What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-02-26 compared with 2020-02-28 · 86 added, 62 removed, 218 unchanged (40% of the section changed)

Arlo Technologies, Inc.

(“we”, “Arlo” or the “Company”) combines an intelligent cloud infrastructure and mobile app with a variety of smart connected devices that transform the way people experience the connected lifestyle.

(“we”, “Arlo” or the “Company”) combines an intelligent cloud infrastructure and mobile app with a variety of smart connected devices 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.

Our 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, we have launched several categories of award-winning smart connected devices, including wire-free smart Wi-Fi and LTE-enabled cameras, advanced baby monitors, smart security lights, and an audio doorbell that works in conjunction with Arlo Cameras.

To date, we have launched several categories of award-winning smart connected devices, including wired and wire-free smart Wi-Fi and LTE-enabled cameras, audio and video doorbells, and floodlight cameras.

In addition, Arlo’s broad compatibility allows the platform to seamlessly integrate with third-party internet-of-things (“IoT”) products and protocols, such as Amazon Alexa, Apple HomeKit, Apple TV, Google Assistant, IFTTT, Stringify and Samsung SmartThings.

Since the launch of our first product in December 2014, we have shipped over 19.2 million smart connected devices, and, as of December 31, 2020, our smart platform had approximately 5.0 million cumulative registered accounts across more than 100 countries around the world.

We plan to continue to introduce new smart connected devices to the Arlo platform both in cameras and new categories such as our recently introduced video doorbell, increase the number of registered accounts on our platform, keep them highly engaged through our mobile app and generate incremental recurring revenue by offering them paid subscription services.

We plan to continue to introduce new smart connected devices to the Arlo platform both in cameras and new categories, increase the number of registered accounts on our platform, keep them highly engaged through our mobile app and generate incremental recurring revenue by offering them paid subscription services.

On February 6, 2018, NETGEAR, Inc.

17 unchanged sentences

We believe the small business, government and direct home monitoring channels provide growth areas for us in addition to our retail and e-commerce presence.

We also believe we are well-positioned to extend our current reach to the broader connected lifestyle market both within and beyond the home as we continue to launch new products and services within our connected lifestyle platform.

In early 2020, we launched Arlo SmartCloud a Software as a Service (“SaaS”) solution to deliver scalable security cloud services for business.

With Arlo SmartCloud, we are extending our platform to partners to help innovate and deploy new opportunities beyond our own camera ecosystem.

We believe we are well-positioned to extend our current reach to the broader connected lifestyle market both within and beyond the home as we continue to launch new products and services within our connected lifestyle platform.

Smart Connected Devices

Arlo Security Camera , released in the fourth quarter of 2014, is the world’s first commercially available 100% battery-operated Wi-Fi security camera with 720p HD video quality, IP65-rated weather resistance and night vision.

The combination of our battery-operated wireless technology and compact weather-resistant design provides users with the ability to easily set up their cameras anywhere inside or outside of the house, without requiring a power outlet.

Our patented low-power battery management technology allows Arlo to operate for up to six months of average use without having to change batteries.

Arlo also features an on-board passive infrared (“PIR”) motion sensor, which when activated

automatically records a video of the motion event and notifies the user with an instant email or push notification directly to their mobile device.

Arlo Q and Arlo Q Plus , released in the fourth quarter of 2015, bring Arlo’s performance and design to an indoor wired solution that allows users to easily monitor their surroundings with 1080p HD video quality.

With two-way audio communication, users can not only watch but also interact with their children, pets or other guests in their home or business.

With two-way audio communication, users cannot only watch but also interact with their children, pets or other guests in their home or business.

Arlo Q and Arlo Q Plus also feature optional 24/7 recording on a subscription basis.

Arlo Q Plus includes the additional functionality of being powered-over-ethernet, which is common for business environments.

Arlo Pro , released in the fourth quarter of 2016, is our second generation battery-operated, IP65-rated weather-resistant Wi-Fi camera.

Arlo Pro maintains the features and flexibility of our battery-operated, compact wire-free design while adding key new features and significant camera upgrades.

With two-way audio, users can hear what is going on near their camera and talk to anyone near the camera through the Arlo mobile app.

Arlo Pro features the convenience of swappable, rechargeable batteries, which require less than four hours of charging time.

Arlo Pro also features upgrades to day and night video performance, PIR motion detection and our proprietary battery-management technology, providing users with improved battery performance.

In addition, Arlo Pro includes a 100+ decibel siren on the base station that can be triggered by motion or sound detection.

Arlo Go , released in the first quarter of 2017, is the world’s first commercially available LTE-enabled wire-free camera and provides untethered mobile security with support by major networks in key markets around the world, including AT&T and Verizon in the United States.

3 unchanged sentences

Parents can also easily move Arlo Baby, powered by its rechargeable batteries or by an electrical outlet, to different rooms.

Arlo Pro 2 , released in the fourth quarter of 2017, is the battery-operated, IP65-rated weather-resistant Wi-Fi cameras.

With 1080p full HD video quality and advancements in sound and motion detection, including a three-second look-back video capture and continuous video recording capabilities when plugged into a power outlet.

Arlo Pro 2 includes a 100+ decibel siren on the base station that can be triggered remotely or by motion or sound detection, as well as two-way audio, night vision and optional local backup storage to any compatible USB drive.

Arlo Audio Doorbell, released in the third quarter of 2018 and designed with flexibility and DIY simplicity in mind, are engineered to work as a standalone smart audio doorbell solution or to pair with any Arlo camera or Arlo Security Light for a more complete view of the entryway.

Using the Arlo app, users can access their Arlo Audio Doorbell to interact with visitors from their smartphone or tablet, and if paired with an Arlo camera, users can also use an Arlo Smart subscription service plan to intelligently detect people and call e911 emergency services closest to the camera’s location, saving valuable time.

The Arlo Audio Doorbell can also be programmed to automatically trigger Arlo Security Lights, Arlo cameras or other connected devices through our cross-platform integration allowing users to fully customize visitor response.

Arlo Chime, released in the third quarter of 2018 and designed to plug into any standard wall outlet and pairs with the Arlo Audio Doorbell to play a variety of ringtones or act as a siren, and even contains a silent mode for those times when users don’t want to be bothered.

2 unchanged sentences

Arlo Ultra, released in the first quarter of 2019 and designed with advanced 4K high dynamic range ("HDR") video quality with color night vision, wire-free setup, a 180-degree diagonal field-of-view, an integrated spotlight and crystal-clear two-way audio with advanced noise cancellations, Ultra delivers ultimate peace of mind for anyone looking to monitor their home or business.

Users will experience enhanced detail and clarity and are able to zoom in on video clips to uncover details such as license plate and clothing.

Users will experience enhanced detail and clarity and are able to zoom in on video clips to

uncover details such as license plate and clothing.

Ultra delivers one of the widest viewing angles in the wire-free security camera industry.

8 unchanged sentences

It also offers features such as HD resolution image quality along with clear, two-way audio for users to simultaneously see and speak to visitors.

Unlike conventional doorbell cameras, the Arlo Video Doorbell delivers direct-to-mobile video calls and personalized alerts when packages, people, vehicles, or animals are detected, allowing for users to quickly reply or take action provided they are an Arlo SmartHub subscriber or in a trial.

The Arlo Video Doorbell connects to an existing mechanical or digital chime for simple installation and continuous power.

Arlo Video Doorbell includes three months of Arlo Smart.

Arlo Video Doorbell includes a three-month trial period of Arlo Smart.

Arlo Floodlight Camera, released in the first quarter of 2020 and is the first wire-free variant on the market.

The floodlight camera brings powerful LEDs, an integrated 2K HDR camera, 160-degree field of view, two-way audio, custom lighting configurations and a built-in siren to any home or small business.

The floodlight camera can automatically measure the amount of surrounding light to allow for true customization for when the floodlight automatically turns on.

The floodlight camera also offers three different light patterns – constant, flashing, and pulsating – which users can control manually on-demand or via automation rules.

Arlo Floodlight Camera includes a three-month trial period of Arlo Smart.

Arlo Essential Spotlight, released in the second quarter of 2020 and designed with an industry-leading, 180-degree viewing angle with a square, 1:1 aspect ratio that ensures users can see packages on the ground or visitors from head-to-toe on their mobile devices.

Arlo Essential Spotlight features HD video resolution combined with direct-to-mobile video calls, clear, two-way audio, an integrated spotlight with color night vision, built in siren and personalized alerts that allow users to quickly reply to guests or take action.

Able to connect directly to WiFi, the latest solution can be powered by its rechargeable battery or be hardwired for continuous charging.

Arlo Essential Spotlight includes a three-month trial period of Arlo Smart.

Arlo Ultra 2, released in the second quarter of 2020 and designed to deliver an enhanced user experience with improved range, building on advanced features such as 4K video with HDR, an ultra-wide, 180-degree field of view, auto zoom and tracking on moving object with clarity and detail, color night vision allowing you to see video in color rather than traditional black and white, built-in siren that automatically triggered by motion or audio, or manually triggered via the Arlo App and more.

Arlo Ultra 2 works with Amazon Alexa, Google Assistant, Apple Homekit, and IFTTT for easy interaction, automation and control.

Arlo Ultra 2 includes a three-month trial period of Arlo Smart.

Arlo Essential XL Spotlight , released in the third quarter of 2020 and which features an integrated, wire-free, extended-life battery that works for up to one year on one charge, an integrated spotlight with color night vision, HD video, two-way audio, motion detection alerts and a built-in siren.

A direct to a WiFi connection enables the Arlo Essential XL Spotlight camera to function as a stand-alone home security solution without the need for a separate Arlo SmartHub or Base Station.

Arlo Essential XL Spotlight includes a three-month trial period of Arlo Smart.

Arlo Essential Wire-Free Video Doorbell, released in the third quarter of 2020, features an easy-to-install, wire-free, battery-powered design.

Arlo’s latest front-entry solution – which joins a robust ecosystem of home security products and services – captures what conventional video doorbells can’t.

An industry-leading, 180-degree viewing angle with a square, 1:1 aspect ratio ensures users can see packages on the ground or visitors from head-to-toe on their mobile devices.

HD video resolution combined with direct-to-mobile video calls, clear, two-way audio and personalized alerts, allow users to quickly reply to guests or take action.

Able to connect directly to WiFi, the latest solution can be powered by its rechargeable battery or be hardwired for continuous charging.

Arlo Essential Wire-Free Video Doorbell includes a three-month trial period of Arlo Smart.

Arlo Pro 4 Wire-Free Spotlight, released in the fourth quarter of 2020 and designed with weather resistance, wide 160-degree field of view, 2K video resolution with HDR, and six-month battery life.

Pro 4 also includes two-way audio, built-in siren, and integrated spotlight.

The updated Pro 4 has the ability to connect directly to home Wi-Fi networks without the need for a dedicated Arlo SmartHub or Base Station, which allows the camera to work as a standalone system for easier installation and setup.

Arlo Pro 4 Wire-Free Spotlight camera includes a three-month trial period of Arlo Smart.

Arlo Accessories

9 unchanged sentences

Our proprietary AI-based capabilities generate relevant and actionable real-time notifications, which enable users to live stream video or contact emergency services through the app notifications when Arlo devices detect motion or sound.

The Arlo app also enables users to view their library of video clips and share them via text, email or social networks, and varies depending on the types of service plans that the user has.

The Arlo app also

enables users to view their library of video clips and share them via text, email or social networks, and varies depending on the types of service plans that the user has.

The app has four main screens:

4 unchanged sentences

• The Settings screen provides access to additional device or account level information and features, including customization of Arlo Smart notifications and detection capabilities.

Our prepaid service, included with the sale of some of our cameras, provides users with rolling seven-day cloud video storage, the ability to connect up to five cameras and 90 days of customer support.

Launched in 2018, Arlo Smart is a paid subscription service that adds powerful AI capabilities to our cameras that enhance the user experience.

1 unchanged sentence

Through real-time computer vision algorithms, Arlo Smart provides users a more personalized experience, deeper insights into detected activity and streamlined access to take responsive actions in urgent situations, such as contacting local emergency services.

Arlo’s paid services subscriber base has grown from over 78,000 subscribers as of December 31, 2017 to about 230,000 subscribers as of December 31, 2019 .

A three-month free trial period of Arlo Smart is provided with various Arlo camera and doorbell products.

Our paid services subscriber base has grown from over 144,000 paid accounts as of December 31, 2018 to about 435,000 as of December 31, 2020.

In addition, some of our older camera products come with a prepaid service that provides users with rolling seven-day cloud video storage, the ability to connect up to five cameras and 90 days of customer support.

In January 2020, we launched Arlo SmartCloud, a SaaS solution to deliver scalable security cloud services for business.

Its comprehensive offering includes computer vision, multi-object detection, audio analysis, security services, scaled storage and numerous ecosystem integrations.

Arlo SmartCloud is a fully managed robust global platform of capabilities built for security, scalability, and reliability that can be deployed as part of advanced subscription services for hardware companies, automotive companies, service providers, insurance companies, home builders, smart communities, smart cities, traditional security companies, and other related verticals.

Our services also include certain development services provided to Verisure S.à.r.l.

under a Non-recurring Engineering arrangement as part of the disposal of our commercial operations in Europe in the fourth quarter of 2019.

Refer to the " Agreements with Verisure " section below for details.

Sales Channels

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, broadcast channels and wireless carriers.

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, broadcast channels, wireless carriers and security solution providers.

We sell to traditional and online retailers, either directly or through wholesale distributors.

We work directly with our retail channels on market development activities, such as co-advertising, including digital and traditional media, online promotions and video demonstrations, instant rebate programs, event sponsorship and sales associate training.

Our largest retailers include Best Buy, Costco, and Amazon and their affiliates.

For the year ended December 31, 2019 , we derived 32.3% and 10.1% of our revenue from Best Buy and Costco and their respective affiliates, respectively.

Our largest retailers include Costco, Best Buy, and Amazon and their affiliates.

For the year ended December 31, 2020, we derived 20.6%, 14.6% and 12.2% of our revenue from Costco, Best Buy and Amazon and their respective affiliates, respectively.

In the third quarter of 2019, we launched our online direct to consumer store to sell our products directly to our customers.

Wholesale Distributors .

Our distribution channel supplies our products to retailers, e-commerce resellers, wireless carriers and broadcast channels.

We sell directly to our distributors, including Also Holding AG, Ingram Micro, Inc., D&H Distributing Company, Exertis (UK) Ltd., Synnex Corporation, and Verisure S.à.r.l.

We sell directly to our distributors, including Ingram Micro, Inc., D&H Distributing Company, and Synnex Corporation.

Broadcast Channels .

3 unchanged sentences

This sales channel is and will continue to be the key route-to-market for our current portable LTE-enabled camera and any future cellular-enabled connected lifestyle devices.

Security Solution Providers.

We sell our products and services to security solution providers, including Verisure S.à.r.l, from which we derived 17.3% of our revenue, and Securitas Security Services USA, Inc.

Agreements with Verisure S.à.r.l.

9 unchanged sentences

The Supply Agreement provides that, upon the terms and subject to the conditions set forth in the Supply Agreement, Verisure will become the exclusive distributor of our products in Europe for all channels, and will non-exclusively distribute our products through its direct channels globally in connection with Verisure’s security business.

During the five-year period commencing January 1, 2020, Verisure has an aggregate minimum purchase commitment of $500.0 million, which includes yearly annual commitments.

On December 30, 2019, Verisure prepaid $20.0 million for product purchases in fiscal 2020 and will prepay $40.0 million on the first anniversary of the closing of the Purchase Agreement for product purchases in fiscal 2021.

The Supply Agreement also provides for certain development services to Verisure, including development of certain custom products specified by Verisure, in exchange for an aggregate of $10.0 million, payable in installments upon meeting certain development milestones.

During the five-year period commencing January 1, 2020, Verisure has an aggregate purchase commitment of $500.0 million.

As of December 31, 2020, $47.3 million of the purchase commitment has been fulfilled.

On December 30, 2019, Verisure prepaid $20.0 million for product purchases in fiscal 2020 and on December 21, 2020, Verisure prepaid $40.0 million for product purchases in fiscal 2021 and fiscal 2022.

The Supply Agreement also provides for certain development services to Verisure under the Non-recurring Engineering ("NRE") arrangement, including development of certain custom products specified by Verisure, in exchange for an aggregate of $10.0 million, payable in installments upon meeting certain development milestones.

In the second fiscal quarter of 2020, an additional $3.5 million was added to the contract price as a result of a modification to Verisure's specification for the Outdoor Custom Camera.

As part of the Purchase Agreement, we also entered into a Transition Services Agreement with Verisure ("Verisure TSA") to assist Verisure with the transition of the Company’s European commercial operations.

These transition services primarily include IT support for 12 months, and other services for 3 to 6 months, including sales and marketing, operations and supply chain, finance, legal, and human resources.

These transition services primarily include IT support and other services, including sales and marketing, operations and supply chain, finance, legal, and human resources.

As compensation for these transition services, we will be reimbursed by Verisure based on actual direct costs plus allocation of overhead.

11 unchanged sentences

telecom service providers, such as AT&T and Comcast;

and smaller point products companies.

and smaller point product companies.

Many of our existing and potential competitors have longer operating histories, greater name recognition and substantially greater financial, technical, sales, marketing and other resources than we do.

15 unchanged sentences

Although we do not have any long-term purchase contracts, we have executed master product supply agreements with these manufacturers, which typically provide indemnification for intellectual property infringement, epidemic failure clauses, agreed-upon price concessions, division of each party’s intellectual property and product quality requirements.

Since we outsource our manufacturing, we have the flexibility and ability to adapt to market changes, product supply and component pricing while keeping our costs low.

Since we outsource our manufacturing, we have the flexibility and ability to adapt to market

changes, product supply and component pricing while keeping our costs low.

In addition to their responsibility for the manufacturing of our products, our manufacturers typically purchase all necessary parts and materials to produce finished goods.

4 unchanged sentences

We believe this model has enabled us to quickly and efficiently deliver high-quality and innovative products, while enabling us to minimize costs and manage inventory.

Our products are manufactured and packaged for retail sale by our manufacturers mostly in Vietnam and Indonesia, with minimal manufacturers in China, and shipped to our logistics hubs located in the United States, the Netherlands, Hong Kong and Australia.

Our operations team coordinates with our manufacturers to ensure that the shipment of our products from the manufacturers to these logistics hubs meets customer demand.

10 unchanged sentences

As our installed base continues to grow in new geographies, new categories and technologies, we will continue to focus on building a scalable support infrastructure that enables our users to engage with us through the channel that is most convenient and efficient for their needs.

IT Infrastructure Operations

Arlo Cloud Engineering Operations

We currently serve our users from third-party data center hosting facilities.

11 unchanged sentences

As of December 31, 2020, we had a backlog of $5.7 million, compared to $5.4 million as of December 31, 2019 and $18.9 million as of December 31, 2018.

As we typically fulfill orders received within a relatively short period after receipt (e.g., within one week for our top three customers), our revenue in any fiscal year depends primarily upon orders booked and the availability of supply of our products in that year.

As we typically fulfill orders received within a relatively short period after receipt, our revenue in any fiscal year depends primarily upon orders booked and the availability of supply of our products in that year.

In addition, most of our backlog is subject to rescheduling or cancellation with minimal penalties.

8 unchanged sentences

issued patents, 32 pending U.S.

patent applications, three patents issued by China and no pending patent applications outside of the United States relating to certain aspects of our hardware devices, accessories, software and services.

patent applications, seven international patents, including patents issued by China and and the EU, 13 pending patent applications outside of the United States.

All the patents and patent applications generally relate to certain aspects of our hardware devices, accessories, software and services.

We continually review our development efforts to assess the existence and patentability of new intellectual property.

We also pursue the registration of our domain names and trademarks and service marks in the United States and in certain locations outside the United States.

We currently have eight registered trademarks and three pending trademark applications in the United States, as well as 23 registered trademarks and 12 pending trademark applications outside of the United States.

We currently hold trademark registrations for “ARLO” in seven countries, including the United States, as well as the European Union and the World Intellectual Property Organization.

We currently have six registered trademarks and three pending trademark applications in the United States, as well as 38 registered trademarks and 10 pending trademark applications outside of the United States.

We currently hold trademark registrations for “ARLO” in nine countries, including the United States, Australia, Canada, China, and Japan, as well as the World Intellectual Property Organization.

For more information, see “ Risk Factors-Risks Related to Our Business-If we are unable to secure and protect our intellectual property rights, our ability to compete could be harmed .”

33 unchanged sentences

The following table sets forth the names, ages and positions of our executive officers as of February 19, 2021.

Matthew McRae

Chief Executive Officer and Director

Chief Financial Officer

General Counsel and Corporate Secretary

Name Age Position(s)

Matthew McRae 47 Chief Executive Officer and Director

Gordon Mattingly 50 Chief Financial Officer

Brian Busse 52 General Counsel and Corporate Secretary

Matthew McRae .

8 unchanged sentences

He previously served on the board of directors of the Leatherby Center for Entrepreneurship and Business Ethics at the Business School of Chapman University from 2012 to 2015.

Gorjanc has served as our Chief Financial Officer since August 2018.

Gorjanc served as NETGEAR’s Chief Financial Officer from January 2008 to August 2018, Chief Accounting Officer from December 2006 to January 2008 and Vice President, Finance from November 2005 to December 2006.

From September 1996 through November 2005, Ms.

Gorjanc served as Vice President, Controller, Treasurer and Assistant Secretary for Aspect Communications Corporation, a provider of workforce and customer management solutions.

From October 1988 through September 1996, Ms.

Gorjanc served as the Manager of Tax for Tandem Computers, Inc., a provider of fault-tolerant computer systems.

Prior to that, Ms.

Gorjanc served in management positions at Xidex Corporation, a manufacturer of storage devices, and spent eight years in public accounting with a number of accounting firms.

Gorjanc is a member of the board of directors and serves as the Audit Committee Chairman of Invitae Corporation, a genetic health information company.

Gorjanc also serves on the board of directors of Juniper Networks and the audit committee.

Jupiter Networks is a leader in secure AI driven networks.

Gorjanc holds a B.A.

in Accounting (with honors) from the University of Texas at El Paso and a M.S.

in Taxation from Golden Gate University.

Gordon Mattingly .

Gordon Mattingly has served as our Chief Financial Officer since June 15, 2020.

Mattingly served as our Senior Vice President, Finance from July 2018 to June 2020.

From 2003 through June 2018, Mr.

Mattingly held various financial roles with NETGEAR and its affiliates, most recently serving as Vice President, Financial Planning & Analysis from August 2011 through June 2018.

Before joining NETGEAR, Inc., Mr.

Mattingly held various European finance positions within U.S.

technology companies such as RealNetworks, Inc., International Business Machines Corporation and Tivoli Systems Inc.

Mattingly began his career in finance with the London audit firm of Mazars Group, where he specialized in audits at Lloyd’s of London and qualified as a member of the Institute of Chartered Accountants in England and Wales.

Mattingly also qualified in 2013 as a member of the Chartered Institute of Taxation.

Mattingly received a BSc in Economics and Accountancy from the University of Southampton.

Brian Busse has served as our General Counsel since July 2018.

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business