

)

 

 

Non-GAAP total operating expenses

$

37,843

 

 

$

38,634

 

 

$

30,211

 

 

$

76,477

 

 

$

55,967

 

ARLO TECHNOLOGIES, INC.

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

 
STATEMENT OF OPERATIONS DATA (CONTINUED):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,
2019

 

March 31,
2019

 

July 1,
2018

 

June 30,
2019

 

July 1,
2018

 

(in thousands, except percentage and per share data)

 

GAAP operating loss

$

(34,086

)

 

$

(41,879

)

 

$

(16,165

)

 

$

(75,965

)

 

$

(21,784

)

GAAP operating margin

(40.8

)%

 

(72.4

)%

 

(14.6

)%

 

(53.7

)%

 

(10.3

)%

Separation expense

717

 

 

906

 

 

11,269

 

 

1,623

 

 

17,826

 

Stock-based compensation expense

5,389

 

 

4,653

 

 

3,252

 

 

10,042

 

 

5,947

 

Amortization of intangibles

382

 

 

381

 

 

381

 

 

763

 

 

763

 

Restructuring and other charges

 

 

 

 

74

 

 

 

 

74

 

Activist shareholder response costs

237

 

 

 

 

 

 

237

 

 

 

Non-GAAP operating income (loss)

$

(27,361

)

 

$

(35,939

)

 

$

(1,189

)

 

$

(63,300

)

 

$

2,826

 

Non-GAAP operating margin

(32.7

)%

 

(62.1

)%

 

(1.1

)%

 

(44.7

)%

 

1.3

%

 

 

 

 

 

 

 

 

 

 

GAAP provision for income taxes

$

349

 

 

$

220

 

 

$

288

 

 

$

569

 

 

$

607

 

GAAP income tax rate

(1.0

)%

 

(0.5

)%

 

(1.6

)%

 

(0.8

)%

 

(2.7

)%

Tax effects

142

 

 

 

 

 

 

142

 

 

 

Non-GAAP provision for income taxes

$

207

 

 

$

220

 

 

$

288

 

 

$

427

 

 

$

607

 

Non-GAAP income tax rate

(0.8

)%

 

(0.6

)%

 

(11.3

)%

 

(0.7

)%

 

29.9

%

 

 

 

 

 

 

 

 

 

 

GAAP net loss

$

(33,692

)

 

$

(41,284

)

 

$

(17,822

)

 

$

(74,976

)

 

$

(23,185

)

Separation expense

717

 

 

906

 

 

11,269

 

 

1,623

 

 

17,826

 

Stock-based compensation expense

5,389

 

 

4,653

 

 

3,252

 

 

10,042

 

 

5,947

 

Amortization of intangibles

382

 

 

381

 

 

381

 

 

763

 

 

763

 

Restructuring and other charges

 

 

 

 

74

 

 

 

 

74

 

Activist shareholder response costs

237

 

 

 

 

 

 

237

 

 

 

Tax effects

142

 

 

 

 

 

 

142

 

 

 

Non-GAAP net income (loss)

$

(26,825

)

 

$

(35,344

)

 

$

(2,846

)

 

$

(62,169

)

 

$

1,425

 

 

ARLO TECHNOLOGIES, INC.

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

 
STATEMENT OF OPERATIONS DATA (CONTINUED):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,
2019

 

March 31,
2019

 

July 1,
2018

 

June 30,
2019

 

July 1,
2018

 

(in thousands, except percentage and per share data)

NET INCOME (LOSS) PER DILUTED SHARE:

 

 

 

 

 

 

GAAP net loss per diluted share

$

(0.45

)

 

$

(0.55

)

 

$

(0.29

)

 

$

(1.01

)

 

$

(0.37

)

Separation expense

0.01

 

 

0.01

 

 

0.18

 

 

0.02

 

 

0.28

 

Stock-based compensation expense

0.07

 

 

0.06

 

 

0.05

 

 

0.15

 

 

0.10

 

Amortization of intangibles

0.01

 

 

0.01

 

 

0.01

 

 

0.01

 

 

0.01

 

Restructuring and other charges

 

 

 

 

0.00

 

 

 

 

0.00

 

Activist shareholder response costs

0.00

 

 

 

 

 

 

0.00

 

 

 

Tax effects

0.00

 

 

 

 

 

 

0.00

 

 

 

Non-GAAP net income (loss) per diluted share

$

(0.36

)

 

$

(0.47

)

 

$

(0.05

)

 

$

(0.83

)

 

$

0.02

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing GAAP net loss per diluted share

74,729

 

 

74,409

 

 

62,500

 

 

74,569

 

 

62,500

 

Shares used in computing non-GAAP net income (loss) per diluted share

74,729

 

 

74,409

 

 

62,500

 

 

74,569

 

 

62,500

 

ARLO TECHNOLOGIES, INC.

 

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

September 30,
2018

 

July 1,
2018

 

(in thousands, except headcount and per share data)

Cash, cash equivalents and short-term investments

$

137,927

 

 

$

180,374

 

 

$

201,027

 

 

$

187,846

 

 

$

133

 

Cash, cash equivalents and short-term investments per diluted share

$

1.85

 

 

$

2.42

 

 

$

2.71

 

 

$

2.70

 

 

$

0.00

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

$

79,707

 

 

$

71,566

 

 

$

166,045

 

 

$

117,119

 

 

$

111,113

 

Days sales outstanding

87

 

111

 

125

 

81

 

91

 

 

 

 

 

 

 

 

 

 

Inventories

$

97,222

 

 

$

131,227

 

 

$

124,791

 

 

$

132,479

 

 

$

123,195

 

Ending inventory turns

2.8

 

1.5

 

3.6

 

2.9

 

2.5

 

 

 

 

 

 

 

 

 

 

Weeks of channel inventory:

 

 

 

 

 

 

 

 

 

U.S. retail channel

10.1

 

14.5

 

8.1

 

13.5

 

9.5

U.S. distribution channel

8.9

 

8.9

 

10.9

 

9.1

 

3.9

EMEA distribution channel

2.7

 

4.4

 

6.7

 

4.4

 

3.6

APAC distribution channel

5.1

 

6.7

 

6.0

 

9.2

 

17.4

 

 

 

 

 

 

 

 

 

 

Deferred revenue (current and non-current)

$

47,464

 

 

$

47,737

 

 

$

49,991

 

 

$

45,906

 

 

$

42,389

 

 

 

 

 

 

 

 

 

 

 

Cumulative registered users

3,397

 

 

3,126

 

 

2,850

 

 

2,498

 

 

2,204

 

Paid subscribers

187

 

 

162

 

*

144

 

 

125

 

 

102

 

 

 

 

 

 

 

 

 

 

 

Headcount

402

 

 

401

 

 

386

 

 

344

 

 

153

 

Non-GAAP diluted shares

74,729

 

 

74,409

 

 

74,247

 

 

69,600

 

 

62,500

 

_________________________

* We recently factored in an adjustment to our Q1’19 paid subscriber number and have subsequently revised the Q1’19 total to 162,000.

REVENUE BY GEOGRAPHY

 

Three Months Ended

 

Six Months Ended

 

June 30,
2019

 

March 31,
2019

 

July 1,
2018

 

June 30,
2019

 

July 1,
2018

 

(in thousands, except percentage data)

Americas

$

64,564

 

77

%

 

$

44,366

 

77

%

 

$

86,681

 

79

%

 

$

108,930

 

77

%

 

$

161,404

 

77

%

EMEA

15,066

 

18

%

 

9,302

 

16

%

 

19,390

 

17

%

 

24,368

 

17

%

 

38,656

 

18

%

APAC

3,968

 

5

%

 

4,212

 

7

%

 

4,877

 

4

%

 

8,180

 

6

%

 

11,526

 

5

%

Total

$

83,598

 

100

%

 

$

57,880

 

100

%

 

$

110,948

 

100

%

 

$

141,478

 

100

%

 

$

211,586

 

100

%

 

Contacts

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

Contacts

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