Arlo Reports Third Quarter 2023 Results

CARLSBAD, Calif.--(BUSINESS WIRE)--Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home security brand, today reported financial results for the third quarter ended October 1, 2023.

"Our third quarter results illustrate the power of our services business, which reached $200 million in annual recurring revenue, a significant milestone that grew nearly 60% year over year. This performance drove our solid free cash flow and record earnings per share, and continued Arlo's trajectory of profit expansion," said Matthew McRae, Chief Executive Officer of Arlo Technologies. "We also launched our Essential 2 product line, the largest product launch in our company's history, bringing higher performance and an improved experience to new lower price points. Arlo believes everyone has a right to feel safe and Essential 2 allows us to address a wider audience just as our industry expands into the mass market this holiday season."

Financial and Business Highlights ⁽²⁾

• Q3 total revenue of $130.0 million, an increase of 1.4% year over year.
• Record Q3 service revenue of $51.0 million, growing 44.0% year over year.
• Q3 GAAP services gross margin of 73.5% and non-GAAP services gross margin of 74.1%.
• GAAP net loss per share of $(0.01); record non-GAAP earnings per diluted share of $0.09.
• Ended the quarter with ARR ⁽³⁾ of $200.0 million, growing 59.5% year over year.
• Added 197,000 paid accounts in Q3, ending cumulative paid accounts around 2.5 million, growing 48.6% year over year.
• Successful launch of Essential 2 camera portfolio targeted at creating a lower price entry point into the Arlo ecosystem.
• Ending cash and cash equivalents and short-term investments balance of $126.0 million, up $2.4 million sequentially.

	Three Months Ended												Nine Months Ended
	October 1, 2023				July 2, 2023				October 2, 2022				October 1, 2023				October 2, 2022
	(In thousands, except percentage and per share data)
Revenue	$	130,003			$	115,076			$	128,157			$	356,083			$	371,887
GAAP Gross Margin		33.2	%			36.4	%			28.7	%			33.8	%			28.0	%
Non-GAAP Gross Margin (2)		34.0	%			37.3	%			29.7	%			34.6	%			29.0	%
GAAP Net Loss per Share	$	(0.01	)		$	(0.08	)		$	(0.16	)		$	(0.25	)		$	(0.40	)
Non-GAAP Net Income per Diluted Share (2)	$	0.09			$	0.06			$	(0.05	)		$	0.17			$	(0.03	)

_________________________

(1)		FCF is calculated as net cash provided by (used in) operating activities less capital expenditures. FCF margin is the FCF 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.

Fourth Quarter 2023 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 December 31, 2023
	Revenue		Net Income (Loss) per Diluted Share
	(In millions, except per share data)
GAAP	$129 - $139		$(0.05) - $0.01
Estimated adjustment for stock-based compensation and other expense	-		0.11
Non-GAAP	$129 - $139		$0.06 - $0.12

_________________________

(4)

Business outlook does not include estimates for any currently unknown income and expense items which, by their nature, could arise late in a quarter, including: litigation reserves, net; impairment charges; discrete tax benefits or detriments relating to tax windfalls or shortfalls from equity awards; and any additional impacts relating to the implementation of U.S. tax reform. New material income and expense items such as these could have a significant effect on our guidance and future results.

Investor Conference Call / Webcast Details

Arlo will review the third quarter 2023 results and discuss management's expectations for the fourth quarter of 2023 today, Thursday, November 9, 2023 at 5:00 p.m. ET (2:00 p.m. PT). The toll-free dial-in number for the live audio call is [phone]. The international dial-in number for the live audio call is [phone]. 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.

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; the ability of the Essential 2 product line to allow us to address a wider audience; 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;
• 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
	October 1, 2023				December 31, 2022
	(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	51,133			$	84,024
Short-term investments		74,916				29,700
Accounts receivable, net		70,313				65,960
Inventories		53,496				46,554
Prepaid expenses and other current assets		11,100				6,544
Total current assets		260,958				232,782
Property and equipment, net		5,752				7,336
Operating lease right-of-use assets, net		12,190				12,809
Goodwill		11,038				11,038
Restricted cash		4,079				4,155
Other non-current assets		3,620				4,081
Total assets	$	297,637			$	272,201
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	82,479			$	52,132
Deferred revenue		17,678				11,291
Accrued liabilities		85,999				98,855
Total current liabilities		186,156				162,278
Non-current operating lease liabilities		17,970				19,279
Other non-current liabilities		3,318				2,949
Total liabilities		207,444				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: 94,581,808 at October 1, 2023 and 88,887,139 at December 31, 2022		94				89
Additional paid-in capital		458,015				433,138
Accumulated other comprehensive income (loss)		237				(107	)
Accumulated deficit		(368,153	)			(345,425	)
Total stockholders' equity		90,193				87,695
Total liabilities and stockholders' equity	$	297,637			$	272,201

ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended												Nine Months Ended
	October 1, 2023				July 2, 2023				October 2, 2022				October 1, 2023				October 2, 2022
	(In thousands, except percentage and per share data)
Revenue:
Products	$	78,961			$	64,749			$	92,720			$	210,770			$	273,736
Services		51,042				50,327				35,437				145,313				98,151
Total revenue		130,003				115,076				128,157				356,083				371,887
Cost of revenue:
Products		73,335				60,446				79,386				197,520				233,992
Services		13,529				12,772				12,021				38,349				33,830
Total cost of revenue		86,864				73,218				91,407				235,869				267,822
Gross profit		43,139				41,858				36,750				120,214				104,065
Gross margin		33.2	%			36.4	%			28.7	%			33.8	%			28.0	%
Operating expenses:
Research and development		16,829				17,618				16,471				52,197				50,252
Sales and marketing		15,863				16,921				22,193				48,137				49,867
General and administrative		12,460				15,007				12,253				43,089				38,023
Others		263				341				273				1,236				377
Total operating expenses		45,415				49,887				51,190				144,659				138,519
Loss from operations		(2,276	)			(8,029	)			(14,440	)			(24,445	)			(34,454	)
Operating margin		(1.8	)%			(7.0	)%			(11.3	)%			(6.9	)%			(9.3	)%
Interest income, net		1,175				835				290				2,736				414
Other income, net		10				52				19				23				314
Loss before income taxes		(1,091	)			(7,142	)			(14,131	)			(21,686	)			(33,726	)
Provision for income taxes		29				221				304				1,042				745
Net loss	$	(1,120	)		$	(7,363	)		$	(14,435	)		$	(22,728	)		$	(34,471	)
Net loss per share - basic and diluted	$	(0.01	)		$	(0.08	)		$	(0.16	)		$	(0.25	)		$	(0.40	)
Weighted average shares used to compute net loss per share - basic and diluted		94,243				92,337				88,124				92,069				86,677

ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Nine Months Ended
	October 1, 2023				October 2, 2022
	(In thousands)
Cash flows from operating activities:
Net loss	$	(22,728	)		$	(34,471	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation expense		37,851				31,787
Depreciation and amortization		3,809				3,653
Allowance for credit losses and inventory reserves		1,218				(211	)
Deferred income taxes		257				259
Others		(1,224	)			39
Changes in assets and liabilities:
Accounts receivable, net		(4,262	)			(3,171	)
Inventories		(8,250	)			(34,613	)
Prepaid expenses and other assets		(4,353	)			(105	)
Accounts payable		31,049				23,229
Deferred revenue		6,202				(18,544	)
Accrued and other liabilities		(9,202	)			(2,635	)
Net cash provided by (used in) operating activities		30,367				(34,783	)
Cash flows from investing activities:
Purchases of property and equipment		(2,448	)			(815	)
Purchases of short-term investments		(110,905	)			(69,305	)
Proceeds from maturities of short-term investments		67,259				24,542
Net cash used in investing activities		(46,094	)			(45,578	)
Cash flows from financing activities:
Proceeds related to employee benefit plans		5,293				3,172
Restricted stock unit withholdings		(22,533	)			(17,766	)
Net cash used in financing activities		(17,240	)			(14,594	)
Net decrease in cash, cash equivalents and restricted cash		(32,967	)			(94,955	)
Cash, cash equivalents and restricted cash, at beginning of period		88,179				179,856
Cash, cash equivalents and restricted cash, at end of period	$	55,212			$	84,901
Non-cash investing activities:
Purchases of property and equipment included in accounts payable and accrued liabilities	$	726			$	209

ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
UNAUDITED STATEMENT OF OPERATIONS DATA:
	Three Months Ended												Nine Months Ended
	October 1, 2023				July 2, 2023				October 2, 2022				October 1, 2023				October 2, 2022
	(In thousands, except percentage data)
GAAP gross profit:
Products	$	5,626			$	4,303			$	13,334			$	13,250			$	39,744
Services		37,513				37,555				23,416				106,964				64,321
Total GAAP gross profit		43,139				41,858				36,750				120,214				104,065
GAAP gross margin:
Products		7.1	%			6.6	%			14.4	%			6.3	%			14.5	%
Services		73.5	%			74.6	%			66.1	%			73.6	%			65.5	%
Total GAAP gross margin		33.2	%			36.4	%			28.7	%			33.8	%			28.0	%
Stock-based compensation expense - Products		723				848				1,132				2,483				3,135
Stock-based compensation expense - Services		145				119				233				213				475
Amortization of development of software cost - Services		152				151				-				454				-
Non-GAAP gross profit:
Products		6,349				5,151				14,466				15,733				42,879
Services		37,810				37,825				23,649				107,631				64,796
Total Non-GAAP gross profit	$	44,159			$	42,976			$	38,115			$	123,364			$	107,675
Non-GAAP gross margin:
Products		8.0	%			8.0	%			15.6	%			7.5	%			15.7	%
Services		74.1	%			75.2	%			66.7	%			74.1	%			66.0	%
Total Non-GAAP gross margin		34.0	%			37.3	%			29.7	%			34.6	%			29.0	%
GAAP research and development	$	16,829			$	17,618			$	16,471			$	52,197			$	50,252
Stock-based compensation expense		(2,847	)			(3,311	)			(2,679	)			(10,069	)			(8,602	)
Non-GAAP research and development	$	13,982			$	14,307			$	13,792			$	42,128			$	41,650
Percentage of revenue		10.8	%			12.4	%			10.8	%			11.8	%			11.2	%
GAAP sales and marketing	$	15,863			$	16,921			$	22,193			$	48,137			$	49,867
Stock-based compensation expense		(1,224	)			(1,670	)			(1,389	)			(4,616	)			(4,559	)
Non-GAAP sales and marketing	$	14,639			$	15,251			$	20,804			$	43,521			$	45,308
Percentage of revenue		11.3	%			13.3	%			16.2	%			12.2	%			12.2	%
GAAP general and administrative	$	12,460			$	15,007			$	12,253			$	43,089			$	38,023
Stock-based compensation expense		(5,348	)			(7,025	)			(4,520	)			(20,470	)			(15,016	)
Litigation reserves, net		-				-				(5	)			-				(117	)
Non-GAAP general and administrative	$	7,112			$	7,982			$	7,728			$	22,619			$	22,890
Percentage of revenue		5.5	%			6.9	%			6.0	%			6.4	%			6.2	%

ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):
	Three Months Ended												Nine Months Ended
	October 1, 2023				July 2, 2023				October 2, 2022				October 1, 2023				October 2, 2022
	(In thousands, except percentage data)
GAAP total operating expenses	$	45,415			$	49,887			$	51,190			$	144,659			$	138,519
Stock-based compensation expense		(9,419	)			(12,006	)			(8,588	)			(35,155	)			(28,177	)
Others		(263	)			(341	)			(278	)			(1,236	)			(494	)
Non-GAAP total operating expenses	$	35,733			$	37,540			$	42,324			$	108,268			$	109,848
GAAP operating loss	$	(2,276	)		$	(8,029	)		$	(14,440	)		$	(24,445	)		$	(34,454	)
GAAP operating margin		(1.8	)%			(7.0	)%			(11.3	)%			(6.9	)%			(9.3	)%
Stock-based compensation expense		10,287				12,973				9,953				37,851				31,787
Others		415				492				278				1,690				494
Non-GAAP operating income (loss)	$	8,426			$	5,436			$	(4,209	)		$	15,096			$	(2,173	)
Non-GAAP operating margin		6.5	%			4.7	%			(3.3	)%			4.2	%			(0.6	)%
GAAP other income, net	$	10			$	52			$	19			$	23			$	314
Employee retention credit		-				-				-				-				(65	)
Non-GAAP other income, net	$	10			$	52			$	19			$	23			$	249
GAAP provision for income taxes	$	29			$	221			$	304			$	1,042			$	745
GAAP income tax rate		(2.7	)%			(3.1	)%			(2.2	)%			(4.8	)%			(2.2	)%
Non-GAAP provision for income taxes	$	29			$	221			$	304			$	1,042			$	745
Non-GAAP income tax rate		0.3	%			3.5	%			(7.8	)%			5.8	%			(49.3	)%

ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):
	Three Months Ended												Nine Months Ended
	October 1, 2023				July 2, 2023				October 2, 2022				October 1, 2023				October 2, 2022
	(In thousands, except percentage and per share data)
GAAP net loss	$	(1,120	)		$	(7,363	)		$	(14,435	)		$	(22,728	)		$	(34,471	)
Stock-based compensation expense		10,287				12,973				9,953				37,851				31,787
Others		415				492				278				1,690				429
Non-GAAP net income (loss)	$	9,582			$	6,102			$	(4,204	)		$	16,813			$	(2,255	)
GAAP net loss per share - basic and diluted	$	(0.01	)		$	(0.08	)		$	(0.16	)		$	(0.25	)		$	(0.40	)
Stock-based compensation expense		0.10				0.14				0.11				0.41				0.37
Others		-				-				-				0.01				-
Non-GAAP net income (loss) - diluted	$	0.09			$	0.06			$	(0.05	)		$	0.17			$	(0.03	)
Shares used in computing GAAP net loss - basic		94,243				92,337				88,124				92,069				86,677
Shares used in computing non-GAAP net income - diluted		102,116				99,187				88,124				99,238				86,677
Free cash flow (usage):
Net cash provided by (used in) operating activities	$	7,459			$	12,578			$	(5,402	)		$	30,367			$	(34,783	)
Less: Purchases of property and equipment		(494	)			(1,031	)			(364	)			(2,448	)			(815	)
Free cash flow (usage) (1)	$	6,965			$	11,547			$	(5,766	)		$	27,919			$	(35,598	)
Free cash flow (usage) margin (1)		5.4	%			10.0	%			(4.5	)%			7.8	%			(9.6	)%

_________________________

(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.

ARLO TECHNOLOGIES, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
	Three Months Ended
	October 1, 2023			July 2, 2023			April 2, 2023			December 31, 2022			October 2, 2022
	(In thousands, except headcount and per share data)
Cash, cash equivalents and short-term investments	$	126,049		$	123,675		$	118,673		$	113,724		$	125,272
Cash, cash equivalents and short-term investments per diluted share	$	1.23		$	1.25		$	1.27		$	1.28		$	1.42
Accounts receivable, net	$	70,313		$	57,327		$	52,837		$	65,960		$	82,707
Days sales outstanding		49			45			44			50			59
Inventories	$	53,496		$	39,429		$	39,922		$	46,554		$	73,243
Inventory turns		5.5			6.1			6.4			6.4			4.3
Weeks of channel inventory:
U.S. retail channel		10.9			9.7			14.6			11.9			13.6
U.S. distribution channel		7.4			9.3			17.6			14.1			5.5
APAC distribution channel		7.2			7.7			5.8			4.7			9.4
Deferred revenue (current and non-current)	$	17,706		$	17,702		$	15,289		$	11,503		$	12,242
Cumulative registered accounts (1)		8,193			7,860			7,510			7,220			6,930
Cumulative paid accounts (2)		2,486			2,289			2,044			1,862			1,673
Annual recurring revenue (ARR) (3)	$	199,993		$	193,633		$	182,583		$	137,764		$	125,402
Headcount		353			345			334			343			360
Non-GAAP diluted shares		102,116			99,187			93,236			88,743			88,124

_________________________

(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.

REVENUE BY GEOGRAPHY
	Three Months Ended															Nine Months Ended
	October 1, 2023					July 2, 2023					October 2, 2022					October 1, 2023					October 2, 2022
	(In thousands, except percentage data)
Americas	$	79,948	61.5	%		$	78,136	67.9	%		$	71,040	55.4	%		$	214,716	60.3	%		$	199,851	53.8	%
EMEA		42,887	33.0	%			30,958	26.9	%			52,542	41.0	%			122,317	34.4	%			157,000	42.2	%
APAC		7,168	5.5	%			5,982	5.2	%			4,575	3.6	%			19,050	5.3	%			15,036	4.0	%
Total	$	130,003	100.0	%		$	115,076	100.0	%		$	128,157	100.0	%		$	356,083	100.0	%		$	371,887	100.0	%

Contacts

Arlo Investor Relations
Tahmin Clarke
[e-mail]