What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 135 added, 99 removed, 461 unchanged (34% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 29,

2024 December 31,

32 unchanged sentences

shares issued and outstanding:

98,326,212 at June 30, 2024 and 95,380,281 at December 31, 2023

100,321,524 at September 29, 2024 and 95,380,281 at December 31, 2023

Additional paid-in capital 489,677 470,322

6 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(In thousands, except per share data)

35 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(In thousands)

21 unchanged sentences

Other comprehensive income (loss), net of tax

45 85 ( 84 ) 344

Ending balances $ 236 $ 237 $ 236 $ 237

10 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 29,

2024 October 1,

(In thousands)

9 unchanged sentences

Accounts receivable

( 3,095 ) ( 4,262 )

Inventories ( 16,609 ) ( 8,250 )

9 unchanged sentences

Proceeds from maturities of short-term investments 158,796 67,259

Net cash used in investing activities ( 268 ) ( 33,150 )

Net cash provided by (used in) investing activities

11,229 ( 46,094 )

Cash flows from financing activities:

26 unchanged sentences

(ii) Europe, Middle-East and Africa (“EMEA”);

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

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

Our corporate headquarters is located in Carlsbad, California, with other satellite offices across North America and various other global locations.

19 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 and six months ended June 30, 2024 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any future period.

Actual results could differ materially from those estimates and operating results for the three and nine months ended September 29, 2024 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 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, 2023.

There have been no significant changes to such policies during the six months ended June 30, 2024.

There have been no significant changes to such policies during the nine months ended September 29, 2024.

Accounting Pronouncements Recently Adopted

There were no accounting pronouncements adopted during the six months ended June 30, 2024.

There were no accounting pronouncements adopted during the nine months ended September 29, 2024.

Accounting Pronouncements Not Yet Effective

18 unchanged sentences

Performance Obligations

The total estimated service revenue expected to be recognized in the future related to performance obligations that are unsatisfied and partially unsatisfied was $ 25.9 million as of June 30, 2024 and $ 18.8 million as of December 31, 2023, substantially related to a performance obligation classified as less than one year .

For the six months ended June 30, 2024 and July 2, 2023, $ 106.7 million and $ 87.6 million of revenue, respectively, was deferred due to unsatisfied performance obligations, primarily relating to over time service revenue, and $ 101.1 million and $ 81.4 million of revenue, respectively, was recognized for the satisfaction of performance obligations over time.

The total estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and partially unsatisfied was $ 29.0 million as of September 29, 2024 and $ 18.8 million as of December 31, 2023, substantially related to performance obligations classified as less than one year .

For the nine months ended September 29, 2024 and October 1, 2023, $ 161.3 million and $ 131.8 million of revenue, respectively, was deferred due to unsatisfied performance obligations, primarily relating to over time service revenue, and $ 154.5 million and $ 125.6 million of revenue, respectively, was recognized for the satisfaction of performance obligations over time.

Approximately $ 17.3 million and $ 10.6 million of this recognized revenue, respectively, was included in the contract liability balance at the beginning of the periods.

There were no significant changes in estimates during the period that would affect the contract balances.

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 June 30, 2024, the entire 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 June 30, 2024, we had a backlog of $ 46.0 million which represents performance obligations that will be recognized as revenue once fulfilled, which is expected to occur over the next six months .

On April 25, 2024, Verisure notified us that it was exercising its right under the Supply Agreement to extend the term for another five years (through November 2029) under the same terms but without minimum purchase obligations.

On April 25, 2024, Verisure Sàrl (“Verisure”), our largest customer, notified us that it was exercising its right under the Supply Agreement to extend the term for another five years (through November 2029) with no minimum purchase obligations.

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

As of September 29, 2024, we had a backlog of $ 27.9 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

2 unchanged sentences

The following table presents revenue disaggregated by geographic region.

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(In thousands)

3 unchanged sentences

Total $ 137,667 $ 130,003 $ 389,314 $ 356,083

As of June 30, 2024 and December 31, 2023, two customers accounted for 63.8 % and 10.4 %, and three customers accounted for 37.1 %, 15.2 %, and 10.2 % of the total accounts receivable, net, respectively.

As of September 29, 2024 and December 31, 2023, three customers accounted for 55.4 %, 11.3 %, and 10.7 %, and three customers accounted for 37.1 %, 15.2 %, and 10.2 % of the total accounts receivable, net, respectively.

No other customers accounted for 10% or greater of the total accounts receivable, net.

For the three months ended June 30, 2024 and July 2, 2023, one customer accounted for 44.6 % and 26.9 % of the total revenue, respectively.

For the six months ended June 30, 2024 and July 2, 2023, one customer accounted for 47.0 % and 35.1 % of the total revenue, respectively.

For the three months ended September 29, 2024 and October 1, 2023, one customer accounted for 42.0 % and 33.0 % of the total revenue, respectively.

For the nine months ended September 29, 2024 and October 1, 2023, one customer accounted for 45.2 % and 34.4 % of the total revenue, respectively.

No other customers accounted for 10% or greater of the total revenue.

3 unchanged sentences

Short-Term Investments

As of June 30, 2024 As of December 31, 2023

As of September 29, 2024 As of December 31, 2023

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

2 unchanged sentences

Accounts Receivable, Net

September 29,

2024 December 31,

4 unchanged sentences

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.

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(In thousands)

Balance at the beginning of the period $ 142 $ 322 $ 333 $ 423

Release of expected credit losses

Provision for (release of) expected credit losses

79 10 ( 112 ) ( 91 )

4 unchanged sentences

The components of property and equipment are as follows:

September 29,

2024 December 31,

10 unchanged sentences

_________________________

(1) $ 0.7 million and $ 1.0 million of property and equipment, net, was included in the sublease arrangement for the San Jose office building as of June 30, 2024 and December 31, 2023, respectively.

Depreciation expense pertaining to property and equipment was $ 0.8 million and $ 1.7 million for the three and six months ended June 30, 2024, respectively, and $ 1.2 million and $ 2.4 million for the three and six months ended July 2, 2023, respectively.

We have determined that no event occurred or circumstances changed during the six months ended June 30, 2024 that would more likely than not reduce the fair value of goodwill below the carrying amount.

No goodwill impairment was recognized in the six months ended June 30, 2024 and July 2, 2023.

(1) $ 0.6 million and $ 1.0 million of property and equipment, net, was included in the sublease arrangement for the San Jose office building as of September 29, 2024 and December 31, 2023, respectively.

Depreciation expense pertaining to property and equipment was $ 0.7 million and $ 2.4 million for the three and nine months ended September 29, 2024, respectively, and $ 1.5 million and $ 3.8 million for the three and nine months ended October 1, 2023, respectively.

We have determined that no event occurred or circumstances changed during the nine months ended September 29, 2024 that would more likely than not reduce the fair value of goodwill below the carrying amount.

No goodwill impairment was recognized in the nine months ended September 29, 2024 and October 1, 2023.

Accrued Liabilities

September 29,

2024 December 31,

2 unchanged sentences

Sales returns

10,039 17,058

Compensation 14,736 13,278

6 unchanged sentences

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

September 29,

2024 December 31,

12 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 June 30, 2024 and December 31, 2023, 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.

As of September 29, 2024 and December 31, 2023, 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.

ARLO TECHNOLOGIES, INC.

3 unchanged sentences

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.

As of June 30, 2024, we have substantially incurred all costs pertaining to restructuring activities, with related cash outflows extending until the fourth quarter of 2024.

As of September 29, 2024, 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.

19 unchanged sentences

Balance as of June 30, 2024 $ 641 $ 485 $ 156 $ —

$ 641 $ 485 $ 156 $ —

Restructuring charges 613 613 — —

Cash payments ( 1,036 ) ( 943 ) ( 93 ) —

Balance as of September 29, 2024 $ 218 $ 155 $ 63 $ —

Total costs incurred inception to date $ 4,530 $ 3,373 $ 1,108 $ 49

3 unchanged sentences

On October 27, 2021, we entered into a Loan and Security Agreement (the “Credit Agreement”) with Bank of America, N.A., a national banking association, as lender (the “Lender”).

The Credit Agreement provides for a three-year revolving credit facility (the “Credit Facility”) that matures on October 27, 2024.

Borrowings under the Credit Facility are limited to the lesser of (x) $ 40.0 million, and (y) an amount equal to the borrowing base.

The borrowing base will be the sum of (i) 90 % of investment grade eligible receivables and (ii) 85 % of non-investment grade eligible accounts, less applicable reserves established by the Lender.

The Credit Agreement also includes a $ 5.0 million sublimit for the issuance by the Lender of letters of credit.

In addition, the Credit Agreement includes an uncommitted accordion feature that allows us to request, from time to time, that the Lender increase the aggregate revolving loan commitments by up to an additional $ 25.0 million in the aggregate, subject to the satisfaction of certain conditions, including obtaining the Lender’s agreement to participate in each increase.

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 June 30, 2024, we had unused borrowing capacity of $ 6.2 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.

At our option, borrowings under the Credit Agreement will bear interest at a floating rate equal to:

(i) the Bloomberg Short-Term Bank Yield Index rate plus the applicable rate of 2.0 % to 2.5 % determined based on our average daily availability for the prior fiscal quarter, or (ii) the base rate plus the applicable rate of 1.0 % to 1.5 % based on our average daily availability for the prior fiscal quarter.

Among other fees, we are required to pay a monthly unused fee of 0.2 % per annum on the amount by which the Lender’s aggregate commitment under the Credit Facility exceeds the average daily revolver usage during such month.

The Credit Agreement contains events of default, representations and warranties, and affirmative and negative covenants customary for credit facilities of this type.

The Credit Agreement also contains financial covenants that require us to, 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 June 30, 2024, 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 June 30, 2024.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of September 29, 2024, we were in compliance with all the covenants of the Credit Agreement.

No amounts had been drawn under the credit facility as of September 29, 2024.

The Credit Agreement provided for a three-year revolving credit facility that matured on October 27, 2024, in which the Credit Agreement and the credit facility provided thereunder were automatically terminated.

Commitments and Contingencies

3 unchanged sentences

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

Gross lease expense was $ 1.3 million and $ 2.8 million for the three and six months ended June 30, 2024, respectively, and $ 1.5 million and $ 3.0 million for the three and six months ended July 2, 2023, 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 June 30, 2024 and July 2, 2023, respectively.

Gross lease expense was $ 1.4 million and $ 4.2 million for the three and nine months ended September 29, 2024, respectively, and $ 1.5 million and $ 4.5 million for the three and nine months ended October 1, 2023, respectively.

We recorded sublease income as reduction of lease expense, in the amount of $ 0.5 million and $ 1.5 million for the three and nine months ended September 29, 2024 and October 1, 2023, respectively.

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

Six Months Ended

Nine Months Ended

September 29,

2024 October 1,

(In thousands)

1 unchanged sentence

Operating cash flows from operating leases $ 4,486 $ 5,274

Right-of-use assets obtained in exchange for lease liabilities

Operating leases $ — $ 1,851

Weighted average remaining lease term and weighted average discount rate related to operating leases are as follows:

September 29,

2024 December 31,

3 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 June 30, 2024 are as follows:

Operating Lease Payments Sublease Payments Net

(In thousands)

2024 (Remaining six months)

2024 (Remaining three months)

$ 1,267 $ ( 533 ) $ 734

10 unchanged sentences

Total lease liabilities $ 18,249

We entered into an operating lease for our new corporate headquarter located in Carlsbad, California.

Upon lease commencement expected to be December 1, 2024, the initial base term is 8.5 years, with a renewal option to extend the term for an additional five years .

As of September 29, 2024, we had approximately $ 7.3 million of future lease obligations subject to non-cancellable leases that have been signed but have not yet commenced.

Letters of Credit

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 June 30, 2024, we had $ 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 September 29, 2024, we had $ 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 June 30, 2024, we had $ 51.7 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months .

As of June 30, 2024, an additional $ 33.3 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements.

As of September 29, 2024, we had $ 29.3 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months .

As of September 29, 2024, an additional $ 25.8 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.

4 unchanged sentences

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

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(In thousands)

18 unchanged sentences

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

As of June 30, 2024 and December 31, 2023, 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 September 29, 2024 and December 31, 2023, we have not incurred any material costs as a result of such indemnification obligations and we are not currently aware of any indemnification claims.

ARLO TECHNOLOGIES, INC.

4 unchanged sentences

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

As of June 30, 2024, approximately 3.8 million shares were available for future grants.

As of September 29, 2024, approximately 4.8 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.

1 unchanged sentence

On January 19, 2024, we registered an aggregate of up to 4,759,901 shares of common stock on a Registration Statement on Form S-8, including 3,807,921 shares issuable pursuant to the 2018 Plan that were automatically added to the shares authorized for issuance and 951,980 shares issuable pursuant to the Employee Stock Purchase Plan (“ESPP”) that were automatically added to the shares authorized for issuance on January 1, 2024, both pursuant to an “evergreen” provision contained in the respective plans.

The following table sets forth the available shares for grants as of June 30, 2024:

The following table sets forth the available shares for grants as of September 29, 2024:

Number of Shares

4 unchanged sentences

Forfeited / cancelled 1,158

Shares traded for taxes 2,071

Shares available for grants as of June 30, 2024

Shares traded / withheld for taxes

Shares available for grants as of September 29, 2024

Employee Stock Purchase Plan

We sponsor the ESPP to eligible employees.

Under our ESPP, employees purchased 233 thousand shares and 460 thousand shares during the six months ended June 30, 2024 and July 2, 2023, respectively.

As of June 30, 2024, 2.5 million shares were available for issuance under the ESPP.

Under our ESPP, employees purchased 233 thousand shares and 460 thousand shares during the nine months ended September 29, 2024 and October 1, 2023, respectively.

As of September 29, 2024, 2.5 million shares were available for issuance under the ESPP.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Option Activity

We did not grant options during the six months ended June 30, 2024.

Stock option activity during the six months ended June 30, 2024 was as follows:

We did not grant options during the nine months ended September 29, 2024.

Stock option activity during the nine months ended September 29, 2024 was as follows:

Number of Shares Weighted Average Exercise Price Per Share

6 unchanged sentences

Expired ( 50 ) $ 14.39

Outstanding as of June 30, 2024

1,010 $ 12.86

Vested and exercisable as of June 30, 2024

1,010 $ 12.86

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

RSU activity, excluding PSU activity, during the six months ended June 30, 2024 was as follows:

Outstanding as of September 29, 2024

Vested and exercisable as of September 29, 2024

RSU activity, excluding PSU activity, during the nine months ended September 29, 2024 was as follows:

Number of Shares Weighted Average Grant Date Fair Value Per Share

4 unchanged sentences

Forfeited ( 1,039 ) $ 6.99

Outstanding as of June 30, 2024

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.

Outstanding as of September 29, 2024

Our executive officers and other senior employees have been granted performance-based awards with some vesting occurring when performance conditions are met and some vesting occurring at the end of a three or five-year period when 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 six months ended June 30, 2024 was as follows:

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PSU activity during the nine months ended September 29, 2024 was as follows:

Number of Shares Weighted Average Grant Date Fair Value Per Share

4 unchanged sentences

Forfeited ( 67 ) $ 6.63

Outstanding as of June 30, 2024

Outstanding as of September 29, 2024

For RSUs and PSUs vested prior to September 29, 2024, the tax withholding method is the net withholding method, in which shares with a market value equivalent to the tax withholding obligation are withheld and the net shares are issued to the RSU and PSU holders.

Effective the fourth quarter of 2024, the tax withholding policy changed and our Named Executive Officers (“NEOs”) will use the sell-to-cover method for their tax withholding, in which shares with a market value equivalent to the tax withholding obligation are sold on behalf of the NEOs of their RSUs and PSUs upon vesting and settlement to cover the tax withholding liability, and the cash proceeds from such sales are remitted by Arlo to taxing authorities.

The sell-to-cover method will apply to all Arlo employees effective on January 1, 2025.

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 Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(In thousands)

4 unchanged sentences

Total $ 14,689 $ 10,287 $ 54,159 $ 37,851

As of September 29, 2024, all outstanding options were fully vested;

therefore, there was no unrecognized compensation cost related to stock options.

Approximately $ 59.7 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.3 years as of September 29, 2024.

During the nine months ended September 29, 2024 and October 1, 2023, we settled executive and employee bonuses by granting and issuing RSUs (non-cash financing activities) that vested immediately amounting to $ 12.6 million and $ 13.5 million, respectively.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of June 30, 2024, all outstanding options were fully vested;

therefore, there was no unrecognized compensation cost related to stock options.

Approximately $ 68.2 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.1 years as of June 30, 2024.

During the six months ended June 30, 2024 and July 2, 2023, we settled executive and employee bonuses by granting and issuing restricted stock units (non-cash financing activities) that vested immediately amounting to $ 6.9 million and $ 6.7 million, respectively.

The provision for income taxes for the three and six months ended June 30, 2024 was $ 0.2 million and $ 0.6 million, respectively, or an effective tax rate of ( 2.1 )% and ( 3.1 )%, respectively.

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

During the three and six months ended June 30, 2024 and July 2, 2023, we sustained U.S.

The provision for income taxes for the three and nine months ended September 29, 2024 was $ 0.3 million and $ 1.0 million, respectively, or an effective tax rate of ( 8.0 )% and ( 3.9 )%, respectively.

The provision for income taxes for the three and nine months ended October 1, 2023 was $ 0.03 million and $ 1.04 million, respectively, or an effective tax rate of ( 2.7 )% and ( 4.8 )%, respectively.

During the three and nine months ended September 29, 2024 and October 1, 2023, 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 for the three and six months ended June 30, 2024, compared to the prior year periods changed primarily due to (i) foreign-derived intangible income (“FDII”) and higher Section 174 amortization in the U.S.

Provision for income taxes increased for the three months ended September 29, 2024, compared to the prior year period, primarily due to increase in U.S.

Provision for income taxes decreased for the nine months ended September 29, 2024, compared to the prior year period, primarily due to (i) foreign-derived intangible income (“FDII”) and higher Section 174 amortization in the U.S.

and (ii) the utilization of R&D credit in Ireland to partially offset its tax liability.

Net Loss Per Share

Three Months Ended Six Months Ended

2023 June 30,

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(In thousands, except per share data)

3 unchanged sentences

Anti-dilutive employee stock-based awards, excluded 789 989 739 2,137

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Segment and Geographic Information

8 unchanged sentences

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

Three Months Ended Six Months Ended

2023 June 30,

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Three Months Ended Nine Months Ended

September 29,

2024 October 1,

2023 September 29,

2024 October 1,

(In thousands)

8 unchanged sentences

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

September 29,

2024 December 31,

3 unchanged sentences

Total $ 13,946 $ 16,211

Stock Repurchase Program

On September 19, 2024, our Board of Directors approved a stock repurchase program of up to an aggregate of $ 50 million of shares of Arlo’s common stock through open market purchases in a manner deemed to be in the best interests of our company and stockholders, considering the economic cost and prevailing market conditions, including the relative trading prices and volumes of Arlo’s common stock.

The stock repurchase program is expected to continue through December 31, 2026 unless extended or shortened by the Board of Directors.

There were no repurchases during the three months ended September 29, 2024 and $ 50 million remained authorized for repurchase under this stock repurchase program as of September 29, 2024.

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