What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 88 added, 120 removed, 488 unchanged (30% of the section changed)

36 unchanged sentences

shares issued and outstanding:

90,785,158 at April 2, 2023 and 88,887,139 at December 31, 2022

93,653,934 at July 2, 2023 and 88,887,139 at December 31, 2022

Additional paid-in capital 448,543 433,138

6 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

2023 April 3,

Three Months Ended Six Months Ended

(In thousands, except per share data)

14 unchanged sentences

Loss from operations ( 8,029 ) ( 11,342 ) ( 22,169 ) ( 20,014 )

Interest income (expense), net 726 ( 5 )

Interest income, net 835 129 1,561 124

Other income (expense), net 52 ( 116 ) 13 295

3 unchanged sentences

Net loss per share:

Basic $ ( 0.16 ) $ ( 0.10 )

Diluted $ ( 0.16 ) $ ( 0.10 )

Basic and diluted $ ( 0.08 ) $ ( 0.13 ) $ ( 0.24 ) $ ( 0.23 )

Weighted average shares used to compute net loss per share:

Basic 89,653 85,222

Diluted 89,653 85,222

Basic and diluted 92,337 86,868 90,984 85,966

Comprehensive loss:

5 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended

2023 April 3,

Three Months Ended Six Months Ended

(In thousands)

4 unchanged sentences

Issuance of common stock under stock-based compensation plans 4 2 7 5

Issuance of common stock under Employee Stock Purchase Plan — 1 — 1

Restricted stock unit withholdings ( 1 ) ( 1 ) ( 2 ) ( 2 )

5 unchanged sentences

Issuance of common stock under stock-based compensation plans 2,986 34 2,986 1,419

Issuance of common stock under Employee Stock Purchase Plan 1,617 1,746 1,617 1,746

Restricted stock unit withholdings ( 11,866 ) ( 6,894 ) ( 16,559 ) ( 13,553 )

13 unchanged sentences

Issuance of common stock under stock-based compensation plans 3,976 2,294 7,141 4,421

Issuance of common stock under Employee Stock Purchase Plan 460 304 460 304

Restricted stock unit withholdings ( 1,567 ) ( 903 ) ( 2,834 ) ( 1,648 )

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

2023 April 3,

Six Months Ended

(In thousands)

73 unchanged sentences

Management bases its estimates on various assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results could differ materially from those estimates and operating results for the three months ended April 2, 2023 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period.

Actual results could differ materially from those estimates and operating results for the six months ended July 2, 2023 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period.

Significant Accounting Policies and Recent Accounting Pronouncements

Our significant accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no significant changes to such policies during the three months ended April 2, 2023.

There have been no significant changes to such policies during the six months ended July 2, 2023.

Emerging Growth Company Status

4 unchanged sentences

Accounting Pronouncements Recently Adopted

There were no accounting pronouncements adopted during the three months ended April 2, 2023.

There were no accounting pronouncements adopted during the six months ended July 2, 2023.

Accounting Pronouncements Not Yet Effective

1 unchanged sentence

Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and partially unsatisfied as of April 2, 2023:

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and partially unsatisfied as of July 2, 2023:

1 year 2 years Greater than 2 years Total

4 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the three months ended April 2, 2023 and April 3, 2022, $ 41.2 million and $ 25.8 million of revenue was deferred due to unsatisfied performance obligations, primarily relating to over time service revenue, and $ 38.4 million and $ 27.5 million of revenue was recognized for the satisfaction of performance obligations over time, respectively.

For the six months ended July 2, 2023 and July 3, 2022, $ 87.6 million and $ 53.4 million of revenue was deferred due to unsatisfied performance obligations, primarily relating to over time service revenue, and $ 81.4 million and $ 70.1 million of revenue was recognized for the satisfaction of performance obligations over time, respectively.

Approximately $ 9.8 million and $ 11.9 million of this recognized revenue was included in the contract liability balance at the beginning of the periods.

1 unchanged sentence

During the five-year period that commenced on January 1, 2020, Verisure Sàrl (“Verisure”) has an aggregate purchase commitment of $ 500.0 million.

As of April 2, 2023, $ 378.9 million of the purchase commitment has been fulfilled with a backlog of $ 25.9 million.

As of July 2, 2023, $ 403.1 million of the purchase commitment has been fulfilled.

Based on the Supply Agreement with Verisure, a purchase obligation is not deemed to exist until we receive and accept Verisure’s purchase order.

As of July 2, 2023, we had a backlog of $ 38.7 million which represents performance obligations that will be recognized as revenue once fulfilled, which is expected to occur over the next six months .

Disaggregation of Revenue

1 unchanged sentence

the Americas, EMEA, and APAC, where we conduct our business.

The following table presents revenue by geography.

Three Months Ended

2023 April 3,

The following table presents revenue disaggregated by geographic regions.

Three Months Ended Six Months Ended

(In thousands)

5 unchanged sentences

Short-term investments

As of April 2, 2023 As of December 31, 2022

As of July 2, 2023 As of December 31, 2022

Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value

7 unchanged sentences

Total $ 57,327 $ 65,960

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Three Months Ended

2023 April 3,

Three Months Ended Six Months Ended

(In thousands)

16 unchanged sentences

_________________________

(1) $ 1.5 million and $ 1.7 million property and equipment, net, was included in the sublease arrangement for the San Jose office building as of April 2, 2023 and December 31, 2022, respectively.

Depreciation expense pertaining to property and equipment was $ 1.1 million and $ 1.3 million for the three months ended April 2, 2023 and April 3, 2022, respectively.

We have determined that no event occurred or circumstances changed during the three months ended April 2, 2023 that would more likely than not reduce the fair value of goodwill below the carrying amount.

No goodwill impairment was recognized in the three months ended April 2, 2023 and the goodwill balance was $ 11.0 million as of April 2, 2023 and December 31, 2022.

(1) $ 1.4 million and $ 1.7 million property and equipment, net, was included in the sublease arrangement for the San Jose office building as of July 2, 2023 and December 31, 2022, respectively.

Depreciation expense pertaining to property and equipment was $ 1.2 million and $ 2.4 million for the three and six months ended July 2, 2023, and $ 1.2 million and $ 2.5 million for the three and six months ended July 3, 2022.

We have determined that no event occurred or circumstances changed during the three and six months ended July 2, 2023 that would more likely than not reduce the fair value of goodwill below the carrying amount.

No goodwill impairment was recognized in the three and six months ended July 2, 2023 and July 3, 2022.

ARLO TECHNOLOGIES, INC.

17 unchanged sentences

Professional services 2,496 3,703

Income taxes payable 2,034 961

Warranty obligations 1,093 1,174

16 unchanged sentences

Fair Value Measurements

Fair Value Measurements - Recurring Basis

The following table summarizes assets measured at fair value on a recurring basis:

6 unchanged sentences

Treasuries (<90 days)

10,174 20,274

Available-for-sale securities:

5 unchanged sentences

Our investments in cash equivalents and available-for-sale securities are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

As of April 2, 2023 and December 31, 2022, assets and liabilities measured as Level 2 fair value were not material and there were no Level 3 fair value assets or liabilities measured on a recurring basis.

Fair Value Measurements - Nonrecurring Basis

We measure the fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

For the three months ended April 2, 2023 and April 3, 2022, we had no assets or liabilities measured on a nonrecurring basis.

As of July 2, 2023 and December 31, 2022, assets and liabilities measured as Level 2 fair value were not material and there were no Level 3 fair value assets or liabilities measured on a recurring basis.

Restructuring

1 unchanged sentence

This restructuring includes the reduction of headcount as well as the abandonment of certain lease contracts and the cancellation of contractual services arrangements with certain suppliers.

We expect the completion date to be in the third quarter of 2023 with the total estimated restructuring charges of $ 2.1 million.

As of July 2, 2023, we have substantially incurred all costs pertaining to restructuring activities, with related cash outflows extending until the fourth quarter of 2024.

The restructuring liabilities are included in accrued liabilities in our unaudited condensed consolidated balance sheets.

Restructuring activities for the three months ended April 2, 2023 are as follows:

Restructuring activities for the six months ended July 2, 2023 are as follows:

Total Severance Expense Office Exit Expense Other Exit Expense

(In thousands)

Balance at the beginning of the period $ 1,265 $ 219 $ 991 $ 55

Balance as of December 31, 2022 $ 1,265 $ 219 $ 991 $ 55

Restructuring charges 400 278 117 5

1 unchanged sentence

Non-cash and other adjustments ( 26 ) — ( 21 ) ( 5 )

Balance at the end of the period $ 749 $ 27 $ 686 $ 36

Balance as of July 2, 2023 $ 628 $ 33 $ 566 $ 29

Total costs incurred inception to date $ 2,454 $ 1,323 $ 1,052 $ 79

9 unchanged sentences

The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes.

Based on certain terms and conditions including eligible accounts receivable as of April 2, 2023, we had unused borrowing capacity of $ 8.4 million.

Based on certain terms and conditions including eligible accounts receivable as of July 2, 2023, we had unused borrowing capacity of $ 13.8 million.

Our obligations under the Credit Agreement are secured by substantially all of our domestic working capital assets, including accounts receivable, cash and cash equivalents, inventory, and other assets to the extent related to such working capital assets.

4 unchanged sentences

The Credit Agreement also contains financial covenants that require us to (a) until we achieve a fixed charge coverage ratio of at least 1.00 to 1.00 for two consecutive quarters, maintain minimum liquidity of not less than $ 20.0 million at all times and (b) thereafter, if the Financial Covenant Trigger Period (as defined in the Credit Agreement) is in effect, maintain a fixed charge coverage ratio, tested quarterly on a trailing twelve month basis, of at least 1.00 to 1.00 at any time.

As of April 2, 2023, we were in compliance with all the covenants of the Credit Agreement.

As of July 2, 2023, we were in compliance with all the covenants of the Credit Agreement.

If an event of default under the Credit Agreement occurs, then the Lender may cease making advances under the Credit Agreement and declare any outstanding obligations under the Credit Agreement to be immediately due and payable.

In addition, if we file a bankruptcy petition, a bankruptcy petition is filed against us and is not dismissed or stayed within thirty days or we make a general assignment for the benefit of creditors, then any outstanding obligations under the Credit Agreement will automatically and without notice or demand become immediately due and payable.

No amounts had been drawn under the Credit Facility as of April 2, 2023.

No amounts had been drawn under the Credit Facility as of July 2, 2023.

ARLO TECHNOLOGIES, INC.

2 unchanged sentences

Operating Leases

Our operating leases comprise offices, equipment, data centers and distribution centers, with various expiration dates through June 2029.

Our operating lease obligations mostly include offices, equipment, data centers and distribution centers, with various expiration dates through June 2029.

Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into our determination of lease payments.

The terms of certain leases provide for rental payments on a graduated scale.

Gross lease expense was $ 1.5 million and $ 1.8 million for the three months ended April 2, 2023 and April 3, 2022, respectively.

We recorded sublease income as reduction of lease expense, in the amount of $ 0.5 million for each of the three months ended April 2, 2023 and April 3, 2022.

Gross lease expense was $ 1.5 million and $ 3.0 million for the three and six months ended July 2, 2023, respectively, and $ 1.8 million and $ 3.6 million for the three and six months ended July 3, 2022, respectively.

We recorded sublease income as reduction of lease expense, in the amount of $ 0.5 million and $ 1.0 million for the three and six months ended July 2, 2023 and July 3, 2022.

Supplemental cash flow information related to operating leases was as follows:

Three Months Ended

2023 April 3,

Six Months Ended

(In thousands)

9 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The future minimum undiscounted lease payments under operating leases and future non-cancelable rent payments from our subtenants for each of the next five years and thereafter as of April 2, 2023 were as follows:

Operating Lease Payments Sublease Payments Net

(In thousands)

2023 (Remaining nine months) $ 3,657 $ ( 1,551 ) $ 2,106

2023 (Remaining six months) $ 1,988 $ ( 1,034 ) $ 954

2024 5,398 ( 1,947 ) 3,451

11 unchanged sentences

In connection with the lease agreement for our office space located in San Jose, California, we executed a letter of credit with the landlord as the beneficiary.

As of April 2, 2023, we had approximately $ 3.6 million of unused letters of credit outstanding, of which $ 3.1 million pertains to the lease arrangement in San Jose, California.

As of July 2, 2023, we had approximately $ 3.6 million of unused letters of credit outstanding, of which $ 3.1 million pertains to the lease arrangement in San Jose, California.

Purchase Obligations

2 unchanged sentences

Orders are non-cancelable within 30 days prior to the expected shipment date.

As of April 2, 2023, we had approximately $ 36.6 million in non-cancelable purchase commitments with suppliers.

As of April 2, 2023, an additional $ 24.2 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements.

As of July 2, 2023, we had approximately $ 50.1 million in non-cancelable purchase commitments with suppliers.

As of July 2, 2023, an additional $ 24.9 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements.

Consequently, we may incur expenses for the materials and components, such as chipsets already purchased by the supplier to fulfill our orders if the purchase order is cancelled.

Expenses incurred have historically not been significant relative to the original order value.

As of April 2, 2023, the loss liability from committed purchases was not material.

As of July 2, 2023, the loss liability from committed purchases was not material.

ARLO TECHNOLOGIES, INC.

2 unchanged sentences

Changes in warranty obligations, which are included in accrued liabilities in the unaudited condensed consolidated balance sheets, were as follows:

Three Months Ended

2023 April 3,

Three Months Ended Six Months Ended

(In thousands)

24 unchanged sentences

The federal court granted that motion, and lead plaintiff filed an amended complaint.

On June 12, 2020, lead plaintiff filed an unopposed motion for preliminary approval of a class action settlement for $ 1.25 million, which was also the amount that we had accrued for loss contingency.

In October 2020, we made a $ 1.25 million payment to an escrow account administered by the court and

On June 12, 2020, lead plaintiff filed an unopposed motion for preliminary approval of a class action settlement for $ 1.25 million, which was also the amount that we had accrued for loss

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

plaintiff’s counsel (the “Settlement Fund”).

In October 2020, we made a $ 1.25 million payment to an escrow account administered by the court and plaintiff’s counsel (the “Settlement Fund”).

The Settlement Fund was deemed to be in the custody of the court and remained subject to the jurisdiction of the court until such time as the Settlement Fund was distributed pursuant to the settlement agreement and/or further order of the court.

14 unchanged sentences

On May 5, 2023, the Court of Appeal affirmed by written order the trial court’s dismissal of the State Action based on the federal forum provision in Arlo’s certificate of incorporation and awarded costs to Arlo.

Arlo Technologies, Inc., et al.

In addition to the State Action and the Federal Action, a purported stockholder named Leonard Pinto filed a tagalong derivative action on June 13, 2019 in the U.S.

District Court for the Northern District of California, captioned Pinto v.

Arlo Technologies, Inc.

19-CV-03354 (the “Derivative Action”).

The Derivative Action is brought on behalf of Arlo against the majority of our current directors.

The complaint is based on the same alleged misconduct as the securities class actions but asserts claims for breach of fiduciary duty, waste of corporate assets, and violation of the Securities Exchange Act of 1934, as amended.

On August 20, 2019, the court stayed the Derivative Action in deference to the Federal Action.

On April 8, 2021, because it had granted final approval of the settlement in the Federal Action, the court lifted the stay in the Derivative Action and asked the parties to file a joint status report by April 22, 2021.

In their status report, the parties stipulated to a schedule for plaintiff to file an amended complaint and for the parties to brief a motion to dismiss.

Plaintiff filed his amended complaint on May 24, 2021.

Defendants moved to dismiss the amended complaint on July 9, 2021.

On August 23, 2021, plaintiff filed a second amended complaint.

Defendants moved to dismiss the second amended complaint on December 17, 2021.

Plaintiff filed his opposition on January 31, 2022, and defendants filed their reply on March 2, 2022.

On July 28, 2022, the Court heard defendants’ motion to dismiss.

At the hearing, the Court informed the parties that it was inclined to grant defendants’ motion to dismiss for lack of jurisdiction, and the Court’s corresponding written order dismissing the case followed on August 8, 2022.

The Derivative Action is now closed.

On June 14, 2023, Plaintiffs filed a petition for review in the Supreme Court of California.

Defendants-Respondents filed their answer to the petition for review on July 5, 2023, and Plaintiffs filed their reply in support of the petition for review on July 17, 2023.

On July 19, 2023, the Supreme Court of California denied Plaintiffs’ petition for review and closed the case.

Indemnifications

In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, distributors, resellers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising from breach of such agreements or from intellectual property infringement claims made by third parties.

In addition, we have entered into indemnification agreements with members of our board of directors and certain of our executive officers that require us, among other things, to indemnify them against certain liabilities that may

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

arise by reason of their status or service as directors or officers.

The maximum potential amount of future payments we could be required to make under these indemnification agreements is, in many cases, unlimited.

As of April 2, 2023 and December 31, 2022, we have not incurred any material costs as a result of such indemnifications and we are not currently aware of any indemnification claims.

As of July 2, 2023 and December 31, 2022, we have not incurred any material costs as a result of such indemnifications and we are not currently aware of any indemnification claims.

Employee Benefit Plans

2 unchanged sentences

Award vesting periods for the 2018 Plan are generally three to four years .

As of April 2, 2023, approximately 3.7 million shares were available for future grants.

As of July 2, 2023, approximately 4.0 million shares were available for future grants.

Options may be granted for periods of up to 10 years or such shorter term as may be provided in the agreement and at prices no less than 100 % of the fair market value of Arlo’s common stock on the date of grant.

Options granted under the 2018 Plan generally vest over four years , the first tranche at the end of 12 months and the remaining shares underlying the option vesting monthly over the remaining three years .

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

On January 20, 2023, we registered an aggregate of up to 4,444,072 shares of common stock on a Registration Statement on Form S-8, including 3,555,258 shares issuable pursuant to the 2018 Plan that were automatically added to the shares authorized for issuance under the 2018 Plan and 888,814 shares issuable pursuant to the Employee Stock Purchase Plan (“ESPP”) that were automatically added to the shares authorized for issuance on January 1, 2023, both pursuant to an “evergreen” provision contained in the respective plans.

The following table sets forth the available shares for grants as of April 2, 2023:

The following table sets forth the available shares for grants as of July 2, 2023:

Number of Shares

5 unchanged sentences

Shares traded for taxes 2,834

Shares available for grants as of April 2, 2023

Shares available for grants as of July 2, 2023

Employee Stock Purchase Plan

We sponsor the ESPP to eligible employees.

As of April 2, 2023, 2.4 million shares were available for issuance under the ESPP.

As of July 2, 2023, 2.0 million shares were available for issuance under the ESPP.

Option Activity

Stock option activity during the three months ended April 2, 2023 was as follows:

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Stock option activity during the six months ended July 2, 2023 was as follows:

Number of Shares Weighted Average Exercise Price Per Share

6 unchanged sentences

Expired ( 12 ) $ 7.55

Outstanding as of April 2, 2023 2,070 $ 10.26

Vested and expected to vest as of April 2, 2023 2,070 $ 10.26

Exercisable Options as of April 2, 2023 2,070 $ 10.26

RSU activity, excluding PSU activity, during the three months ended April 2, 2023 was as follows:

Outstanding as of July 2, 2023

1,637 $ 11.15

Vested and expected to vest as of July 2, 2023 1,637 $ 11.15

Exercisable Options as of July 2, 2023 1,637 $ 11.15

RSU activity, excluding PSU activity, during the six months ended July 2, 2023 was as follows:

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Number of Shares Weighted Average Grant Date Fair Value Per Share

4 unchanged sentences

Forfeited ( 363 ) $ 6.42

Outstanding as of April 2, 2023 10,656 $ 5.54

During the three months ended April 2, 2023 and April 3, 2022, our executive officers and other senior employees were granted performance-based awards with vesting occurring at the end of a three or five-year period if performance conditions or market conditions are met.

Outstanding as of July 2, 2023

Our executive officers and other senior employees have been granted performance-based awards with vesting occurring at the end of a three or five-year period if performance conditions or market conditions are met.

The number of units earned and eligible to vest are determined based on the achievement of various performance conditions or market conditions, including the cumulative paid accounts targets, stock price, cash balances at reporting period, and the recipients’ continued services.

At the end of each reporting period, we evaluate the probability of achieving the performance or market conditions and record the related stock-based compensation expense based on the achievement over the service period.

PSU activity during the three months ended April 2, 2023 was as follows:

PSU activity during the six months ended July 2, 2023 was as follows:

Number of Shares Weighted Average Grant Date Fair Value Per Share

4 unchanged sentences

Forfeited ( 3 ) $ 8.28

Outstanding as of April 2, 2023

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Outstanding as of July 2, 2023

Stock-Based Compensation Expense

The following table sets forth the stock-based compensation expense included in our unaudited condensed consolidated statements of comprehensive loss:

Three Months Ended

2023 April 3,

Three Months Ended Six Months Ended

(In thousands)

4 unchanged sentences

Total $ 12,973 $ 12,245 $ 27,564 $ 21,834

As of April 2, 2023, there was no unrecognized compensation cost related to stock options.

Approximately $ 75.5 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.9 years as of April 2, 2023.

The provision for income taxes for the three months ended April 2, 2023 was $ 0.8 million, or an effective tax rate of ( 5.9 )%.

The provision for income taxes for the three months ended April 3, 2022 was $ 0.2 million, or an effective tax rate of ( 2.6 )%.

During the three months ended April 2, 2023 and April 3, 2022, we sustained U.S.

Consistent with the prior year, we maintained a valuation allowance against our U.S.

As of July 2, 2023, there was no unrecognized compensation cost related to stock options.

Approximately $ 71.2 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 2.2 years as of July 2, 2023.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The provision for income taxes for the three and six months ended July 2, 2023 was $ 0.2 million and $ 1.0 million, or an effective tax rate of ( 3.1 )% and ( 4.9 )%.

The provision for income taxes for the three and six months ended July 3, 2022 was $ 0.2 million and $ 0.4 million, or an effective tax rate of ( 2.0 )% and ( 2.3 )%.

During the three and six months ended July 2, 2023 and July 3, 2022, we sustained U.S.

Consistent with the prior year periods, we maintained a valuation allowance against our U.S.

federal and state deferred tax assets and did not record a tax benefit on these deferred tax assets since it is more likely than not that these deferred tax assets will not be realized.

Provision for income taxes increased for the three months ended April 2, 2023, compared to the prior year period, primarily due to higher U.S.

earnings and also the application of Section 174 of the Internal Revenue Code requiring capitalization of research and experimental expenses.

Provision for income taxes decreased slightly for the three months ended July 2, 2023, compared to the prior year period and increased for the six months ended July 2, 2023, compared to the prior year period, primarily due to the higher U.S.

earnings and also the application of Section 174 of the Internal Revenue Code requiring capitalization of research and experimental expenses, which increase was recognized mostly in the first quarter of 2023.

Net Loss Per Share

Three Months Ended

2023 April 3,

Three Months Ended Six Months Ended

(In thousands, except per share data)

Net loss $ ( 7,363 ) $ ( 11,557 ) $ ( 21,608 ) $ ( 20,036 )

Weighted average common shares - basic 89,653 85,222

Potentially dilutive common shares — —

Weighted average common shares - dilutive 89,653 85,222

Basic net loss per share $ ( 0.16 ) $ ( 0.10 )

Diluted net loss per share $ ( 0.16 ) $ ( 0.10 )

Weighted average common shares - basic and dilutive 92,337 86,868 90,984 85,966

Basic and diluted net loss per share $ ( 0.08 ) $ ( 0.13 ) $ ( 0.24 ) $ ( 0.23 )

Anti-dilutive employee stock-based awards, excluded 1,370 4,812 3,238 1,476

9 unchanged sentences

For reporting purposes, revenue by geography is generally based upon the ship-to location of the customer for device sales and device location for service sales.

The following table presents revenue by geography.

The following table presents revenue by geographic area.

For comparative purposes, amounts in prior periods have been recast.

Three Months Ended

2023 April 3,

Three Months Ended Six Months Ended

(In thousands)

7 unchanged sentences

Our long-lived assets are based on the physical location of the assets.

The following table presents long-lived assets by geography.

The following table presents long-lived assets by geographic area.

2023 December 31,

4 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-Q

Item 1. Financial Statements