What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-09 · 89 added, 105 removed, 154 unchanged (56% of the section changed)

13 unchanged sentences

Business and Executive Overview

Arlo combines an intelligent cloud infrastructure and mobile app with a variety of smart connected devices that are 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.

Arlo is transforming the ways in which people can protect everything that matters to them with advanced home, business, and personal security services that combine a globally scaled cloud platform, advanced monitoring and analytics capabilities, and award-winning app-controlled devices to create a personalized security ecosystem.

Arlo’s deep expertise in cloud services, cutting-edge AI and computer vision analytics, wireless connectivity and intuitive user experience design delivers seamless, smart home security for Arlo users that is easy to setup and engage with every day.

Our highly secure, 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 – all rooted in a commitment to safeguard privacy for our users and their personal data.

Since the launch of our first product in December 2014, we have shipped over 33.4 million smart connected devices.

As of October 1, 2023, the Arlo platform had approximately 8.2 million cumulative registered accounts across more than 100 countries around the world coupled with 2.5 million cumulative paid subscribers and annual recurring revenue of $200.0 million.

As of March 31, 2024, the Arlo platform had approximately 9.2 million cumulative registered accounts across more than 100 countries around the world coupled with 3.2 million cumulative paid subscribers and annual recurring revenue of $227.0 million.

We conduct business across three geographic regions—(i) the Americas;

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and (iii) Asia Pacific (“APAC”)—and we primarily generate revenue by selling devices through retail, wholesale distribution, wireless carrier channels, security solution providers, Arlo’s direct to consumer store and paid subscription services.

For the three months ended October 1, 2023 and October 2, 2022, we generated total revenue of $130.0 million and $128.2 million, respectively.

Loss from operations was $2.3 million and $14.4 million for the three months ended October 1, 2023 and October 2, 2022, respectively.

For the nine months ended October 1, 2023 and October 2, 2022, we generated total revenue of $356.1 million and $371.9 million, respectively.

Loss from operations was $24.4 million and $34.5 million for the nine months ended October 1, 2023 and October 2, 2022, respectively.

Our goal is to continue to develop innovative, world-class connected lifestyle solutions to expand and further monetize our current and future user and paid account bases.

For the three months ended March 31, 2024 and April 2, 2023, we generated total revenue of $124.2 million and $111.0 million, respectively.

Loss from operations was $10.6 million and $14.1 million for the three months ended March 31, 2024 and April 2, 2023, respectively.

Our goal is to continue to develop innovative, world-class smart security solutions to expand and further monetize our current and future user and paid account bases.

We believe that the growth of our business is dependent on many factors, including our ability to innovate and launch successful new products on a timely basis and grow our installed base, to increase subscription-based recurring revenue, to invest in channel partnerships and to continue our global expansion.

We expect to increase our investment in research and development going forward as we continue to introduce new and innovative products and services to enhance the Arlo platform and compete for engineering talent.

We expect to increase our investment in research and development going forward as we continue to introduce new and

innovative products and services to enhance the Arlo platform and compete for engineering talent.

We also expect our sales and marketing expense to increase in the future as we invest in marketing to drive demand for our products and services.

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We believe that any such inaccuracies or adjustments are immaterial unless otherwise stated.

As of and for the Three Months Ended

2023 % Change October 2,

2024 % Change April 2,

(In thousands, except percentage data)

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3,235 58.3 % 2,044

Annual recurring revenue $ 199,993 59.5 % $ 125,402

Annual recurring revenue (“ARR”) (2)

$ 226,968 24.3 % $ 182,583

(1) The number of cumulative paid accounts as of October 1, 2023 included paid accounts managed by Verisure Sàrl (“Verisure”) in our EMEA region which are now onboarded with us.

_________________________

(1) The number of cumulative paid accounts as of March 31, 2024 included paid accounts managed by Verisure Sàrl (“Verisure”) in our EMEA region which are now onboarded with us.

This does not have an impact to our financial statements and key business metrics other than our number of cumulative paid accounts.

(2) As described further below, in the first fiscal quarter of 2024, we changed the methodology on paid service revenue recognition from a mid-month convention to a daily recognition model.

As a result, ARR as of March 31, 2024 was calculated using the daily recognition model while ARR as of April 2, 2023 was calculated using our former methodology, the mid-month convention.

ARR as of April 2, 2023 calculated using the daily recognition model does not represent a material change from the mid-month convention over the same period.

Cumulative Registered Accounts .

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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).

Annual Recurring Revenue (“ARR”) .

Annual Recurring Revenue .

We believe ARR enables measurement of our business initiatives and serves as an indicator of our future growth.

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 represents the amount of paid service revenue that we expect to recur annually.

In the first fiscal quarter of 2024, we changed the methodology on paid service revenue recognition from a mid-month convention to a daily recognition model which recognizes paid service revenue based on the number of service days within the fiscal reporting period, commencing on the start date of the subscription and continuing over the term of the arrangement.

Accordingly, the methodology used to calculate ARR was also changed as of March 31, 2024 and is now calculated by taking the average daily paid service revenue of the last calendar month in the fiscal quarter, multiplied by 365 days.

We believe the daily recognition model aligns with our customers’ subscription period and service usage and allows for a more precise measurement of paid service revenue relative to the former methodology of a mid-month convention, which was based on paid service revenue for the last calendar month in the fiscal quarter, multiplied by 12 months.

This change in calculation methodology has no material impact on our financial statements or any previously reported ARR numbers.

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.

Impact of Global Geopolitical, Economic and Business Conditions

During the nine months ended October 1, 2023, we remained focused on the ongoing conflict in Ukraine, hostilities in the Middle East, supply chain disruptions, inflation, fluctuating consumer confidence and rising interest rates by preserving our liquidity and managing our cash flow by taking preemptive action to enhance our ability to meet our short-term liquidity needs.

During the three months ended March 31, 2024, we remained focused on the ongoing conflict in Ukraine, hostilities in the Middle-East, supply chain disruptions, the inflationary macro environment, fluctuating consumer confidence and rising interest rates by preserving our liquidity and managing our cash flow by taking preemptive action to enhance our ability to meet our short-term liquidity needs.

These actions include, but are not limited to, proactively managing working capital by closely monitoring customers’ credit and collections, renegotiating payment terms with third-party manufacturers and key suppliers, closely monitoring inventory levels and purchases against forecasted demand, reducing or eliminating non-essential spending, and subleasing or reducing excess office space.

We continue to monitor the situation and may, as necessary, reduce expenditures further, borrow under our revolving credit facility, or pursue other sources of capital that may include other forms of external financing in order to maintain our cash position and preserve financial flexibility in response to the uncertainty in the United States and global markets resulting from the ongoing conflict in Ukraine, hostilities in the Middle East, supply chain disruptions, the inflationary macro environment, fluctuating consumer confidence and rising interest rates and current financial conditions within the banking industry, including the effects of recent failures of other financial institutions, and liquidity levels.

We continue to monitor the situation and may, as necessary, reduce expenditures further, borrow under our revolving credit facility, or pursue other sources of capital that may include other forms of external financing in order to maintain our cash position and preserve financial flexibility in response to the uncertainty in the United States and global markets resulting from the ongoing conflict in Ukraine, hostilities in the Middle-East, supply chain disruptions, the inflationary macro environment, fluctuating consumer confidence and rising interest rates, current financial conditions within the banking industry, including the effects of recent failures of other financial institutions, and liquidity levels.

Results of Operations

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The following table sets forth, for the periods presented, the unaudited condensed consolidated statements of comprehensive loss data, which we derived from the accompanying unaudited condensed consolidated financial statements:

Three Months Ended Nine Months Ended

2023 October 2,

2022 October 1,

2023 October 2,

Three Months Ended

2024 April 2,

(In thousands, except percentage data)

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Net loss $ (9,644) (7.7) % $ (14,245) (12.8) %

Our gross revenue consists primarily of sales of devices, prepaid and paid subscription service revenue.

Our gross revenue consists primarily of sales of devices and prepaid and paid subscription service revenue.

We generally recognize revenue from product sales at the time the product is shipped and transfer of control from us to the customer occurs.

Upon device shipment, we attribute a portion of the sales price as prepaid service, deferring this revenue at the outset and subsequently recognizing it ratably over the estimated useful economic life of the device or free trial period, as applicable.

Our paid subscription services relate to sales of subscription plans to our registered accounts.

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We conduct business across three geographic regions—(i) the Americas;

and (iii) APAC—and generally base revenue by geography on the ship-to location of the customer for device sales and device location for service sales.

Three Months Ended Nine Months Ended

2023 % Change October 2,

2022 October 1,

2023 % Change October 2,

and (iii) APAC—and generally base revenue by geographic region on the bill-to location of the customer.

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

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Total revenue $ 124,200 11.9 % $ 111,004

Product revenue decreased by $13.8 million, or 14.8% and $63.0 million, or 23.0% for the three and nine months ended October 1, 2023 compared to the prior year periods.

The declines were experienced mainly in EMEA and Americas primarily driven by a reduction in the average selling prices (“ASPs”) of our products as we increased promotional activities to stimulate household acquisition and increased subscriber growth coupled with a shift in product mix driven by the softening consumer demand as a result of current macro-economic factors and seasonality.

This decline in revenue was partially offset by the revenue generated from the launch of the Essential 2 camera portfolio during the three months ended October 1, 2023.

Service revenue increased in all regions by $15.6 million, or 44.0% and $47.2 million, or 48.1% for the three and nine months ended October 1, 2023 compared to the prior year periods, primarily due to increases in (1) cumulative paid accounts of 48.6%, and (2) rates for our subscription plans.

Revenue by classification is as follows:

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

Product revenue $ 67,493 0.6 % $ 67,060

Service revenue 56,707 29.0 % 43,944

Total revenue $ 124,200 11.9 % $ 111,004

Product revenue increased by $0.4 million, or 0.6% for the three months ended March 31, 2024 compared to the prior year period, primarily driven by an increase in product shipments in EMEA due to stronger customer demand, partially offset by the decrease in product sales in the Americas and APAC due to seasonality.

The increase in product revenue was partially offset by higher sales incentives that are deemed to be a reduction of revenue.

Service revenue increased in all regions by $12.8 million, or 29.0% for the three months ended March 31, 2024 compared to the prior year period, primarily due to a 58.3% increase in cumulative paid accounts and an approximated

30% increase in rates for our subscription plans.

Cost of Revenue

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We outsource our manufacturing, warehousing, and distribution logistics.

We also outsource certain components of the required infrastructure to support our cloud-based back-end IT infrastructure.

We also outsource certain components of the required

infrastructure to support our cloud-based back-end IT infrastructure.

We believe this outsourcing strategy allows us to better manage our product and service costs and gross margin and allows us to adapt to changing market dynamics and supply chain constraints.

The following table presents cost of revenue and gross margin for the periods indicated:

Three Months Ended Nine Months Ended

2023 % Change October 2,

2022 October 1,

2023 % Change October 2,

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

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Total cost of revenue $ 76,820 1.4 % $ 75,787

Product cost of revenue decreased 7.6% and 15.6% for the three and nine months ended October 1, 2023 compared to the prior year periods, respectively, primarily due to decreases in product shipments coupled with decreases in freight-in costs due to normalization of the supply chain and utilization of ocean freight, partially offset by increases in inventory reserves.

Service cost of revenue increased 12.5% and 13.4% for the three and nine months ended October 1, 2023 compared to the prior year periods, respectively, primarily due to service revenue growth as a result of increases in (1) cumulative paid accounts of 48.6%, and (2) rates for our subscription plans, partially offset by cost optimizations.

The following table presents gross profit for the periods indicated:

Three Months Ended Nine Months Ended

2023 % Change October 2,

2022 October 1,

2023 % Change October 2,

Product cost of revenue decreased 1.3% for the three months ended March 31, 2024 compared to the prior year period, primarily due to a decrease in product warranty reserves, partially offset by an increase in inventory reserves.

Service cost of revenue increased 15.8% for the three months ended March 31, 2024 compared to the prior year period, primarily due to service revenue growth as a result of the increase in cumulative paid accounts, partially offset by cost optimizations.

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

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Total gross margin 38.1 % 31.7 %

Product gross profit decreased for the three and nine months ended October 1, 2023 compared to the prior year periods, primarily driven by a reduction in the ASPs of our products as we increased promotional activities to stimulate household acquisition and increased subscriber growth coupled with a shift in product mix driven by the softening consumer demand as a result of current macro-economic factors.

The product gross profit decrease was partially offset by the decrease in freight-in costs due to normalization of the supply chain and utilization of ocean freight.

Service gross profit increased for the three and nine months ended October 1, 2023 compared to the prior year periods, primarily due to service revenue growth in all regions as a result of increases in (1) cumulative paid accounts of 48.6%, and (2) rates for our subscription plans, as well as cost optimizations.

Product gross profit increased for the three months ended March 31, 2024 compared to the prior year period, primarily driven by increased product sales in EMEA, partially offset by higher sales incentives that are deemed to be a reduction of revenue.

Service gross profit increased for the three months ended March 31, 2024 compared to the prior year period, primarily due to service revenue growth in all regions as a result of increases in cumulative paid accounts and rates for our subscription plans, as well as cost optimizations.

Operating Expenses

Research and Development

Research and development expense consists primarily of personnel-related expense, safety, security, regulatory services and testing, other research and development consulting fees, and corporate IT and facilities overhead.

Generally, we recognize research and development expenses as they are incurred.

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We believe that innovation and technological leadership are critical to our future success, and we are committed to continuing a significant level of research and development to develop new technologies, products, and services, including our hardware devices, cloud-based software, AI-based algorithms, and machine learning capabilities.

The following table presents research and development expense for the periods indicated:

Three Months Ended Nine Months Ended

2023 % Change October 2,

2022 October 1,

2023 % Change October 2,

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

Research and development expense $ 20,793 17.1 % $ 17,750

Research and development expense increased by $0.4 million for the three months ended October 1, 2023 compared to the prior year period, primarily due to an increase of $0.6 million in personnel-related expenses mainly from increase in base compensation as a result of headcount increase, partially offset by a decrease of $0.2 million in professional services.

Research and development expense increased by $1.9 million for the nine months ended October 1, 2023 compared to the prior year period, primarily due to an increase of $3.1 million in personnel-related expenses mainly from stock-based compensation and merit increases, partially offset by a decrease of $1.0 million in corporate IT and facilities overhead.

Research and development expense increased by $3.0 million for the three months ended March 31, 2024 compared to the prior year period, primarily due to an increase of $2.1 million in personnel-related expenses mainly from merit increases and stock-based compensation.

Sales and Marketing

Sales and marketing expense consists primarily of personnel expense for sales and marketing staff, technical support expense, advertising, trade shows, media and placement, corporate communications and other marketing expense, product marketing expense, IT and facilities overhead, outbound freight costs, and credit card processing fees.

Sales and marketing expense consists primarily of personnel expense for sales and marketing staff, technical support expense, advertising, trade shows, media and placement, corporate communications and other marketing expense, product marketing expense, allocated IT and facilities overhead, outbound freight costs, and credit card processing fees.

We expect our sales and marketing expense to increase in the future as we invest in marketing to drive demand for our products and services.

The following table presents sales and marketing expense for the periods indicated:

Three Months Ended Nine Months Ended

2023 % Change October 2,

2022 October 1,

2023 % Change October 2,

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

Sales and marketing expense $ 17,370 13.1 % $ 15,353

Sales and marketing expense decreased $6.3 million for the three months ended October 1, 2023 compared to the prior year period, primarily due to decreases of $7.5 million in marketing expenditures as a result of the suspension of our brand awareness advertising campaign, partially offset by increases of $0.5 million in customer care services and $0.5 million in credit card processing fees as a result of increases in Arlo.com store sales and paid subscriber accounts.

Sales and marketing expense decreased $1.7 million for the nine months ended October 1, 2023 compared to the prior year period, primarily due to decreases of $5.7 million in marketing expenditures as a result of the suspension of our brand awareness advertising campaign, partially offset by increases of $1.7 million in credit card processing fees as a result of increases in Arlo.com store sales and paid subscriber accounts, $1.6 million in customer care services, and $1.4 million in freight-out expenses.

Sales and marketing expense increased $2.0 million for the three months ended March 31, 2024 compared to the prior year period, primarily due to increases of $1.0 million in professional services as a result of continued investment in customer experience improvements across customer care and engineering, $0.9 million in personnel-related expenses mainly from stock-based compensation and merit increases, and $0.2 million credit card processing fees as a result of increases in Arlo.com store sales and paid subscriber accounts.

General and Administrative

General and administrative expense consists primarily of personnel-related expense for certain executives, finance and accounting, investor relations, human resources, legal, information technology, professional fees, corporate IT and facilities overhead, strategic initiative expense, and other general corporate expense.

General and administrative expense consists primarily of personnel-related expense for certain executives, finance and accounting, investor relations, human resources, legal, information technology, professional fees, allocated IT and facilities overhead, strategic initiative expense, and other general corporate expense.

We expect our general and administrative expense to fluctuate as a percentage of our revenue in future periods based on fluctuations in our revenue and the timing of such expense.

The following table presents general and administrative expense for the periods indicated:

Three Months Ended Nine Months Ended

2023 % Change October 2,

2022 October 1,

2023 % Change October 2,

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

General and administrative expense $ 19,348 23.9 % $ 15,622

General and administrative expense increased $0.2 million for the three months ended October 1, 2023 compared to the prior year period, primarily due to an increase of $0.8 million in personnel-related expenses mainly from stock-based compensation, partially offset by decreases of $0.6 million in professional consulting services and corporate IT and facilities overhead.

General and administrative expense increased $5.1 million for the nine months ended October 1, 2023 compared to the prior year period, primarily due to an increase of $7.4 million in personnel-related expenses mainly from stock-based compensation and merit increases, partially offset by decreases of $2.3 million in corporate IT and facilities overhead and professional consulting services.

Others include separation expense, which consists primarily of costs of legal and professional services and restructuring charges, which consist of severance costs and office exit expense associated with the abandonment of certain lease contracts.

Interest Income and Other Income, Net

The following table presents interest income and other income, net for the periods indicated:

Three Months Ended Nine Months Ended

2023 % Change October 2,

2022 October 1,

2023 % Change October 2,

General and administrative expense increased $3.7 million for the three months ended March 31, 2024 compared to the prior year period, primarily due to increases of $2.8 million in personnel-related expenses mainly from stock-based compensation and $0.8 million in professional services.

Others include separation expense, which consists primarily of costs of legal and professional services and restructuring charges, which consist of severance costs, office exit expense, and other exit expense associated with the abandonment of certain lease contracts and cancellation of contractual services arrangements with certain suppliers.

Interest Income, Net and Other Loss, Net

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

Interest income, net

Other income, net

$ 1,386 90.9 % $ 726

Other loss, net

$ (25) ** $ (39)

**Percentage change not meaningful.

Interest income, net increased for the three and nine months ended October 1, 2023 compared to the prior year periods, primarily due to the increase in our short-term investments as well as a result of higher interest rates.

Interest income, net increased for the three months ended March 31, 2024 compared to the prior year period, primarily due to the increase in our short-term investments as well as higher interest rates.

Provision for Income Taxes

The following table presents provision for income taxes for the periods indicated:

Three Months Ended Nine Months Ended

2023 % Change October 2,

2022 October 1,

2023 % Change October 2,

Three Months Ended

2024 % Change April 2,

(In thousands, except percentage data)

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Effective tax rate (4.3) % (5.9) %

Provision for income taxes decreased for the three months ended October 1, 2023, compared to the prior year period and increased for the nine months ended October 1, 2023, compared to the prior year period, primarily due to (i) the higher U.S.

earnings, (ii) 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, and (iii) the recognition of a tax benefit from return to provision adjustments in the third quarter of 2023.

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.

The effective tax rate for the three months ended March 31, 2024 was lower than the U.S.

federal income tax rate due to a lower effective tax rate on foreign earnings and valuation allowance on our net U.S.

deferred tax assets and certain foreign tax attributes as it is more likely than not that some or all of our deferred tax assets will not be realized.

Liquidity and Capital Resources

As of October 1, 2023, our cash and cash equivalents and short-term investments totaled $126.0 million and we had unused borrowing capacity of $14.4 million based on the terms and conditions of our revolving credit facility.

As of March 31, 2024, our cash and cash equivalents and short-term investments totaled $142.9 million and we had unused borrowing capacity of $4.2 million based on the terms and conditions of our revolving credit facility.

We have a history of losses and may incur operating and net losses in the future.

As of October 1, 2023, our accumulated deficit was $368.2 million.

As of March 31, 2024, our accumulated deficit was $377.1 million.

Historically, we have funded our principal business activities through cash flows generated from operations and available cash on hand.

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Leases and Contractual Commitments

Our operating lease obligations mostly include offices, equipment, data centers, and distribution centers.

Our operating lease obligations mostly include offices, equipment, and distribution centers.

Our contractual commitments are primarily inventory-related purchase obligations with suppliers.

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Commitments and Contingencies in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report for further information about our operating leases, purchase obligations, and legal contingencies.

The following table presents our cash flows for the periods presented:

Nine Months Ended

2023 October 2,

Three Months Ended

2024 April 2,

(In thousands)

Net cash provided by (used in) operating activities $ 30,367 $ (34,783)

Net cash provided by operating activities

$ 19,806 $ 10,329

Net cash used in investing activities (440) (22,672)

Net cash used in financing activities (13,782) (4,691)

Net cash decrease $ (32,967) $ (94,955)

Net cash increase (decrease)

$ 5,584 $ (17,034)

Operating activities

Net cash provided by operating activities increased by $65.2 million for the nine months ended October 1, 2023 compared to the prior year period, primarily due to improved profitability and changes in working capital as a result of an increase in our service revenue driven by growth in paid accounts and increased subscription rates and lower payments to our suppliers and vendors.

Net cash provided by operating activities increased by $9.5 million for the three months ended March 31, 2024 compared to the prior year period, primarily due to improved profitability and favorable working capital movements as a result of higher accounts payable balances due to the timing of payments, offset by increased inventory purchases.

Investing activities

Net cash used in investing activities increased by $0.5 million for the nine months ended October 1, 2023 compared to the prior year period, primarily due to an increase in purchases of property and equipment, partially offset by a decrease in net purchases, and maturities of short-term investments.

Net cash used in investing activities decreased by $22.2 million for the three months ended March 31, 2024 compared to the prior year period, primarily due to lower net purchases of short-term investments.

Financing activities

Net cash used in financing activities increased by $2.6 million for the nine months ended October 1, 2023 compared to the prior year period, primarily due to the increase in withholding tax from restricted stock unit releases, partially offset by higher proceeds related to employee benefit plans.

Net cash used in financing activities increased by $9.1 million for the three months ended March 31, 2024 compared to the prior year period, primarily due to the increase in withholding tax from restricted stock unit releases.

Critical Accounting Policies and Estimates

For a complete description of what we believe to be the critical accounting policies and estimates used in the preparation of our Unaudited Condensed Consolidated Financial Statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no material changes to our critical accounting policies and estimates during the nine months ended October 1, 2023, other than as discussed in Note 2.

There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2024, other than as discussed in Note 2.

Significant Accounting Policies and Recent Accounting Pronouncements, in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report.

Quantitative and Qualitative Disclosures About Market Risk

During the nine months ended October 1, 2023, there were no material changes to our market risk disclosures as set forth in Part II Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2022.

During the three months ended March 31, 2024, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2023.

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 2. Management’s Discussion and Analysis