Cover
Cover - shares | 3 Months Ended | |
Mar. 29, 2020 | Apr. 24, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 29, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38618 | |
Entity Registrant Name | ARLO TECHNOLOGIES, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 38-4061754 | |
Entity Address, Address Line One | 3030 Orchard Parkway | |
Entity Address, City or Town | San Jose, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95134 | |
City Area Code | 408 | |
Local Phone Number | 890-3900 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | ARLO | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 77,452,280 | |
Entity Central Index Key | 0001736946 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 176,425 | $ 236,680 |
Short-term investments (amortized cost of $30,068 and $19,967, allowance for credit losses of $0 and $0) | 30,157 | 19,990 |
Accounts receivable (net of allowance for credit losses of $863 and $609) | 61,376 | 127,317 |
Inventories | 61,027 | 68,624 |
Prepaid expenses and other current assets | 12,569 | 16,958 |
Total current assets | 341,554 | 469,569 |
Property and equipment, net | 19,284 | 21,352 |
Operating lease right-of-use assets, net | 30,184 | 31,300 |
Intangibles, net | 950 | 1,306 |
Goodwill | 11,038 | 11,038 |
Restricted cash | 4,117 | 4,139 |
Other non-current assets | 3,049 | 4,008 |
Total assets | 410,176 | 542,712 |
Current liabilities: | ||
Accounts payable | 39,103 | 111,650 |
Deferred revenue | 46,875 | 50,362 |
Accrued liabilities | 100,447 | 127,400 |
Income tax payable | 4,120 | 4,489 |
Total current liabilities | 190,545 | 293,901 |
Non-current deferred revenue | 12,973 | 15,736 |
Non-current operating lease liabilities | 27,776 | 29,001 |
Non-current income taxes payable | 92 | 92 |
Other non-current liabilities | 229 | 606 |
Total liabilities | 231,615 | 339,336 |
Commitments and contingencies (Note 11) | ||
Stockholders’ Equity: | ||
Preferred stock: $0.001 par value; 50,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock: $0.001 par value; 500,000,000 shares authorized; shares issued and outstanding: 77,361,231 at March 29, 2020 and 75,785,952 at December 31, 2019 | 77 | 76 |
Additional paid-in capital | 349,212 | 334,821 |
Accumulated other comprehensive income | 117 | (2) |
Accumulated deficit | (170,845) | (131,519) |
Total stockholders’ equity | 178,561 | 203,376 |
Total liabilities and stockholders’ equity | $ 410,176 | $ 542,712 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Short-term investments, amortized cost | $ 30,068 | $ 19,967 |
Short-term investments, allowance for credit losses | 0 | 0 |
Accounts receivable, allowance for credit losses | $ 863 | $ 609 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, issued (in shares) | 77,361,231 | 75,785,952 |
Common stock, outstanding (in shares) | 77,361,231 | 75,785,952 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Revenue | $ 65,450 | $ 57,880 |
Cost of revenue | 61,497 | 55,935 |
Gross profit | 3,953 | 1,945 |
Operating expenses: | ||
Research and development | 15,243 | 18,161 |
Sales and marketing | 11,038 | 14,221 |
General and administrative | 18,784 | 10,536 |
Separation expense | 79 | 906 |
Gain on sale of business | (292) | 0 |
Total operating expenses | 44,852 | 43,824 |
Loss from operations | (40,899) | (41,879) |
Interest income | 535 | 862 |
Other income (expense), net | 1,183 | (47) |
Loss before income taxes | (39,181) | (41,064) |
Provision for income taxes | 145 | 220 |
Net loss | $ (39,326) | $ (41,284) |
Net loss per share: | ||
Basic (in dollars per share) | $ (0.51) | $ (0.55) |
Diluted (in dollars per share) | $ (0.51) | $ (0.55) |
Weighted average shares used to compute net loss per share: | ||
Basic (in shares) | 76,560 | 74,409 |
Diluted (in shares) | 76,560 | 74,409 |
Products | ||
Revenue | $ 50,723 | $ 46,608 |
Cost of revenue | 52,188 | 50,284 |
Services | ||
Revenue | 14,727 | 11,272 |
Cost of revenue | $ 9,309 | $ 5,651 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (39,326) | $ (41,284) |
Other comprehensive income (loss), before tax: | ||
Unrealized gain on derivative instruments | 53 | 40 |
Unrealized gain on available-for-sale securities | 66 | 21 |
Total other comprehensive income (loss), before tax | 119 | 61 |
Tax benefit (provision) related to derivative instruments | 0 | (5) |
Total other comprehensive income (loss), net of tax | 119 | 56 |
Comprehensive loss | $ (39,207) | $ (41,228) |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2018 | 74,247,000 | ||||
Beginning balance at Dec. 31, 2018 | $ 269,502 | $ 74 | $ 315,277 | $ 0 | $ (45,849) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (41,284) | (41,284) | |||
Stock-based compensation expense | 4,653 | ||||
Issuance of common stock under stock-based compensation plans (in shares) | 481,000 | ||||
Issuance of common stock under stock-based compensation plans | 1 | $ 1 | |||
Restricted stock unit withholdings (in shares) | (176,000) | ||||
Restricted stock unit withholdings | (1,068) | (1,068) | |||
Change in unrealized gains and losses on available-for-sale securities, net of tax | 21 | 21 | |||
Change in unrealized gains and losses on derivatives, net of tax | 35 | 35 | |||
Ending balance (in shares) at Mar. 31, 2019 | 74,552,000 | ||||
Ending balance at Mar. 31, 2019 | $ 232,141 | $ 75 | 318,862 | 56 | (86,852) |
Beginning balance (in shares) at Dec. 31, 2019 | 75,785,952 | 75,786,000 | |||
Beginning balance at Dec. 31, 2019 | $ 203,376 | $ 76 | 334,821 | (2) | (131,519) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (39,326) | (39,326) | |||
Stock-based compensation expense | 11,985 | 11,985 | |||
Settlement of liability classified RSUs | 2,573 | 2,573 | |||
Issuance of common stock under stock-based compensation plans (in shares) | 1,375,000 | ||||
Issuance of common stock under stock-based compensation plans | 1 | $ 1 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 732,000 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 1,854 | $ 1 | 1,853 | ||
Restricted stock unit withholdings (in shares) | (532,000) | ||||
Restricted stock unit withholdings | (2,021) | $ (1) | (2,020) | ||
Change in unrealized gains and losses on available-for-sale securities, net of tax | 66 | 66 | |||
Change in unrealized gains and losses on derivatives, net of tax | $ 53 | 53 | |||
Ending balance (in shares) at Mar. 29, 2020 | 77,361,231 | 77,361,000 | |||
Ending balance at Mar. 29, 2020 | $ 178,561 | $ 77 | $ 349,212 | $ 117 | $ (170,845) |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (39,326) | $ (41,284) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,773 | 2,375 |
Premium amortization / discount accretion on investments, net | (5) | (137) |
Stock-based compensation expense | 12,773 | 4,653 |
Allowance for credit losses and inventory reserves | 1,709 | 3,280 |
Gain on sale of business | (292) | 0 |
Deferred income taxes | 100 | (12) |
Changes in assets and liabilities: | ||
Accounts receivable, net | 65,685 | 94,174 |
Inventories | 6,142 | (9,411) |
Prepaid expenses and other assets | 5,273 | 13,114 |
Accounts payable | (71,834) | (27,486) |
Deferred revenue | (6,251) | (2,254) |
Accrued and other liabilities | (25,651) | (52,497) |
Net cash used in operating activities | (48,904) | (15,485) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,111) | (4,260) |
Purchases of short-term investments | (20,096) | (9,897) |
Proceeds from maturities of short-term investments | 10,000 | 15,000 |
Net cash provided (cash used) by investing activities | (11,207) | 843 |
Cash flows from financing activities: | ||
Proceeds related to employee benefit plans | 1,854 | 1 |
Restricted stock unit withholdings | (2,020) | (1,068) |
Net cash used in financing activities | (166) | (1,067) |
Net decrease in cash and cash equivalents and restricted cash | (60,277) | (15,709) |
Cash and cash equivalents and restricted cash, at beginning of period | 240,819 | 155,424 |
Cash and cash equivalents and restricted cash, at end of period | 180,542 | 139,715 |
Non-cash investing and financing activities: | ||
Purchases of property and equipment included in accounts payable and accrued liabilities | 323 | 1,880 |
De-recognition of build-to-suit assets and liabilities | $ 0 | $ (21,610) |
The Company and Basis of Presen
The Company and Basis of Presentation | 3 Months Ended |
Mar. 29, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Basis of Presentation | The Company and Basis of Presentation The Company The Company combines an intelligent cloud infrastructure and mobile app with a variety of smart connected devices that transform the way people experience the connected lifestyle. The Company's cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. The Company conducts business across three geographic regions - Americas; Europe, Middle-East and Africa (“EMEA”); and Asia Pacific (“APAC”) - and primarily generates revenue by selling devices through retail channels, wholesale distribution and wireless carrier channels and paid subscription services through in-app purchases. The Company has dual corporate headquarters located in San Jose, California and Carlsbad, California and also maintains offices to provide sales and customer support at various global locations. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All periods presented have been accounted for in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 . In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for fair statement of the unaudited condensed consolidated financial statements for interim periods. Reclassification Certain reclassifications have been made to the prior year’s condensed consolidated statements of cash flows to conform to the current year’s presentation. The reclassifications had no effect on the net cash used (provided by) in operating activities, investing activities or financing activities on the prior year’s statement of cash flows. Fiscal periods The Company’s fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. The Company reports its results on a fiscal quarter basis rather than on a calendar quarter basis. Under the fiscal quarter basis, each of the first three fiscal quarters ends on the Sunday closest to the calendar quarter end, with the fourth quarter ending on December 31. Use of estimates The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. 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 March 29, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 |
Significant Accounting Policies
Significant Accounting Policies and Recent Accounting Pronouncements | 3 Months Ended |
Mar. 29, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Recent Accounting Pronouncements | Significant Accounting Policies and Recent Accounting Pronouncements The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 . There have been no significant changes during the three months ended March 29, 2020 , other than the accounting policy discussed below. Trade accounts receivable The Company is exposed to credit losses primarily through sales of products and services. The Company's allowance for current estimated credit losses methodology for trade accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. The Company considered the current and expected future economic and market conditions surrounding the novel coronavirus ("COVID-19") pandemic and determined that the estimate of credit losses was not significantly impacted. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables. Recent accounting pronouncements Emerging Growth Company Status As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, unless the Company otherwise irrevocably elects not to avail itself of this exemption. The Company did not make such an irrevocable election and has not delayed the adoption of any applicable accounting standards. Accounting Pronouncements Recently Adopted ASU 2016-13 - Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. The Company adopted Topic 326 on January 1, 2020, using a modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. The cumulative-effect adjustment recorded on January 1, 2020, is immaterial. ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" ("ASU 2019-12"), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning January 1, 2022 (or January 1, 2021 should the Company cease to be classified as an EGC), with early adoption permitted. The Company early adopted ASU 2019-12 in the first quarter of 2020. The impact of the adoption of ASU 2019-12 on its financial statements is immaterial. Accounting Pronouncements Not Yet Effective In March 2020, FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact this guidance may have on its financial statements and related disclosures. |
Deferred Revenue
Deferred Revenue | 3 Months Ended |
Mar. 29, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue | Deferred Revenue Deferred Revenue Deferred revenue consists of advance payments and deferred revenue, where the Company has unsatisfied performance obligations. Deferred revenue primarily consists of prepaid services and customer billings in advance of revenues being recognized from the Company's subscription contracts. Transaction Price Allocated to the Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. Non-cancellable backlog includes goods and services for which customer purchase orders have been accepted and that are scheduled or in the process of being scheduled for shipment. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 29, 2020 : 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 59,916 $ 10,258 $ 3,120 $ 73,294 The majority of the performance obligation classified as greater than one year pertains to revenue deferral from prepaid services. For the three months ended March 29, 2020 and March 31, 2019 , $8.6 million and $9.2 million of revenue was deferred due to unsatisfied performance obligations, primarily relating to over time service revenue, and $14.9 million and $11.5 million of revenue was recognized for the satisfaction of performance obligations over time, respectively. $8.7 million and $8.6 million of this recognized revenue was included in the contract liability balance at the beginning of the period. There were no significant changes in estimates during the period that would affect the contract balances. Disaggregation of Revenue The Company conducts business across three geographic regions: Americas, EMEA, and APAC. Sales and usage-based taxes are excluded from revenue. Refer to Note 14 , Segment and Geographic Information |
Disposal of Business
Disposal of Business | 3 Months Ended |
Mar. 29, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal of Business | Disposal of Business On November 4, 2019, the Company and Verisure S.à.r.l. (“Verisure”) concurrently entered into an Asset Purchase Agreement (the “Purchase Agreement”) and Supply Agreement (the “Supply Agreement” and together with the Purchase Agreement, the “Verisure Agreements”). The Verisure Agreements created a strategic partnership that leverages both the Company and Verisure’s capabilities to create incremental scale to address the ever-growing demand for residential and commercial security. The strategic partnership combines the Company’s innovative connected cameras and cloud services platform with Verisure’s professionally monitored security solutions to provide a new level of smart security for European customers. The Purchase Agreement provided that, upon the terms and subject to the conditions set forth in the Purchase Agreement, the Company transferred, sold and assigned to Verisure certain assets (the "Assets") related to the Company’s commercial operations in Europe (the "Business") to Verisure for $50.0 million in cash plus additional cash for certain inventory. The Purchase Agreement contained customary representations and warranties regarding Verisure, the Business and the Assets, indemnification provisions, termination rights and other customary provisions. Further, t he Company has agreed not to engage in any business that competes with the Business for a period of three years . The transaction closed on December 30, 2019 for $52.7 million including working capital adjustments and resulted in a pretax gain of $54.9 million in the fourth quarter of 2019. In the first quarter of 2020, the Company recorded an additional gain of $292 thousand that was recorded in Gain on sale of business in the Company's unaudited condensed consolidated statements of operations as a result of the final working capital adjustment. The assets and liabilities sold and assigned to Verisure were determined to have met the criteria to be classified as held for sale as of November 4, 2019, the execution date of the Purchase Agreement. The transaction contemplated by the Purchase Agreement did not meet the criteria for discontinued operations as the Company is expected to have continued involvement in Europe through manufacturing and shipping of products to the region through sales to Verisure as part of the Supply Agreement and therefore no significant change in revenue from the region is expected; it was determined the transaction did not represent a strategic shift. The Company also assessed whether a loss is needed to be recorded upon initial classification of the assets and liabilities as held for sale to adjust its carrying amount to the fair value less cost to sell. As the carrying amount of the assets and liabilities was lower than fair value less cost to sell, no adjustment was necessary. As of the closing date of December 30, 2019, the Company concluded that no impairment exists for the assets and no adjustment was necessary for the liabilities. Further, the Company reassessed the fair value and cost to sell, and noted that they did not change since the initial classification of the assets and liabilities as held for sale. Given such, no loss adjustment was necessary. The Supply Agreement provides that Verisure is the exclusive distributor of Company products in Europe for all channels, and will non-exclusively distribute the Company's products through its direct channels globally for an initial term of five years . During the five-year period commencing January 1, 2020, Verisure has an aggregate minimum purchase commitment of $500 million , which includes annual minimum commitments. On December 30, 2019, Verisure prepaid the Company $20 million for product purchases in fiscal 2020 and will prepay $40.0 million on the first anniversary of the closing of the Purchase Agreement for product purchases in fiscal 2021. The Supply Agreement also includes certain Non-recurring Engineering ("NRE") services to be delivered to Verisure, including developing certain custom products specified by Verisure in exchange for an aggregate of $10.0 million , payable in installments upon meeting certain development milestones. As of March 29, 2020 , Verisure has paid $2.5 million for this NRE service. For the three months ended March 29, 2020 , the Company recognized service revenue of $946 thousand for this NRE service. As part of the Purchase Agreement, the Company also entered into a Transition Services Agreement with Verisure (“Verisure TSA”) to assist Verisure with the transition of the Company’s European commercial operations. These transition services primarily include IT support for 12 months , and other services for three to six months , including sales and marketing, operations and supply chain, finance, legal, and human resources which may be extended as mutually agreed upon by the parties. As compensation for these transition services, the Company will be reimbursed by Verisure based on actual direct costs plus allocation of overhead. For the three months ended March 29, 2020 , the Company charged Verisure $1.1 million for Verisure TSA services which was recorded as Other income, given such services are not related to the primary business in which the Company operates. The related Verisure TSA expenses in the same amount were recognized as incurred and reported under their natural expense classification. |
Balance Sheet Components
Balance Sheet Components | 3 Months Ended |
Mar. 29, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | Balance Sheet Components Cash and Cash Equivalents and Restricted cash The Company maintains certain cash balances restricted as to withdrawal or use. The restricted cash is comprised primarily of cash used as a collateral for a letter of credit associated with the Company’s lease agreement for its headquarters in San Jose, California. The Company deposits restricted cash with high credit quality financial institutions. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same amounts shown on the statements of cash flows: As of March 29, December 31, (In thousands) Cash and cash equivalents $ 176,425 $ 236,680 Restricted cash 4,117 4,139 Total as presented on the unaudited condensed consolidated statements of cash flows $ 180,542 $ 240,819 As of March 31, December 31, (In thousands) Cash and cash equivalents $ 135,582 $ 151,290 Restricted cash 4,133 4,134 Total as presented on the unaudited condensed consolidated statements of cash flows $ 139,715 $ 155,424 Available-for-sale short-term investments As of March 29, 2020 As of December 31, 2019 Cost Unrealized Gains Unrealized Losses Estimated Fair Value Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. treasuries $ 30,068 $ 89 $ — $ 30,157 $ 19,967 $ 23 $ — $ 19,990 The Company’s short-term investments are classified as available-for-sale and consist of government securities with an original maturity or remaining maturity at the time of purchase of greater than three months and no more than twelve months. Accordingly, none of the available-for-sale securities have unrealized losses greater than twelve months. The Company did not recognize any allowance for credit losses related to available for sale short-term investment for the three months ended March 29, 2020 . Accounts receivable, net As of March 29, December 31, (In thousands) Gross accounts receivable $ 62,239 $ 127,926 Allowance for credit losses (863 ) (609 ) Total accounts receivable, net $ 61,376 $ 127,317 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 March 29, 2020 (In thousands) Balance at the beginning of the period $ 609 Adoption of ASU 2016-13, cumulative-effect adjustment to retained earnings — Provision for expected credit losses 254 Amounts written off charged against the allowance — Balance at the end of the period $ 863 Inventories Inventories consist of finished goods which are valued at the lower of cost or net realizable value, with cost being determined using the first-in, first-out method as of March 29, 2020 . Property and equipment, net The components of property and equipment are as follows: As of March 29, December 31, (In thousands) Machinery and equipment $ 13,808 $ 13,402 Software 11,941 11,945 Computer equipment 4,093 4,047 Furniture and fixtures 4,040 4,075 Leasehold improvements 8,022 8,087 Total property and equipment, gross 41,904 41,556 Accumulated depreciation and amortization (22,620 ) (20,204 ) Total property and equipment, net $ 19,284 $ 21,352 Depreciation and amortization expense pertaining to property and equipment was $2.4 million and $2.0 million for the three months ended March 29, 2020 and March 31, 2019 , respectively. Intangibles, net As of March 29, 2020 As of December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 9,800 $ (8,883 ) $ 917 $ 9,800 $ (8,540 ) $ 1,260 Other 500 (467 ) 33 500 (454 ) 46 Total intangibles, net $ 10,300 $ (9,350 ) $ 950 $ 10,300 $ (8,994 ) $ 1,306 As of March 29, 2020 , the remaining weighted-average estimated useful life of intangibles was 0.7 years. Amortization of intangibles was $356 thousand and $381 thousand for the three months ended March 29, 2020 and March 31, 2019 , respectively. There was no impairment recorded for the three months ended March 29, 2020 and March 31, 2019 . As of March 29, 2020 , estimated amortization expense related to finite-lived intangibles for the remaining year was $950 thousand . Goodwill There was no change in the carrying amount of goodwill during the three months ended March 29, 2020 and the goodwill as of December 31, 2019 and March 29, 2020 was $11.0 million . Goodwill Impairment The Company performs an annual assessment of goodwill at the reporting unit level on the first day of the fourth fiscal quarter and during interim periods if there are triggering events to reassess goodwill. The uncertainty brought about by COVID-19 pandemic has adversely impacted the Company's stock price. The resulting impact to the Company’s market capitalization is a qualitative factor to consider when evaluating whether events or changes in circumstances indicate that it is more likely than not that a potential goodwill impairment exists. The Company concluded that the decline in the price of its common stock as a result of the COVID-19 impact was an indicator that the Company’s goodwill might be impaired. As a result, the Company performed a quantitative assessment as of March 29, 2020. The Company operates as one operating and reportable segment. The Company estimated the fair value of the business using the discounted cash flow model ("DCF model"), as management believes forecasted operating cash flows are the best indicator of current fair value. The assumptions used in the DCF model include weighted-average cost of capital, projected revenue based on projected revenue growth rate, projected operating expenses, income taxes as well as capital expenditures and change in working capital. Estimating the fair value of the business was a subjective process involving the use of estimates and judgments, particularly related to future cash flows, which are inherently uncertain. Based on the results of the quantitative assessment, the respective fair value was in excess of the carrying amount by $94.1 million , or 52.7% . As fair value was greater than carrying amount, goodwill was not impaired as of March 29, 2020. If there is a further decline in the Company’s stock price based on market conditions and deterioration of the Company’s business, the Company may have to record a charge to its earnings for the goodwill impairment of up to $11.0 million . The Company determined that no events occurred or circumstances changed during the three months ended March 29, 2020 that would more likely than not reduce the fair value of the Company below its carrying amount. Other non-current assets As of March 29, December 31, 2019 (In thousands) Non-current deferred income taxes $ 1,218 $ 1,318 Deposits 790 764 Other 1,041 1,926 Total other non-current assets $ 3,049 $ 4,008 Accrued liabilities As of March 29, December 31, (In thousands) Sales and marketing $ 37,242 $ 53,974 Sales returns 26,620 28,817 Accrued employee compensation 6,440 11,795 Current operating lease liabilities 4,138 3,912 Warranty obligation 3,188 3,169 Freight 1,480 2,690 Other 21,339 23,043 Total accrued liabilities $ 100,447 $ 127,400 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 29, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following table summarizes assets and liabilities measured at fair value on a recurring basis as of March 29, 2020 and December 31, 2019 : As of March 29, 2020 As of December 31, 2019 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) (In thousands) Assets: Cash equivalents: money-market funds (<90 days) $ 51,544 $ 51,544 $ — $ 31,472 $ 31,472 $ — Available-for-sale securities: U.S. treasuries (1) 30,157 30,157 — 19,990 19,990 — Foreign currency forward contracts (2) 106 — 106 27 — 27 Total assets measured at fair value $ 81,807 $ 81,701 $ 106 $ 51,489 $ 51,462 $ 27 Liabilities: Foreign currency forward contracts (3) $ 225 $ — $ 225 $ 375 $ — $ 375 Total liabilities measured at fair value $ 225 $ — $ 225 $ 375 $ — $ 375 _________________________ (1) Included in Short-term investments on the Company’s unaudited condensed consolidated balance sheets. (2) Included in Prepaid expenses and other current assets on the Company’s unaudited condensed consolidated balance sheets. (3) Included in Accrued liabilities on the Company’s unaudited condensed consolidated balance sheets. The Company’s 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. The Company enters into foreign currency forward contracts with only those counterparties that have long-term credit ratings of A-/A3 or higher. The Company’s foreign currency forward contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that take into account the contract terms as well as currency rates and counterparty credit rates. The Company verifies the reasonableness of these pricing models using observable market data for related inputs into such models. Additionally, the Company includes an adjustment for non-performance risk in the recognized measure of fair value of derivative instruments. As of March 29, 2020 and December 31, 2019 , the adjustment for non-performance risk did not have a material impact on the fair value of the Company’s foreign currency forward contracts. The carrying value of non-financial assets and liabilities measured at fair value in the financial statements on a recurring basis, including accounts receivable and accounts payable, approximate fair value due to their short maturities. As of March 29, 2020 and December 31, 2019 , the Company has no Level 3 fair value assets or liabilities. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 29, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s subsidiaries have had, and will continue to have material future cash flows, including revenue and expenses, which are denominated in currencies other than the Company’s functional currency. The Company and all its subsidiaries designate the U.S. dollar as the functional currency. Changes in exchange rates between the Company’s functional currency and other currencies in which the Company transacts business will cause fluctuations in cash flow expectations and cash flow realized or settled. Accordingly, the Company uses derivatives to mitigate its business exposure to foreign exchange risk. The Company enters into foreign currency forward contracts in Australian dollars, British pounds, euros, and Canadian dollars to manage its exposure to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses and existing assets and liabilities. T he Company’s foreign currency forward contracts do not contain any credit risk-related contingent features. The Company is exposed to credit losses in the event of nonperformance by the counter-parties of its forward contracts. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any one counter-party. In addition, the derivative contracts typically mature in less than six months and the Company continuously evaluates the credit standing of its counter-party financial institutions. The counter-parties to these arrangements are large highly rated financial institutions and the Company does not consider non-performance a material risk. The Company may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, materiality, accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange rates. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with the authoritative guidance for derivatives and hedging. The Company records all derivatives on the balance sheets at fair value. Cash flow hedge gains and losses are recorded in other comprehensive income (“OCI”) until the hedged item is recognized in earnings. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in Other income (expense), net in the unaudited condensed consolidated statements of operations. Fair value of derivative instruments The fair values of the Company’s derivative instruments and the line items on the unaudited condensed consolidated balance sheets to which they were recorded as of March 29, 2020 and December 31, 2019 are summarized as follows: Derivative Assets Balance Sheet Location March 29, 2020 December 31, 2019 Balance Sheet Location March 29, 2020 December 31, 2019 (In thousands) (In thousands) Derivative assets not designated as hedging instruments Prepaid expenses and other current assets $ 106 $ 27 Accrued liabilities $ 225 $ 347 Derivative assets designated as hedging instruments Prepaid expenses and other current assets — — Accrued liabilities — 28 Total $ 106 $ 27 $ 225 $ 375 Refer to Note 6 , Fair Value Measurements, for detailed disclosures regarding fair value measurements in accordance with the authoritative guidance for fair value measurements and disclosures. Gross amounts offsetting of derivative instruments The Company has entered into master netting arrangements which allow net settlements under certain conditions. Although netting is permitted, it is currently the Company’s policy and practice to record all derivative assets and liabilities on a gross basis in the unaudited condensed consolidated balance sheets. The following tables set forth the offsetting of derivative assets as of March 29, 2020 and December 31, 2019 : As of March 29, 2020 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ — $ — $ — $ — $ — $ — Wells Fargo Bank 106 — 106 (106 ) — — Total $ 106 $ — $ 106 $ (106 ) $ — $ — December 31, 2019 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 6 $ — $ 6 $ (6 ) $ — $ — Wells Fargo Bank 21 — 21 (21 ) — — Total $ 27 $ — $ 27 $ (27 ) $ — $ — The following tables set forth the offsetting of derivative liabilities as of March 29, 2020 and December 31, 2019 As of March 29, 2020 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 46 $ — $ 46 $ — $ — $ 46 Wells Fargo Bank 179 — 179 (106 ) — 73 Total $ 225 $ — $ 225 $ (106 ) $ — $ 119 December 31, 2019 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC 83 — 83 (6 ) — 77 Wells Fargo Bank 292 — 292 (21 ) — 271 Total $ 375 $ — $ 375 $ (27 ) $ — $ 348 Cash flow hedges The Company typically hedges portions of its anticipated foreign currency exposure which generally are less than six months . The Company enters into about eight forward contracts per quarter with an average size of $2.0 million USD equivalent related to its cash flow hedging program. The Company did not enter into any forward contracts related to its cash flow hedging program for the three months ended March 29, 2020 . The effects of the Company's cash flow hedges from the previous quarter on the unaudited condensed consolidated statements of operations for the three months ended March 29, 2020 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 65,450 $ 61,497 $ 15,243 $ 11,038 $ 18,784 Gains (losses) on cash flow hedge $ (4 ) $ — $ — $ — $ — The effects of the Company’s cash flow hedges on the unaudited condensed consolidated statements of operations for the three months ended March 31, 2019 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 57,880 $ 55,935 $ 18,161 $ 14,221 $ 10,536 Gains (losses) on cash flow hedge $ 120 $ (1 ) $ (18 ) $ (11 ) $ (5 ) The Company expects to reclassify to earnings all of the amounts recorded in AOCI (as defined below) associated with its cash flow hedges over the next twelve months. For information on the unrealized gains or losses on derivatives reclassified out of AOCI into the unaudited condensed consolidated statements of operations, refer to Note 8 , Accumulated Other Comprehensive Income (Loss). Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur within the designated hedge period or if not recognized within 60 days following the end of the hedge period. The Company did not recognize any material net gains or losses related to the loss of hedge designation as there were no discontinued cash flow hedges during the three months ended March 29, 2020 and March 31, 2019 . Non-designated hedges The Company adjusts its non-designated hedges monthly and enters into about nine non-designated derivatives per quarter with an average size of $1.7 million . The hedges range typically from one to three months in duration. The effects of the Company’s non-designated hedge included in Other income (expense), net on the unaudited condensed consolidated statements of operations for the three months ended March 29, 2020 and March 31, 2019 were as follows: Derivatives Not Designated as Hedging Instruments Location of Gains (Losses) Recognized in Income on Derivative Three Months Ended March 29, 2020 March 31, 2019 (In thousands) Foreign currency forward contracts Other income (expense), net $ 1,079 $ (121 ) |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 29, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table sets forth the changes in accumulated other comprehensive income (loss) (“AOCI”) by component for the three months ended March 29, 2020 and March 31, 2019 . Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2019 $ 23 $ (25 ) $ — $ (2 ) Other comprehensive income (loss) before reclassifications 66 49 — 115 Less: Amount reclassified from accumulated other comprehensive income (loss) — (4 ) — (4 ) Net current period other comprehensive income (loss) 66 53 — 119 Balance as of March 29, 2020 $ 89 $ 28 $ — $ 117 Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2018 $ (2 ) $ 2 $ — $ — Other comprehensive income (loss) before reclassifications 21 125 (5 ) 141 Less: Amount reclassified from accumulated other comprehensive income (loss) — 85 — 85 Net current period other comprehensive income (loss) 21 40 (5 ) 56 Balance as of March 31, 2019 $ 19 $ 42 $ (5 ) $ 56 The following tables provide details about significant amounts reclassified out of each component of AOCI for the three months ended March 29, 2020 and March 31, 2019 : Three Months Ended March 29, 2020 Three Months Ended March 31, 2019 Gains (Losses) Recognized in OCI - Effective Portion Gains (Losses) Reclassified from OCI to Income - Effective Portion Gains (Losses) Recognized in OCI - Effective Portion Gains (Losses) Reclassified from OCI to Income - Effective Portion Affected Line Item in the Statements of Operations (In thousands) Gains (losses) on cash flow hedge: Foreign currency contracts $ (4 ) $ (4 ) $ 125 $ 120 Revenue Foreign currency contracts — — — (1 ) Cost of revenue Foreign currency contracts — — — (18 ) Research and development Foreign currency contracts — — — (11 ) Sales and marketing Foreign currency contracts — — — (5 ) General and administrative $ (4 ) $ (4 ) $ 125 $ 85 Total * _________________________ |
Debt
Debt | 3 Months Ended |
Mar. 29, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Revolving Credit Facility On November 5, 2019, the Company entered into a Business Financing Agreement (the “Credit Agreement”) with Western Alliance Bank, an Arizona corporation, as lender (the “Lender”). The Credit Agreement provides for a two-year revolving credit facility (the “Credit Facility”) that matures on November 5, 2021 and that may, by its terms, be extended by mutual written agreement between the Company and the Lender. 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 60% of the Company’s eligible receivables and eligible accounts receivable, less such reserves as the Lender may deem proper and necessary from time to time. The Lender is not required to make any advance under the Credit Facility during the period beginning on January 1st and continuing through June 30th, except for advances made against eligible receivables first invoiced between July 1 and December 31, 2019. The Credit Agreement also includes sublimits for the issuance by the Lender of letters of credit, credit card indebtedness and foreign exchange forward contract. Repayment of the borrowings under the Credit Facility are due upon collection of the eligible receivables. The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes. The obligations of the Company under the Credit Agreement are secured by substantially all of the Company’s domestic personal property, excluding intellectual property assets and more than 65% of the shares of voting capital stock of any of the Company’s foreign subsidiaries. Borrowings under the Credit Agreement generally bear interest at floating rates based upon the prime rate plus two and one-quarter percentage points ( 2.25% ), plus an additional five percentage points ( 5% ) during any period that an event of default has occurred and is continuing. Among other fees, the Company is required to pay an annual facility fee equal to 0.25% of the limit under the Credit Facility due upon entry into the Credit Agreement and on each anniversary thereof. The annual facility fee is capitalized and being amortized as interest expense over a 12-month period. The Company incurred debt issuance costs for the Credit Agreement, which are recorded in prepaid expenses and other current assets in the Company's unaudited condensed consolidated balance sheets and are being amortized as interest expense over the contractual term of the Credit Agreement. The Credit Agreement contains customary events of default and other restrictions, including a financial covenant that requires the Company to maintain certain amount of domestic cash and certain restrictions on the Company’s ability to incur additional indebtedness, consolidate or merge, enter into acquisitions, pay any dividend or distribution on the Company’s capital stock, redeem, retire or purchase shares of the Company’s capital stock, make investments or pledge or transfer assets, in each case subject to limited exceptions. 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 the Company files a bankruptcy petition, a bankruptcy petition is filed against the Company and is not dismissed or stayed within forty-five days, or the Company makes 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. As of March 29, 2020 , the Company is in compliance with all the covenants of the Credit Agreement. No amounts had been drawn under the Credit Facility as of March 29, 2020 . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 29, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company primarily leases office space, with various expiration dates through June 2029 . Some of the leases include options to extend such leases for up to five years , and some include options to terminate such leases within one year . The terms of certain of the Company's leases provide for rental payments on a graduated scale. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, accrued liabilities, and non-current operating lease liabilities in the unaudited condensed consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Fixed lease expense for lease payments are recognized in the unaudited condensed consolidated statements of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. The operating lease expense for the three months ended March 29, 2020 and March 31, 2019 was as follows: Statements of Operations Location March 29, 2020 March 31, 2019 (In thousands) Operating lease cost (1) General and administrative $ 1,837 $ 863 ________________________ (1) Included short-term leases and variable lease costs which were immaterial. Supplemental cash flow information related to operating leases for the three months ended March 29, 2020 and was as follows: March 29, 2020 March 31, 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,486 $ 756 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ — $ 14,559 Weighted average remaining lease term and weighted average discount rate related to operating leases as of March 29, 2020 were as follows: Weighted average remaining lease term 7.5 years Weighted average discount rate 5.67 % The maturity of lease liabilities related to operating leases for each of the next five years and thereafter as of March 29, 2020 was as follows (in thousands): 2020 (Remaining nine months) $ 4,318 2021 5,698 2022 5,551 2023 4,874 2024 4,439 Thereafter 14,655 Total lease payments 39,535 Less: interest (1) (7,621 ) Total $ 31,914 Accrued liabilities $ 4,138 Non-current operating lease liabilities 27,776 Total $ 31,914 ________________________ (1) Calculated using the Company’s incremental borrowing rate on a collateralized basis plus LIBOR rate that closely matches contractual term of most leases. The maturity of lease liabilities related to operating leases for each of the next five years and thereafter as of December 31, 2019 was as follows (in thousands): 2020 $ 5,660 2021 5,735 2022 5,589 2023 4,908 2024 4,450 Thereafter 14,669 Total lease payments $ 41,011 Less: interest (1) (8,098 ) Total $ 32,913 Accrued liabilities $ 3,912 Non-current operating lease liabilities 29,001 Total $ 32,913 ________________________ (1) Calculated using the Company’s incremental borrowing rate on a collateralized basis plus LIBOR rate that closely matches contractual term of most leases. Letters of Credit In connection with the lease agreement for the headquarters located in San Jose, California, the Company executed a letter of credit with the landlord as the beneficiary. As of March 29, 2020 the Company 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 The Company has entered into various inventory-related purchase agreements with suppliers. Generally, under these agreements, 50% of orders are cancelable by giving notice 46 to 60 days prior to the expected shipment date and 25% of orders are cancelable by giving notice 31 to 45 days prior to the expected shipment date. Orders are non-cancelable within 30 days prior to the expected shipment date. As of March 29, 2020 , the Company had approximately $51.4 million in non-cancelable purchase commitments with suppliers. The Company establishes a loss liability for all products it does not expect to sell for which it has committed purchases from suppliers. As of March 29, 2020 , the loss liability from committed purchases was $1.9 million . From time to time the Company’s suppliers procure unique complex components on the Company’s behalf. If these components do not meet specified technical criteria or are defective, the Company should not be obligated to purchase the materials. Warranty Obligations Changes in the Company’s warranty liability, which is included in Accrued liabilities in the unaudited condensed consolidated balance sheets, were as follows: Three Months Ended March 29, March 31, (In thousands) Balance at the beginning of the period $ 3,169 $ 3,712 Provision for warranty obligation made during the period 207 — Settlements made during the period (188 ) (511 ) Balance at the end of the period $ 3,188 $ 3,201 Litigation and Other Legal Matters The Company is involved in disputes, litigation, and other legal actions, including, but not limited to, the matters described below. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. In such cases, the Company accrues for the amount, or if a range, the Company accrues the low end of the range, only if there is not a better estimate than any other amount within the range, as a component of legal expense within litigation reserves, net. The Company monitors developments in these legal matters that could affect the estimate the Company had previously accrued. In relation to such matters, the Company currently believes that there are no existing claims or proceedings that are likely to have a material adverse effect on its financial position within the next twelve months, or the outcome of these matters is currently not determinable. There are many uncertainties associated with any litigation, and these actions or other third-party claims against the Company may cause the Company to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require the Company to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, the Company's business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from the Company's estimates, which could result in the need to adjust the liability and record additional expenses. Beginning on December 11, 2018, purported stockholders of Arlo Technologies, Inc. filed six putative securities class action complaints in the Superior Court of California, County of Santa Clara, and one complaint in the U.S. District Court for the Northern District of California against the Company and certain of its executives and directors. Some of these actions also name as defendants the underwriters in the Company’s IPO and NETGEAR, Inc. The actions pending in state court are Aversa v. Arlo Technologies, Inc., et al. , No. 18CV339231, filed Dec. 11, 2018; Pham v. Arlo Technologies, Inc. et al. , No. 19CV340741, filed January 9, 2019; Patel v. Arlo Technologies, Inc. , No. 19CV340758, filed January 10, 2019; Perros v. NetGear, Inc. , No. 19CV342071, filed February 1, 2019; Vardanian v. Arlo Technologies, Inc. , No. 19CV342318, filed February 8, 2019; and Hill v. Arlo Technologies, Inc. et al. , No. 19CV343033, filed February 22, 2019. On April 26, 2019, the state court consolidated these actions as In re Arlo Technologies, Inc. Shareholder Litigation , No. 18CV339231 (the “State Action"). The action pending in federal court is Wong v. Arlo Technologies, Inc. et al. , No. 19-CV-00372 (the “Federal Action”). The plaintiffs in the State Action filed a consolidated complaint on May 1, 2019. The consolidated complaint generally alleges that the Company failed to adequately disclose quality control problems and adverse sales trends ahead of its IPO, violating the Securities Act of 1933, as amended. The complaint seeks unspecified monetary damages and other relief on behalf of investors who purchased Arlo common stock issued pursuant and/or traceable to the IPO offering documents. On June 21, 2019, the court stayed the State Action pending resolution of the Federal Action, given the substantial overlap between the claims. The court has set a case management conference for June 19, 2020, so the parties can provide an update regarding the status of the Federal Action. In the Federal Action, the court appointed a shareholder named Matis Nayman to serve as lead plaintiff and the law firm of Keller Lenkner LLC as lead counsel. On June 7, 2019, plaintiff filed an amended complaint, which alleged that defendants violated the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, by failing to adequately disclose quality control problems and adverse sales trends surrounding the Company’s IPO. The amended complaint also named as defendants the underwriters in the IPO and NETGEAR, Inc. Defendants filed a motion to dismiss the amended complaint on August 6, 2019, and the court granted that motion on December 19, 2019, while giving plaintiff leave to amend. On February 13, 2020, plaintiff filed a second amended complaint. On the same day, the parties asked the court to stay the case to allow for plaintiff to file a motion for preliminary approval of a class-wide settlement. On February 14, 2020, the court stayed the case. 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 (the “Derivative Action”) in the U.S. District Court for the Northern District of California. The action is brought on behalf of the Company against the majority of the Company’s 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 15, 2020, a purported stockholder named David W. Foster filed a lawsuit under 8 Del. C. § 220 in the Delaware Court of Chancery. Plaintiff seeks inspection of corporate books and records to investigate the allegations underlying the State Actions and Federal Action. Plaintiff also seeks an order directing the Company to pay his costs and expenses. Regardless of the merits or ultimate results of the above-described litigation matters, they could result in substantial costs, which would hurt the Company’s financial condition and results of operations and divert management’s attention and resources from our business. As of March 29, 2020 , the Company had accrued a loss contingency of $1.25 million for the Federal Action. Indemnification of Directors and Officers The Company, as permitted under Delaware law and in accordance with its bylaws, has agreed to indemnify its officers and directors for certain events or occurrences, subject to certain conditions, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that will enable it to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company believes the fair value of each indemnification agreement will be minimal. The Company had no liabilities recorded for these agreements as of March 29, 2020 and December 31, 2019 . Indemnifications Prior to the completion of the IPO, the Company historically participated in NETGEAR’s sales agreements. In its sales agreements, NETGEAR typically agrees to indemnify its direct customers, distributors and resellers (the “Indemnified Parties”) for any expenses or liability resulting from claimed infringements by NETGEAR’s products of patents, trademarks or copyrights of third parties that are asserted against the Indemnified Parties, subject to customary carve-outs. The terms of these indemnification agreements are generally perpetual after execution of the agreement. The maximum amount of potential future indemnification is generally unlimited. From time to time, the Company receives requests for indemnity and may choose to assume the defense of such litigation asserted against the Indemnified Parties. The Company had no liabilities recorded for these agreements as of March 29, 2020 and December 31, 2019 . In connection with the Separation, and after July 1, 2018, certain sales agreements were transferred to the Company, and the Company has replaced certain shared contracts, which include similar indemnification terms. In addition, pursuant to the master separation agreement and certain other agreements entered into with NETGEAR in connection with the Separation and the IPO, NETGEAR has agreed to indemnify the Company for certain liabilities. The master separation agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of its business with the Company and financial responsibility for the obligations and liabilities of NETGEAR’s business with NETGEAR. Under the intellectual property rights cross-license agreement entered into between the Company and NETGEAR, each party, in its capacity as a licensee, indemnifies the other party, in its capacity as a licensor, and its directors, officers, agents, successors and subsidiaries against any losses suffered by such indemnified party as a result of the indemnifying party’s practice of the intellectual property licensed to such indemnifying party under the intellectual property rights cross-license agreement. Also, under the tax matters agreement entered into between the Company and NETGEAR, each party is liable for, and indemnifies the other party and its subsidiaries from and against any liability for, taxes that are allocated to the indemnifying party under the tax matters agreement. In addition, the Company has agreed in the tax matters agreement that each party will generally be responsible for any taxes and related amounts imposed on it or NETGEAR as a result of the failure of the Distribution, together with certain related transactions, to qualify as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) and certain other relevant provisions of the Code, to the extent that the failure to so qualify is attributable to actions, events or transactions relating to such party’s respective stock, assets or business, or a breach of the relevant representations or covenants made by that party in the tax matters agreement. The transition services agreement generally provides that the applicable service recipient indemnifies the applicable service provider for liabilities that such service provider incurs arising from the provision of services other than liabilities arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the transition services agreement, and that the applicable service provider indemnifies the applicable service recipient for liabilities that such service recipient incurs arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the transition services agreement. Pursuant to the registration rights agreement, the Company has agreed to indemnify NETGEAR and its subsidiaries that hold registrable securities (and their directors, officers, agents and, if applicable, each other person who controls such holder under Section 15 of the Securities Act) registering shares pursuant to the registration rights agreement against certain losses, expenses and liabilities under the Securities Act, common law or otherwise. NETGEAR and its subsidiaries that hold registrable securities similarly indemnify the Company but such indemnification will be limited to an amount equal to the net proceeds received by such holder under the sale of registrable securities giving rise to the indemnification obligation. Change in Control and Severance Agreements The Company has entered into change in control and severance agreements with certain of its key executives (the “Severance Agreements”). Pursuant to the Severance Agreements, upon a termination without cause or resignation with good reason, the individual would be entitled to (1) cash severance equal to (a) the individual’s annual base salary and an additional amount equal to his or her target annual bonus (for the Chief Executive Officer and Chief Financial Officer) or (b) the individual’s base salary for six months (for other key executives), (2) (a) 12 months of health benefits continuation (for the Chief Executive Officer and Chief Financial Officer) or (b) six months of health benefits continuation (for other key executives) and (3) accelerated vesting of any unvested equity awards that would have vested during the 12 months following the termination date. Upon a termination without cause or resignation with good reason that occurs during the one month prior to or 12 months following a change in control, the individual would be entitled to (1) (a) cash severance equal to a multiple (2 times for the Chief Executive Officer and 1.5 times for the Chief Financial Officer) of the sum of the individual’s annual base salary and target annual bonus (for the Chief Executive Officer and Chief Financial Officer) or (b) a cash severance equal to the individual’s annual base salary (for other key executives), (2) a number of months of health benefits continuation (24 months for the Chief Executive Officer, 18 months for the Chief Financial Officer, and 12 months for other key executives) and (3) vesting of all outstanding, unvested equity awards. Severance will be conditioned upon the execution and non-revocation of a release of claims. The Company had no liabilities recorded for these agreements as of March 29, 2020 . On May 2, 2019, the Company and Patrick J. Collins III, the Company’s Senior Vice President of Products, entered into a Separation and Release Agreement (the “Separation Agreement”) regarding Mr. Collins’ separation from the Company, effective May 1, 2019. Pursuant to the Separation Agreement, Mr. Collins received cash severance equal to his annual base salary, 12 months of health benefits continuation and accelerated vesting of any of his unvested equity awards that would have vested during the 12 months following the termination date. Environmental Regulation The Company is required to comply and is currently in compliance with the European Union (“EU”) and other Directives on the Restrictions of the use of Certain Hazardous Substances in Electrical and Electronic Equipment (“RoHS”), Waste Electrical and Electronic Equipment (“WEEE”) requirements, Energy Using Product (“EuP”) requirements, the REACH Regulation, Packaging Directive and the Battery Directive. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Mar. 29, 2020 | |
Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company grants options and restricted stock units ("RSUs") under the 2018 Equity Incentive Plan (the “2018 Plan”), under which awards may be granted to all employees. Award vesting periods for this plan are generally three to four years . Options may be granted for periods of up to 10 years or such shorter term as may be provided in the applicable option agreement and at prices no less than 100% of the fair market value of the Company’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 . The following table sets forth the available shares for grant under the 2018 Plan as of March 29, 2020 and December 31, 2019 : Number of Shares (In thousands) Shares available for grant as of December 31, 2019 (1) 2,630 Additional authorized shares 3,031 Granted (795 ) Forfeited / cancelled (2) 1,717 Shares traded for taxes 532 Shares available for grant as of March 29, 2020 7,115 _________________________ (1) Includes Arlo IPO Options of 2.8 million shares granted to certain of the Company’s named executive officers (“NEOs”) with performance-based vesting criteria (in addition to service-based vesting criteria for any of such IPO Options that are deemed to have been earned). Each of the IPO Options has a ten-year contractual term and an exercise price equal to the fair value of a share of Arlo common stock on the date of grant and will vest as follows: • The Tranche 1 Service Option vests in equal monthly installments during the 24 -month period that begins on the two-year anniversary of the option grant date; • The Tranche 2 Performance Option vests on the later of (i) the date (prior to the four-year anniversary of the grant date) of satisfaction of a cumulative registered accounts milestone and (ii) if the milestone has been satisfied prior to the applicable date, then (a) with respect to 25% of the Tranche 2 Performance Option, on the first anniversary of the option grant date, (b) with respect to 25% of the Tranche 2 Performance Option, on the second anniversary of the option grant date, and (c) with respect to the remaining 50% of the Tranche 2 Performance Option, in equal monthly installments during the 24-month period on the first day of each month beginning on September 1, 2020; • The Tranche 3 Performance Option vests on the later of (i) the date (prior to the four-year anniversary of the grant date) of satisfaction of a paid recurring revenue milestone and (ii) if the milestone has been satisfied prior to the applicable date, then (a) with respect to 25% of the Tranche 3 Performance Option, on the first anniversary of the option grant date, (b) with respect to 25% of the Tranche 3 Performance Option, on the second anniversary of the option grant date, and (c) with respect to the remaining 50% of the Tranche 3 Performance Option, in equal monthly installments during the 24-month period on the first day of each month beginning on September 1, 2020; • The Tranche 4 Performance Option vests on the one-year anniversary of the grant date based on the extent to which the revenue and non-GAAP gross profit milestones for the second half of fiscal 2018 are achieved; and • The Tranche 5 Performance Option vests on the two-year anniversary of the grant date based on the extent to which the revenue and non-GAAP gross profit milestones for the fiscal 2019 are achieved. As of March 29, 2020, the Tranche 2 performance milestone was achieved and Tranche 3 performance milestone is probable to be achieved. However, Tranches 4 and 5 performance measurement period were completed and none of the performance milestones were achieved, hence, none of the shares vested. Tranches 1 to 5 granted to Mr. Collins were cancelled in connection with his separation from the Company in May 2019. Tranches 4 and 5 granted to the Chief Executive Officer ("CEO") were voluntarily forfeited in 2019 as the performance milestones for those Tranches were not achieved. Tranches 1, 2 and 3 granted to the CEO were voluntarily forfeited in January 2020 by the CEO. The performance milestones for Tranches 4 and 5 that were granted to the Chief Financial Officer were not met, hence, Tranche 4 was cancelled in 2019 and Tranche 5 is pending cancellation. (2) Includes 1.4 million IPO Options that were voluntarily cancelled by the Company's CEO in January 2020 with no replacement award, and 0.2 million units subject to the performance RSUs ("PSUs") granted to the Company's NEOs that were cancelled as the performance milestone was not achieved. Additionally, the Company sponsors an Employee Stock Purchase Plan (“ESPP”), pursuant to which eligible employees may contribute up to 15% of compensation, subject to certain income limits, to purchase shares of the Company’s common stock. The terms of the plan include a look-back feature that enables employees to purchase stock semi-annually at a price equal to 85% of the lesser of the fair market value at the beginning of the offering period or the purchase date. The duration of each offering period is generally six months , with the first offering period having commenced on February 16, 2019 and ended on August 15, 2019. As of March 29, 2020 , approximately 1.5 million shares were available for issuance under the ESPP. On March 3, 2020, the Company registered an aggregate of up to 3,788,756 shares of the Company’s common stock on Registration Statement on Form S-8, including 3,031,005 shares issuable pursuant to the Company's 2018 Plan that were automatically added to the shares authorized for issuance under the 2018 Plan on January 1, 2020 pursuant to an “evergreen” provision contained in the 2018 Plan and 757,751 shares issuable pursuant to the Company’s 2018 ESPP that were automatically added to the shares authorized for issuance under the 2018 ESPP on January 1, 2020 pursuant to an “evergreen” provision contained in the 2018 ESPP. Option Activity Arlo’s stock option activity during the three months ended March 29, 2020 was as follows: Number of shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2019 (1) 6,040 $ 11.56 Granted — $ — Exercised — $ — Forfeited / cancelled (2) (1,417 ) $ 15.92 Outstanding as of March 29, 2020 4,623 $ 10.22 Vested and expected to vest as of March 29, 2020 4,623 $ 11.56 Exercisable Options as of March 29, 2020 3,375 $ 8.69 (1) Includes Arlo IPO Options of 2.8 million shares granted to certain of the Company’s NEOs with performance-based vesting criteria (in addition to service-based vesting criteria for any of such IPO Options that are deemed to have been earned). Tranches 1 to 5 granted to Mr. Collins were cancelled in connection with his separation from the Company in May 2019. Tranches 4 and 5 granted to the CEO were voluntarily forfeited in 2019 as the performance milestones for those tranches were not achieved, Tranches 1, 2 and 3 granted to the CEO were voluntarily forfeited in January 2020 with no replacement award. The performance milestones for Tranches 4 and 5 that were granted to the Chief Financial Officer were not met, hence, Tranche 4 was cancelled in 2019 and Tranche 5 was pending cancellation on the 2nd anniversary of the grant date. (2) Includes 1.4 million shares subject to the IPO Options that were voluntarily cancelled by the CEO in January 2020 with no replacement award. NETGEAR’s stock option activity for Arlo employees during the three months ended March 29, 2020 was as follows: Number of shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2019 205 $ 25.94 Exercised (3 ) $ 21.83 Forfeited / cancelled — $ — Expired — $ — Outstanding as of March 29, 2020 202 $ 25.99 Vested and expected to vest as of March 29, 2020 202 $ 25.99 Exercisable Options as of March 29, 2020 168 $ 24.39 RSU Activity Arlo’s RSU activity during the three months ended March 29, 2020 was as follows: Number of shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2019 (1) 7,851 $ 6.50 Granted 794 $ 4.06 Vested (1,375 ) $ 7.14 Forfeited (300 ) $ 4.84 Outstanding as of March 29, 2020 6,970 $ 6.17 (1) Includes 0.8 million shares consisting of RSUs ( 50% of the grant), PSUs ( 25% of the grant) and market-based performance RSUs ("MPSUs") ( 25% of the grant) granted to the NEOs during the fiscal quarter ended September 29, 2019. The RSUs will vest in three equal annual installments during the period that begins on the RSU grant date. The PSUs will vest in three equal annual installments during the period that begins on the PSU grant date based on the extent to which a revenue milestone for the fiscal year ended December 31, 2019 is achieved. As of March 29, 2020 , 0.2 million shares subject to the PSUs granted to the Company's NEOs were cancelled as the performance milestone was not achieved. The MPSUs will vest at the end of the three-year period that begins on the MPSU grant date based on performance of the Company's common stock relative to the Benchmark during the three-year period from the grant date. A positive 3.3 x or negative 2.5 x multiplier will be applied to the total shareholder returns (“TSR”), such that the number of shares vested will increase by 3.3% or decrease by 2.5% of the target numbers, for each 1% of positive or negative TSR relative to the Benchmark. In the event the Company's common stock performance is below negative 30% relative to the Benchmark, no shares will be vested. In no event will the number of shares vested exceed 200% of the target for that tranche. NETGEAR’s RSU activity for Arlo employees during the three months ended March 29, 2020 was as follows: Number of shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2019 278 $ 36.14 Vested (41 ) $ 40.20 Forfeited (9 ) $ 35.54 Outstanding as of March 29, 2020 228 $ 35.44 The following table sets forth the weighted average assumptions used to estimate the fair value of purchase rights granted under Arlo’s ESPP for the three months ended March 29, 2020 and March 31, 2019 . Three Months Ended ESPP March 29, March 31, Expected life (in years) 0.5 0.5 Risk-free interest rate 1.55 % 2.49 % Expected volatility 73.0 % 97.6 % Dividend yield — — Stock-Based Compensation Expense The Company’s employees have historically participated in NETGEAR’s various stock-based plans, which are described below and represent the portion of NETGEAR’s stock-based plans in which Arlo employees participated. The Company’s unaudited condensed consolidated statements of income reflect compensation expense for these stock-based plans associated with the portion of NETGEAR’s plans in which Arlo employees participated. The following tables set forth stock-based compensation expense for Arlo employees and allocated charges deemed attributable to Arlo operations resulting from NETGEAR’s and Arlo’s RSUs, PSUs, MPSUs and stock options, and the purchase rights under the NETGEAR’s ESPP included in the Company’s unaudited condensed consolidated statements of operations during the periods indicated: Three Months Ended March 29, 2020 March 31, 2019 (In thousands) Cost of revenue $ 503 $ 369 Research and development 1,660 1,297 Sales and marketing 751 940 General and administrative 9,859 2,047 Total stock-based compensation $ 12,773 $ 4,653 The Company recognizes these compensation expense generally on a straight-line basis over the requisite service period of the award. In January 2020, the IPO Options (Tranches 1, 2 and 3) granted to the CEO were voluntarily forfeited with no replacement award. The cancellation was treated as a settlement for no consideration and all remaining unrecognized compensation cost of $7.4 million was accelerated and recognized as stock-based compensation expenses for the three months ended March 29, 2020. As of March 29, 2020 , $3.9 million of unrecognized compensation cost related to Arlo’s stock options and IPO options was expected to be recognized over a weighted-average period of 1.8 years. $25.3 million of unrecognized compensation cost related to unvested Arlo’s RSUs, PSUs and MPSUs was expected to be recognized over a weighted-average period of 2.6 years. As of March 29, 2020 , $0.3 million of unrecognized compensation cost related to NETGEAR’s stock options for Arlo employees was expected to be recognized over a weighted-average period of 1.6 years. $6.0 million of unrecognized compensation cost related to unvested NETGEAR’s RSUs for Arlo employees was expected to be recognized over a weighted-average period of 1.6 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 29, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the three months ended March 29, 2020 and March 31, 2019 , was $0.1 million , or an effective tax rate of (0.4)% , and $0.2 million , or an effective tax rate of (0.5)% , respectively. During the three months ended March 29, 2020 , the Company sustained lower book losses than the same periods in the prior year. Consistent with the prior year, the Company has a full valuation allowance on its U.S. federal and state deferred tax assets and did not record a tax benefit on these deferred tax assets because of uncertainty about its future profitability. The Company's provision for income taxes was primarily attributable to income taxes on foreign earnings. The decrease in provision for income taxes for the three months ended March 29, 2020 , compared to the prior year period was primarily due to lower foreign earnings in 2020 compared to 2019. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 3 Months Ended |
Mar. 29, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Potentially dilutive common shares, such as common shares issuable upon exercise of stock options and vesting of restricted stock awards are typically reflected in the computation of diluted net income (loss) per share by application of the treasury stock method. For certain periods presented, due to the net losses reported, these potentially dilutive securities were excluded from the computation of diluted net loss per share, since their effect would be anti-dilutive. Net loss per share for three months ended March 29, 2020 and March 31, 2019 were as follows: Three Months Ended March 29, 2020 March 31, 2019 (In thousands, except per share data) Numerator: Net loss $ (39,326 ) $ (41,284 ) Denominator: Weighted average common shares - basic 76,560 74,409 Potentially dilutive common share equivalent — — Weighted average common shares - dilutive 76,560 74,409 Basic net loss per share $ (0.51 ) $ (0.55 ) Diluted net loss per share $ (0.51 ) $ (0.55 ) Anti-dilutive employee stock-based awards, excluded 8,003 10,030 |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Mar. 29, 2020 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information Segment Information The Company operates as one operating and reportable segment. The Company has identified its CEO as the Chief Operating Decision Maker (“CODM”). The CODM reviews financial information presented on a combined basis for purposes of allocating resources and evaluating financial performance. Geographic Information The Company conducts business across three geographic regions: Americas, EMEA and APAC. Revenue consists of gross product shipments and service revenue, less allowances for estimated sales returns, price protection, end-user customer rebates and other channel sales incentives deemed to be a reduction of revenue per the authoritative guidance for revenue recognition, net changes in deferred revenue, and gains or losses from hedging. 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 shows revenue by geography for the periods indicated: Three Months Ended March 29, March 31, (In thousands) United States (“U.S.”) $ 45,544 $ 41,803 Americas (excluding U.S.) 4,614 2,563 EMEA 7,573 9,302 APAC 7,719 4,212 Total revenue $ 65,450 $ 57,880 The Company’s Property and equipment, net are located in the following geographic locations: As of March 29, December 31, (In thousands) United States (“U.S.”) $ 15,426 $ 17,100 Americas (excluding U.S.) 807 904 EMEA 293 316 China 1,926 2,089 APAC (excluding China) 832 943 Total property and equipment, net $ 19,284 $ 21,352 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 29, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Tenant Allowance Reimbursement Under the terms of our lease agreement, the Company received a Tenant Improvement Reimbursement of $3.5 million |
Significant Accounting Polici_2
Significant Accounting Policies and Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 29, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All periods presented have been accounted for in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). |
Reclassification | Reclassification Certain reclassifications have been made to the prior year’s condensed consolidated statements of cash flows to conform to the current year’s presentation. The reclassifications had no effect on the net cash used (provided by) in operating activities, investing activities or financing activities on the prior year’s statement of cash flows. |
Fiscal periods | Fiscal periods The Company’s fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. The Company reports its results on a fiscal quarter basis rather than on a calendar quarter basis. Under the fiscal quarter basis, each of the first three fiscal quarters ends on the Sunday closest to the calendar quarter end, with the fourth quarter ending on December 31. |
Use of estimates | Use of estimates The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. 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 March 29, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any future period. |
Trade accounts receivable | Trade accounts receivable The Company is exposed to credit losses primarily through sales of products and services. The Company's allowance for current estimated credit losses methodology for trade accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. The Company considered the current and expected future economic and market conditions surrounding the novel coronavirus ("COVID-19") pandemic and determined that the estimate of credit losses was not significantly impacted. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables. |
Recent accounting pronouncements | Recent accounting pronouncements Emerging Growth Company Status As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, unless the Company otherwise irrevocably elects not to avail itself of this exemption. The Company did not make such an irrevocable election and has not delayed the adoption of any applicable accounting standards. Accounting Pronouncements Recently Adopted ASU 2016-13 - Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. The Company adopted Topic 326 on January 1, 2020, using a modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. The cumulative-effect adjustment recorded on January 1, 2020, is immaterial. ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" ("ASU 2019-12"), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning January 1, 2022 (or January 1, 2021 should the Company cease to be classified as an EGC), with early adoption permitted. The Company early adopted ASU 2019-12 in the first quarter of 2020. The impact of the adoption of ASU 2019-12 on its financial statements is immaterial. Accounting Pronouncements Not Yet Effective In March 2020, FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact this guidance may have on its financial statements and related disclosures. |
Fair value of financial instruments | The Company’s 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. The Company enters into foreign currency forward contracts with only those counterparties that have long-term credit ratings of A-/A3 or higher. The Company’s foreign currency forward contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that take into account the contract terms as well as currency rates and counterparty credit rates. The Company verifies the reasonableness of these pricing models using observable market data for related inputs into such models. Additionally, the Company includes an adjustment for non-performance risk in the recognized measure of fair value of derivative instruments. As of March 29, 2020 and December 31, 2019 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Remaining Performance Obligations | The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 29, 2020 : 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 59,916 $ 10,258 $ 3,120 $ 73,294 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same amounts shown on the statements of cash flows: As of March 29, December 31, (In thousands) Cash and cash equivalents $ 176,425 $ 236,680 Restricted cash 4,117 4,139 Total as presented on the unaudited condensed consolidated statements of cash flows $ 180,542 $ 240,819 |
Schedule of Restricted Cash | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same amounts shown on the statements of cash flows: As of March 29, December 31, (In thousands) Cash and cash equivalents $ 176,425 $ 236,680 Restricted cash 4,117 4,139 Total as presented on the unaudited condensed consolidated statements of cash flows $ 180,542 $ 240,819 |
Schedule of Available-For-Sale Short-Term Investments | Available-for-sale short-term investments As of March 29, 2020 As of December 31, 2019 Cost Unrealized Gains Unrealized Losses Estimated Fair Value Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. treasuries $ 30,068 $ 89 $ — $ 30,157 $ 19,967 $ 23 $ — $ 19,990 |
Schedule of Accounts Receivable, Net | Accounts receivable, net As of March 29, December 31, (In thousands) Gross accounts receivable $ 62,239 $ 127,926 Allowance for credit losses (863 ) (609 ) Total accounts receivable, net $ 61,376 $ 127,317 |
Summary of Allowance for Credit Losses, Accounts Receivable | 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 March 29, 2020 (In thousands) Balance at the beginning of the period $ 609 Adoption of ASU 2016-13, cumulative-effect adjustment to retained earnings — Provision for expected credit losses 254 Amounts written off charged against the allowance — Balance at the end of the period $ 863 |
Schedule of Property and Equipment, Net | Property and equipment, net The components of property and equipment are as follows: As of March 29, December 31, (In thousands) Machinery and equipment $ 13,808 $ 13,402 Software 11,941 11,945 Computer equipment 4,093 4,047 Furniture and fixtures 4,040 4,075 Leasehold improvements 8,022 8,087 Total property and equipment, gross 41,904 41,556 Accumulated depreciation and amortization (22,620 ) (20,204 ) Total property and equipment, net $ 19,284 $ 21,352 |
Schedule of Intangibles, Net | Intangibles, net As of March 29, 2020 As of December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 9,800 $ (8,883 ) $ 917 $ 9,800 $ (8,540 ) $ 1,260 Other 500 (467 ) 33 500 (454 ) 46 Total intangibles, net $ 10,300 $ (9,350 ) $ 950 $ 10,300 $ (8,994 ) $ 1,306 |
Schedule of Other Non-Current Assets | Other non-current assets As of March 29, December 31, 2019 (In thousands) Non-current deferred income taxes $ 1,218 $ 1,318 Deposits 790 764 Other 1,041 1,926 Total other non-current assets $ 3,049 $ 4,008 |
Schedule of Accrued Liabilities | Accrued liabilities As of March 29, December 31, (In thousands) Sales and marketing $ 37,242 $ 53,974 Sales returns 26,620 28,817 Accrued employee compensation 6,440 11,795 Current operating lease liabilities 4,138 3,912 Warranty obligation 3,188 3,169 Freight 1,480 2,690 Other 21,339 23,043 Total accrued liabilities $ 100,447 $ 127,400 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes assets and liabilities measured at fair value on a recurring basis as of March 29, 2020 and December 31, 2019 : As of March 29, 2020 As of December 31, 2019 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) (In thousands) Assets: Cash equivalents: money-market funds (<90 days) $ 51,544 $ 51,544 $ — $ 31,472 $ 31,472 $ — Available-for-sale securities: U.S. treasuries (1) 30,157 30,157 — 19,990 19,990 — Foreign currency forward contracts (2) 106 — 106 27 — 27 Total assets measured at fair value $ 81,807 $ 81,701 $ 106 $ 51,489 $ 51,462 $ 27 Liabilities: Foreign currency forward contracts (3) $ 225 $ — $ 225 $ 375 $ — $ 375 Total liabilities measured at fair value $ 225 $ — $ 225 $ 375 $ — $ 375 _________________________ (1) Included in Short-term investments on the Company’s unaudited condensed consolidated balance sheets. (2) Included in Prepaid expenses and other current assets on the Company’s unaudited condensed consolidated balance sheets. (3) Included in Accrued liabilities on the Company’s unaudited condensed consolidated balance sheets. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of the Company's Derivative Instruments and the Line Items on the Consolidated Balance Sheets | The fair values of the Company’s derivative instruments and the line items on the unaudited condensed consolidated balance sheets to which they were recorded as of March 29, 2020 and December 31, 2019 are summarized as follows: Derivative Assets Balance Sheet Location March 29, 2020 December 31, 2019 Balance Sheet Location March 29, 2020 December 31, 2019 (In thousands) (In thousands) Derivative assets not designated as hedging instruments Prepaid expenses and other current assets $ 106 $ 27 Accrued liabilities $ 225 $ 347 Derivative assets designated as hedging instruments Prepaid expenses and other current assets — — Accrued liabilities — 28 Total $ 106 $ 27 $ 225 $ 375 |
Schedule of Offsetting of Derivative Assets | The following tables set forth the offsetting of derivative assets as of March 29, 2020 and December 31, 2019 : As of March 29, 2020 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ — $ — $ — $ — $ — $ — Wells Fargo Bank 106 — 106 (106 ) — — Total $ 106 $ — $ 106 $ (106 ) $ — $ — December 31, 2019 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 6 $ — $ 6 $ (6 ) $ — $ — Wells Fargo Bank 21 — 21 (21 ) — — Total $ 27 $ — $ 27 $ (27 ) $ — $ — |
Schedule of Offsetting of Derivative Liabilities | The following tables set forth the offsetting of derivative liabilities as of March 29, 2020 and December 31, 2019 As of March 29, 2020 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 46 $ — $ 46 $ — $ — $ 46 Wells Fargo Bank 179 — 179 (106 ) — 73 Total $ 225 $ — $ 225 $ (106 ) $ — $ 119 December 31, 2019 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC 83 — 83 (6 ) — 77 Wells Fargo Bank 292 — 292 (21 ) — 271 Total $ 375 $ — $ 375 $ (27 ) $ — $ 348 |
Schedule of Locations of Gains or Losses Recognized in Income | The Company did not enter into any forward contracts related to its cash flow hedging program for the three months ended March 29, 2020 . The effects of the Company's cash flow hedges from the previous quarter on the unaudited condensed consolidated statements of operations for the three months ended March 29, 2020 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 65,450 $ 61,497 $ 15,243 $ 11,038 $ 18,784 Gains (losses) on cash flow hedge $ (4 ) $ — $ — $ — $ — The effects of the Company’s cash flow hedges on the unaudited condensed consolidated statements of operations for the three months ended March 31, 2019 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 57,880 $ 55,935 $ 18,161 $ 14,221 $ 10,536 Gains (losses) on cash flow hedge $ 120 $ (1 ) $ (18 ) $ (11 ) $ (5 ) |
Schedule of Derivatives not Designated as Hedging Instruments | The effects of the Company’s non-designated hedge included in Other income (expense), net on the unaudited condensed consolidated statements of operations for the three months ended March 29, 2020 and March 31, 2019 were as follows: Derivatives Not Designated as Hedging Instruments Location of Gains (Losses) Recognized in Income on Derivative Three Months Ended March 29, 2020 March 31, 2019 (In thousands) Foreign currency forward contracts Other income (expense), net $ 1,079 $ (121 ) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income | The following table sets forth the changes in accumulated other comprehensive income (loss) (“AOCI”) by component for the three months ended March 29, 2020 and March 31, 2019 . Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2019 $ 23 $ (25 ) $ — $ (2 ) Other comprehensive income (loss) before reclassifications 66 49 — 115 Less: Amount reclassified from accumulated other comprehensive income (loss) — (4 ) — (4 ) Net current period other comprehensive income (loss) 66 53 — 119 Balance as of March 29, 2020 $ 89 $ 28 $ — $ 117 Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2018 $ (2 ) $ 2 $ — $ — Other comprehensive income (loss) before reclassifications 21 125 (5 ) 141 Less: Amount reclassified from accumulated other comprehensive income (loss) — 85 — 85 Net current period other comprehensive income (loss) 21 40 (5 ) 56 Balance as of March 31, 2019 $ 19 $ 42 $ (5 ) $ 56 |
Schedule of Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following tables provide details about significant amounts reclassified out of each component of AOCI for the three months ended March 29, 2020 and March 31, 2019 : Three Months Ended March 29, 2020 Three Months Ended March 31, 2019 Gains (Losses) Recognized in OCI - Effective Portion Gains (Losses) Reclassified from OCI to Income - Effective Portion Gains (Losses) Recognized in OCI - Effective Portion Gains (Losses) Reclassified from OCI to Income - Effective Portion Affected Line Item in the Statements of Operations (In thousands) Gains (losses) on cash flow hedge: Foreign currency contracts $ (4 ) $ (4 ) $ 125 $ 120 Revenue Foreign currency contracts — — — (1 ) Cost of revenue Foreign currency contracts — — — (18 ) Research and development Foreign currency contracts — — — (11 ) Sales and marketing Foreign currency contracts — — — (5 ) General and administrative $ (4 ) $ (4 ) $ 125 $ 85 Total * _________________________ * Tax impact to hedging gains and losses from derivative contracts was immaterial. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Effect on Financial Statements | Supplemental cash flow information related to operating leases for the three months ended March 29, 2020 and was as follows: March 29, 2020 March 31, 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,486 $ 756 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ — $ 14,559 Weighted average remaining lease term and weighted average discount rate related to operating leases as of March 29, 2020 were as follows: Weighted average remaining lease term 7.5 years Weighted average discount rate 5.67 % The operating lease expense for the three months ended March 29, 2020 and March 31, 2019 was as follows: Statements of Operations Location March 29, 2020 March 31, 2019 (In thousands) Operating lease cost (1) General and administrative $ 1,837 $ 863 ________________________ (1) Included short-term leases and variable lease costs which were immaterial. |
Summary of Operating Lease Maturity | The maturity of lease liabilities related to operating leases for each of the next five years and thereafter as of March 29, 2020 was as follows (in thousands): 2020 (Remaining nine months) $ 4,318 2021 5,698 2022 5,551 2023 4,874 2024 4,439 Thereafter 14,655 Total lease payments 39,535 Less: interest (1) (7,621 ) Total $ 31,914 Accrued liabilities $ 4,138 Non-current operating lease liabilities 27,776 Total $ 31,914 ________________________ (1) Calculated using the Company’s incremental borrowing rate on a collateralized basis plus LIBOR rate that closely matches contractual term of most leases. The maturity of lease liabilities related to operating leases for each of the next five years and thereafter as of December 31, 2019 was as follows (in thousands): 2020 $ 5,660 2021 5,735 2022 5,589 2023 4,908 2024 4,450 Thereafter 14,669 Total lease payments $ 41,011 Less: interest (1) (8,098 ) Total $ 32,913 Accrued liabilities $ 3,912 Non-current operating lease liabilities 29,001 Total $ 32,913 ________________________ (1) Calculated using the Company’s incremental borrowing rate on a collateralized basis plus LIBOR rate that closely matches contractual term of most leases. |
Schedule of Changes in Warranty Obligation | Changes in the Company’s warranty liability, which is included in Accrued liabilities in the unaudited condensed consolidated balance sheets, were as follows: Three Months Ended March 29, March 31, (In thousands) Balance at the beginning of the period $ 3,169 $ 3,712 Provision for warranty obligation made during the period 207 — Settlements made during the period (188 ) (511 ) Balance at the end of the period $ 3,188 $ 3,201 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Schedule of Shares Available for Grant | The following table sets forth the available shares for grant under the 2018 Plan as of March 29, 2020 and December 31, 2019 : Number of Shares (In thousands) Shares available for grant as of December 31, 2019 (1) 2,630 Additional authorized shares 3,031 Granted (795 ) Forfeited / cancelled (2) 1,717 Shares traded for taxes 532 Shares available for grant as of March 29, 2020 7,115 _________________________ (1) Includes Arlo IPO Options of 2.8 million shares granted to certain of the Company’s named executive officers (“NEOs”) with performance-based vesting criteria (in addition to service-based vesting criteria for any of such IPO Options that are deemed to have been earned). Each of the IPO Options has a ten-year contractual term and an exercise price equal to the fair value of a share of Arlo common stock on the date of grant and will vest as follows: • The Tranche 1 Service Option vests in equal monthly installments during the 24 -month period that begins on the two-year anniversary of the option grant date; • The Tranche 2 Performance Option vests on the later of (i) the date (prior to the four-year anniversary of the grant date) of satisfaction of a cumulative registered accounts milestone and (ii) if the milestone has been satisfied prior to the applicable date, then (a) with respect to 25% of the Tranche 2 Performance Option, on the first anniversary of the option grant date, (b) with respect to 25% of the Tranche 2 Performance Option, on the second anniversary of the option grant date, and (c) with respect to the remaining 50% of the Tranche 2 Performance Option, in equal monthly installments during the 24-month period on the first day of each month beginning on September 1, 2020; • The Tranche 3 Performance Option vests on the later of (i) the date (prior to the four-year anniversary of the grant date) of satisfaction of a paid recurring revenue milestone and (ii) if the milestone has been satisfied prior to the applicable date, then (a) with respect to 25% of the Tranche 3 Performance Option, on the first anniversary of the option grant date, (b) with respect to 25% of the Tranche 3 Performance Option, on the second anniversary of the option grant date, and (c) with respect to the remaining 50% of the Tranche 3 Performance Option, in equal monthly installments during the 24-month period on the first day of each month beginning on September 1, 2020; • The Tranche 4 Performance Option vests on the one-year anniversary of the grant date based on the extent to which the revenue and non-GAAP gross profit milestones for the second half of fiscal 2018 are achieved; and • The Tranche 5 Performance Option vests on the two-year anniversary of the grant date based on the extent to which the revenue and non-GAAP gross profit milestones for the fiscal 2019 are achieved. As of March 29, 2020, the Tranche 2 performance milestone was achieved and Tranche 3 performance milestone is probable to be achieved. However, Tranches 4 and 5 performance measurement period were completed and none of the performance milestones were achieved, hence, none of the shares vested. Tranches 1 to 5 granted to Mr. Collins were cancelled in connection with his separation from the Company in May 2019. Tranches 4 and 5 granted to the Chief Executive Officer ("CEO") were voluntarily forfeited in 2019 as the performance milestones for those Tranches were not achieved. Tranches 1, 2 and 3 granted to the CEO were voluntarily forfeited in January 2020 by the CEO. The performance milestones for Tranches 4 and 5 that were granted to the Chief Financial Officer were not met, hence, Tranche 4 was cancelled in 2019 and Tranche 5 is pending cancellation. (2) Includes 1.4 million IPO Options that were voluntarily cancelled by the Company's CEO in January 2020 with no replacement award, and 0.2 million units subject to the performance RSUs ("PSUs") granted to the Company's NEOs that were cancelled as the performance milestone was not achieved. |
Schedule of Stock Option Activity | NETGEAR’s stock option activity for Arlo employees during the three months ended March 29, 2020 was as follows: Number of shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2019 205 $ 25.94 Exercised (3 ) $ 21.83 Forfeited / cancelled — $ — Expired — $ — Outstanding as of March 29, 2020 202 $ 25.99 Vested and expected to vest as of March 29, 2020 202 $ 25.99 Exercisable Options as of March 29, 2020 168 $ 24.39 Arlo’s stock option activity during the three months ended March 29, 2020 was as follows: Number of shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2019 (1) 6,040 $ 11.56 Granted — $ — Exercised — $ — Forfeited / cancelled (2) (1,417 ) $ 15.92 Outstanding as of March 29, 2020 4,623 $ 10.22 Vested and expected to vest as of March 29, 2020 4,623 $ 11.56 Exercisable Options as of March 29, 2020 3,375 $ 8.69 (1) Includes Arlo IPO Options of 2.8 million shares granted to certain of the Company’s NEOs with performance-based vesting criteria (in addition to service-based vesting criteria for any of such IPO Options that are deemed to have been earned). Tranches 1 to 5 granted to Mr. Collins were cancelled in connection with his separation from the Company in May 2019. Tranches 4 and 5 granted to the CEO were voluntarily forfeited in 2019 as the performance milestones for those tranches were not achieved, Tranches 1, 2 and 3 granted to the CEO were voluntarily forfeited in January 2020 with no replacement award. The performance milestones for Tranches 4 and 5 that were granted to the Chief Financial Officer were not met, hence, Tranche 4 was cancelled in 2019 and Tranche 5 was pending cancellation on the 2nd anniversary of the grant date. (2) Includes 1.4 million shares subject to the IPO Options that were voluntarily cancelled by the CEO in January 2020 with no replacement award. |
Schedule of RSU Activity | Arlo’s RSU activity during the three months ended March 29, 2020 was as follows: Number of shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2019 (1) 7,851 $ 6.50 Granted 794 $ 4.06 Vested (1,375 ) $ 7.14 Forfeited (300 ) $ 4.84 Outstanding as of March 29, 2020 6,970 $ 6.17 (1) Includes 0.8 million shares consisting of RSUs ( 50% of the grant), PSUs ( 25% of the grant) and market-based performance RSUs ("MPSUs") ( 25% of the grant) granted to the NEOs during the fiscal quarter ended September 29, 2019. The RSUs will vest in three equal annual installments during the period that begins on the RSU grant date. The PSUs will vest in three equal annual installments during the period that begins on the PSU grant date based on the extent to which a revenue milestone for the fiscal year ended December 31, 2019 is achieved. As of March 29, 2020 , 0.2 million shares subject to the PSUs granted to the Company's NEOs were cancelled as the performance milestone was not achieved. The MPSUs will vest at the end of the three-year period that begins on the MPSU grant date based on performance of the Company's common stock relative to the Benchmark during the three-year period from the grant date. A positive 3.3 x or negative 2.5 x multiplier will be applied to the total shareholder returns (“TSR”), such that the number of shares vested will increase by 3.3% or decrease by 2.5% of the target numbers, for each 1% of positive or negative TSR relative to the Benchmark. In the event the Company's common stock performance is below negative 30% relative to the Benchmark, no shares will be vested. In no event will the number of shares vested exceed 200% of the target for that tranche. NETGEAR’s RSU activity for Arlo employees during the three months ended March 29, 2020 was as follows: Number of shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2019 278 $ 36.14 Vested (41 ) $ 40.20 Forfeited (9 ) $ 35.54 Outstanding as of March 29, 2020 228 $ 35.44 |
Schedule of Weighted Average Assumptions | The following table sets forth the weighted average assumptions used to estimate the fair value of purchase rights granted under Arlo’s ESPP for the three months ended March 29, 2020 and March 31, 2019 . Three Months Ended ESPP March 29, March 31, Expected life (in years) 0.5 0.5 Risk-free interest rate 1.55 % 2.49 % Expected volatility 73.0 % 97.6 % Dividend yield — — |
Schedule of Total Stock-Based Compensation Expense Resulting from Stock Options, Restricted Stock Awards, and the Employee Stock Purchase Plan | The following tables set forth stock-based compensation expense for Arlo employees and allocated charges deemed attributable to Arlo operations resulting from NETGEAR’s and Arlo’s RSUs, PSUs, MPSUs and stock options, and the purchase rights under the NETGEAR’s ESPP included in the Company’s unaudited condensed consolidated statements of operations during the periods indicated: Three Months Ended March 29, 2020 March 31, 2019 (In thousands) Cost of revenue $ 503 $ 369 Research and development 1,660 1,297 Sales and marketing 751 940 General and administrative 9,859 2,047 Total stock-based compensation $ 12,773 $ 4,653 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Net Income Per Share | Net loss per share for three months ended March 29, 2020 and March 31, 2019 were as follows: Three Months Ended March 29, 2020 March 31, 2019 (In thousands, except per share data) Numerator: Net loss $ (39,326 ) $ (41,284 ) Denominator: Weighted average common shares - basic 76,560 74,409 Potentially dilutive common share equivalent — — Weighted average common shares - dilutive 76,560 74,409 Basic net loss per share $ (0.51 ) $ (0.55 ) Diluted net loss per share $ (0.51 ) $ (0.55 ) Anti-dilutive employee stock-based awards, excluded 8,003 10,030 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 29, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geography | The following table shows revenue by geography for the periods indicated: Three Months Ended March 29, March 31, (In thousands) United States (“U.S.”) $ 45,544 $ 41,803 Americas (excluding U.S.) 4,614 2,563 EMEA 7,573 9,302 APAC 7,719 4,212 Total revenue $ 65,450 $ 57,880 |
Schedule of Property and Equipment, Net By Geography | The Company’s Property and equipment, net are located in the following geographic locations: As of March 29, December 31, (In thousands) United States (“U.S.”) $ 15,426 $ 17,100 Americas (excluding U.S.) 807 904 EMEA 293 316 China 1,926 2,089 APAC (excluding China) 832 943 Total property and equipment, net $ 19,284 $ 21,352 |
The Company and Basis of Pres_2
The Company and Basis of Presentation (Narrative) (Details) | 3 Months Ended |
Mar. 29, 2020region | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of geographic regions in which the Company conducts business | 3 |
Significant Accounting Polici_3
Significant Accounting Policies and Recent Accounting Pronouncements (Details) | 3 Months Ended |
Mar. 29, 2020 | |
RSUs | Tranche One | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Stock awards, annual vesting installments (as a percentage) | 33.33% |
RSUs | Tranche Two | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Stock awards, annual vesting installments (as a percentage) | 33.33% |
RSUs | Tranche Three | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Stock awards, annual vesting installments (as a percentage) | 33.33% |
PSUs | Tranche One | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Stock awards, annual vesting installments (as a percentage) | 33.33% |
PSUs | Tranche Two | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Stock awards, annual vesting installments (as a percentage) | 33.33% |
PSUs | Tranche Three | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Stock awards, annual vesting installments (as a percentage) | 33.33% |
MPSUs | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Vesting period | 3 years |
Positive movement of benchmark (multiplier) | 3.3 |
Negative movement of benchmark (multiplier) | 2.5 |
Positive movement of benchmark (as a percentage) | 3.30% |
Negative movement of benchmark (as a percentage) | 2.50% |
Movement of benchmark, increment (as a percentage) | 1.00% |
Threshold (as a percentage) | 30.00% |
2018 Plan | Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Vesting period | 3 years |
2018 Plan | RSUs | Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Vesting period | 3 years |
Deferred Revenue (Schedule of R
Deferred Revenue (Schedule of Remaining Performance Obligations) (Details) $ in Thousands | Mar. 29, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 73,294 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-30 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 59,916 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-03-30 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 10,258 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-03-30 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 3,120 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, expected timing of satisfaction |
Deferred Revenue (Narrative) (D
Deferred Revenue (Narrative) (Details) $ in Millions | 3 Months Ended | |
Mar. 29, 2020USD ($)region | Mar. 31, 2019USD ($) | |
Revenue from Contract with Customer [Abstract] | ||
Revenue deferred due to unsatisfied performance obligations | $ 8.6 | $ 9.2 |
Revenue recognized for satisfaction of performance obligations over time | 14.9 | 11.5 |
Recognized revenue that was included in contract liability balance at beginning of period | $ 8.7 | $ 8.6 |
Number of geographic regions in which the Company conducts business | region | 3 |
Disposal of Business (Details)
Disposal of Business (Details) - USD ($) $ in Thousands | Dec. 30, 2019 | Nov. 04, 2019 | Dec. 31, 2020 | Mar. 29, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Mar. 29, 2020 |
Business Acquisition [Line Items] | |||||||
Agreed upon amount for sale of business plus additional cash for certain inventory | $ 50,000 | ||||||
Proceeds from sale of business | $ 52,700 | ||||||
Gain on sale of business | $ 292 | $ 54,900 | $ 0 | ||||
Purchase commitment, remaining minimum amount committed | 51,400 | $ 51,400 | |||||
Revenue | $ 65,450 | $ 57,880 | |||||
Verisure S.a.r.l | |||||||
Business Acquisition [Line Items] | |||||||
Noncompete agreements term | 3 years | ||||||
Supply commitment, term of contract | 5 years | ||||||
Prepayments received | $ 20,000 | ||||||
Transition services agreement, consideration | $ 1,100 | ||||||
Forecast | Verisure S.a.r.l | |||||||
Business Acquisition [Line Items] | |||||||
Prepayments received | $ 40,000 | ||||||
Verisure S.a.r.l | |||||||
Business Acquisition [Line Items] | |||||||
Purchase commitment, remaining minimum amount committed | $ 500,000 | ||||||
NRE Service | |||||||
Business Acquisition [Line Items] | |||||||
Revenue | $ 946 | ||||||
NRE Service | Verisure S.a.r.l | |||||||
Business Acquisition [Line Items] | |||||||
Aggregate consideration for services | $ 10,000 | ||||||
Proceeds received on NRE Service | $ 2,500 | ||||||
IT Support | |||||||
Business Acquisition [Line Items] | |||||||
Transition services agreement, term | 12 months | ||||||
Minimum | Other services | |||||||
Business Acquisition [Line Items] | |||||||
Transition services agreement, term | 3 months | ||||||
Maximum | Other services | |||||||
Business Acquisition [Line Items] | |||||||
Transition services agreement, term | 6 months |
Balance Sheet Components (Sched
Balance Sheet Components (Schedule of Cash, Cash Equivalents and Restricted Cash) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||||
Cash and cash equivalents | $ 176,425 | $ 236,680 | $ 135,582 | $ 151,290 |
Restricted cash | 4,117 | 4,139 | 4,133 | 4,134 |
Total as presented on the unaudited condensed consolidated statements of cash flows | $ 180,542 | $ 240,819 | $ 139,715 | $ 155,424 |
Balance Sheet Components (Sch_2
Balance Sheet Components (Schedule of Available-for-Sale Short-Term Investments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 29, 2020 | Dec. 31, 2019 | |
Debt Securities, Available-For-Sale [Line Items] | ||
Cost | $ 30,068 | $ 19,967 |
Estimated Fair Value | 30,157 | 19,990 |
U.S. treasuries | ||
Debt Securities, Available-For-Sale [Line Items] | ||
Cost | 30,068 | 19,967 |
Unrealized Gains | 89 | 23 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 30,157 | $ 19,990 |
Balance Sheet Components (Sch_3
Balance Sheet Components (Schedule of Accounts Receivable and Related Allowances) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Gross accounts receivable | $ 62,239 | $ 127,926 |
Allowance for credit losses | (863) | (609) |
Total accounts receivable, net | $ 61,376 | $ 127,317 |
Balance Sheet Components (Allow
Balance Sheet Components (Allowance For Credit Losses, Accounts Receivable) (Details) $ in Thousands | 3 Months Ended |
Mar. 29, 2020USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at the beginning of the period | $ 609 |
Adoption of ASU 2016-13, cumulative-effect adjustment to retained earnings | 0 |
Provision for expected credit losses | 254 |
Amounts written off charged against the allowance | 0 |
Balance at the end of the period | $ 863 |
Balance Sheet Components (Sch_4
Balance Sheet Components (Schedule of Property and Equipment, Net) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Total property and equipment, gross | $ 41,904 | $ 41,556 |
Accumulated depreciation and amortization | (22,620) | (20,204) |
Property and equipment, net | 19,284 | 21,352 |
Machinery and equipment | ||
Total property and equipment, gross | 13,808 | 13,402 |
Software | ||
Total property and equipment, gross | 11,941 | 11,945 |
Computer equipment | ||
Total property and equipment, gross | 4,093 | 4,047 |
Furniture and fixtures | ||
Total property and equipment, gross | 4,040 | 4,075 |
Leasehold improvements | ||
Total property and equipment, gross | $ 8,022 | $ 8,087 |
Balance Sheet Components (Prope
Balance Sheet Components (Property and Equipment, Other Information) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | ||
Depreciation expense | $ 2.4 | $ 2 |
Balance Sheet Components (Sch_5
Balance Sheet Components (Schedule of Intangibles, Net) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Intangible Assets [Line Items] | ||
Gross | $ 10,300 | $ 10,300 |
Accumulated Amortization | (9,350) | (8,994) |
Net | 950 | 1,306 |
Technology | ||
Intangible Assets [Line Items] | ||
Gross | 9,800 | 9,800 |
Accumulated Amortization | (8,883) | (8,540) |
Net | 917 | 1,260 |
Other | ||
Intangible Assets [Line Items] | ||
Gross | 500 | 500 |
Accumulated Amortization | (467) | (454) |
Net | $ 33 | $ 46 |
Balance Sheet Components (Intan
Balance Sheet Components (Intangibles, Other Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | ||
Acquired intangible assets, estimated useful life | 8 months 12 days | |
Amortization of intangibles | $ 356 | $ 381 |
Balance Sheet Components (Estim
Balance Sheet Components (Estimated Amortization Expense Related to Intangibles) (Details) $ in Thousands | Mar. 29, 2020USD ($) |
Balance Sheet Related Disclosures [Abstract] | |
Estimated amortization expense, remaining of the year | $ 950 |
Balance Sheet Components (Goodw
Balance Sheet Components (Goodwill) (Details) - USD ($) | 3 Months Ended | |
Mar. 29, 2020 | Dec. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | ||
Increase (decrease) in goodwill | $ 0 | |
Goodwill | $ 11,038,000 | $ 11,038,000 |
Balance Sheet Components (Goo_2
Balance Sheet Components (Goodwill Impairment Narrative) (Details) | 3 Months Ended | 9 Months Ended | |
Mar. 29, 2020USD ($)segment | Mar. 31, 2019USD ($) | Sep. 29, 2019segment | |
Balance Sheet Related Disclosures [Abstract] | |||
Number of operating segments | segment | 1 | 1 | |
Number of reportable segments | segment | 1 | ||
Reporting unit, amount of fair value in excess of carrying amount | $ 94,100,000 | ||
Fair value in excess of carrying amount (as a percentage) | 52.70% | ||
Expected goodwill impairment | $ 11,000,000 | ||
Goodwill impairment | $ 0 | $ 0 |
Balance Sheet Components (Sch_6
Balance Sheet Components (Schedule of Other Non-Current Assets) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Non-current deferred income taxes | $ 1,218 | $ 1,318 |
Deposits | 790 | 764 |
Other | 1,041 | 1,926 |
Total other non-current assets | $ 3,049 | $ 4,008 |
Balance Sheet Components (Sch_7
Balance Sheet Components (Schedule of Other Accrued Liabilities) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Sales and marketing | $ 37,242 | $ 53,974 |
Sales returns | 26,620 | 28,817 |
Accrued employee compensation | 6,440 | 11,795 |
Current operating lease liabilities | 4,138 | 3,912 |
Warranty obligation | 3,188 | 3,169 |
Freight | 1,480 | 2,690 |
Other | 21,339 | 23,043 |
Total accrued liabilities | $ 100,447 | $ 127,400 |
Fair Value Measurements (Summar
Fair Value Measurements (Summary of Valuation of Company's Financial Instruments by Various Levels) (Details) - Fair value, measurements, recurring - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Assets: | ||
Cash equivalents: U.S. treasuries | $ 51,544 | $ 31,472 |
Available-for-sale securities: U.S. treasuries | 30,157 | 19,990 |
Foreign currency forward contracts | 106 | 27 |
Total assets measured at fair value | 81,807 | 51,489 |
Liabilities: | ||
Foreign currency forward contracts | 225 | 375 |
Total liabilities measured at fair value | 225 | 375 |
Quoted market prices in active markets (Level 1) | ||
Assets: | ||
Cash equivalents: U.S. treasuries | 51,544 | 31,472 |
Available-for-sale securities: U.S. treasuries | 30,157 | 19,990 |
Foreign currency forward contracts | 0 | 0 |
Total assets measured at fair value | 81,701 | 51,462 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Total liabilities measured at fair value | 0 | 0 |
Significant other observable inputs (Level 2) | ||
Assets: | ||
Cash equivalents: U.S. treasuries | 0 | 0 |
Available-for-sale securities: U.S. treasuries | 0 | 0 |
Foreign currency forward contracts | 106 | 27 |
Total assets measured at fair value | 106 | 27 |
Liabilities: | ||
Foreign currency forward contracts | 225 | 375 |
Total liabilities measured at fair value | $ 225 | $ 375 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Schedule of Fair Values of the Company's Derivative Instruments and the Line Items on the Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | $ 106 | $ 27 |
Gross Amounts of recognized liabilities | 225 | 375 |
Prepaid expenses and other current assets | Derivative assets not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | 106 | 27 |
Prepaid expenses and other current assets | Derivative assets designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | 0 | 0 |
Other accrued liabilities | Derivative assets not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized liabilities | 225 | 347 |
Other accrued liabilities | Derivative assets designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized liabilities | $ 0 | $ 28 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Schedule of Offsetting of Derivative Assets) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | $ 106 | $ 27 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets | 106 | 27 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (106) | (27) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | 0 | 0 |
HSBC | ||
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | 0 | 6 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets | 0 | 6 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | 0 | (6) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | 0 | 0 |
Wells Fargo Bank | ||
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | 106 | 21 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets | 106 | 21 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (106) | (21) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | $ 0 | $ 0 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Schedule of Offsetting of Derivative Liabilities) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Offsetting of Derivative Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | $ 225 | $ 375 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets | 225 | 375 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (106) | (27) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | 119 | 348 |
HSBC | ||
Offsetting of Derivative Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 46 | 83 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets | 46 | 83 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | 0 | (6) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | 46 | 77 |
Wells Fargo Bank | ||
Offsetting of Derivative Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 179 | 292 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets | 179 | 292 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (106) | (21) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | $ 73 | $ 271 |
Derivative Financial Instrume_6
Derivative Financial Instruments (Narrative) (Details) - Foreign currency contracts $ in Millions | 3 Months Ended |
Mar. 29, 2020USD ($)derivative_instrument | |
Derivative [Line Items] | |
Term of derivative contracts | 6 months |
Derivatives Not Designated as Hedging Instruments | |
Derivative [Line Items] | |
Number of derivatives entered into | derivative_instrument | 9 |
Average size of derivative contracts | $ | $ 1.7 |
Cash Flow Hedges | |
Derivative [Line Items] | |
Number of derivatives entered into | derivative_instrument | 8 |
Average size of derivative contracts | $ | $ 2 |
Minimum | Derivatives Not Designated as Hedging Instruments | |
Derivative [Line Items] | |
Term of derivative contracts | 1 month |
Maximum | Derivatives Not Designated as Hedging Instruments | |
Derivative [Line Items] | |
Term of derivative contracts | 3 months |
Derivative Financial Instrume_7
Derivative Financial Instruments (Schedule of Location and Amount of Gains or Losses Recognized in Income on Cash Flow Hedges) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Revenue | $ 65,450 | $ 57,880 |
Cost of revenue | 61,497 | 55,935 |
Research and development | 15,243 | 18,161 |
Sales and marketing | 11,038 | 14,221 |
General and administrative | 18,784 | 10,536 |
Foreign currency contracts | Gain (losses) on cash flow hedge | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Revenue | (4) | 125 |
Cost of revenue | 0 | 0 |
Research and development | 0 | 0 |
Sales and marketing | 0 | 0 |
General and administrative | 0 | 0 |
Foreign currency contracts | Gain (losses) on cash flow hedge | Amount Reclassified from AOCI | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Revenue | (4) | 120 |
Cost of revenue | 0 | (1) |
Research and development | 0 | (18) |
Sales and marketing | 0 | (11) |
General and administrative | $ 0 | $ (5) |
Derivative Financial Instrume_8
Derivative Financial Instruments (Schedule of Derivatives not Designated as Hedging Instruments) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Other income (expense), net | Foreign currency contracts | Derivatives Not Designated as Hedging Instruments | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gains (losses) on cash flow hedge | $ 1,079 | $ (121) |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Schedule of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
AOCI, before tax | ||
Beginning balance | $ 203,376 | $ 269,502 |
Net current period other comprehensive income (loss) | 119 | 61 |
Ending balance | 178,561 | 232,141 |
AOCI, Tax | ||
Beginning balance, tax | 0 | 0 |
Other comprehensive income (loss) before reclassifications, tax | 0 | (5) |
Less: Amount reclassified from accumulated other comprehensive income (loss), tax | 0 | 0 |
Net current period other comprehensive income (loss), tax | 0 | (5) |
Ending balance, tax | 0 | (5) |
AOCI, after tax | ||
Other comprehensive income (loss) before reclassifications | 115 | 141 |
Less: Amount reclassified from accumulated other comprehensive income (loss) | (4) | 85 |
Total other comprehensive income (loss), net of tax | 119 | 56 |
Unrealized gains (losses) on available-for-sale securities | ||
AOCI, before tax | ||
Beginning balance | 23 | (2) |
Other comprehensive income (loss) before reclassifications | 66 | 21 |
Less: Amount reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Net current period other comprehensive income (loss) | 66 | 21 |
Ending balance | 89 | 19 |
Unrealized gains (losses) on derivatives | ||
AOCI, before tax | ||
Beginning balance | (25) | 2 |
Other comprehensive income (loss) before reclassifications | 49 | 125 |
Less: Amount reclassified from accumulated other comprehensive income (loss) | (4) | 85 |
Net current period other comprehensive income (loss) | 53 | 40 |
Ending balance | 28 | 42 |
Total | ||
AOCI, before tax | ||
Beginning balance | (2) | 0 |
Ending balance | $ 117 | $ 56 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) (Reclassifications out of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||
Revenue | $ 65,450 | $ 57,880 |
Cost of revenue | 61,497 | 55,935 |
Research and development | 15,243 | 18,161 |
Sales and marketing | 11,038 | 14,221 |
General and administrative | 18,784 | 10,536 |
Foreign currency contracts | ||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||
Total before tax | (4) | 125 |
Gain (losses) on cash flow hedge | Foreign currency contracts | ||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||
Revenue | (4) | 125 |
Cost of revenue | 0 | 0 |
Research and development | 0 | 0 |
Sales and marketing | 0 | 0 |
General and administrative | 0 | 0 |
Amount Reclassified from AOCI | Foreign currency contracts | ||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||
Total before tax | (4) | 85 |
Amount Reclassified from AOCI | Gain (losses) on cash flow hedge | Foreign currency contracts | ||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||
Revenue | (4) | 120 |
Cost of revenue | 0 | (1) |
Research and development | 0 | (18) |
Sales and marketing | 0 | (11) |
General and administrative | $ 0 | $ (5) |
Debt (Details)
Debt (Details) - Credit Agreement - Revolving Credit Facility - Line of Credit - USD ($) | Nov. 05, 2019 | Mar. 29, 2020 |
Short-term Debt [Line Items] | ||
Debt term (in years) | 2 years | |
Maximum borrowing capacity | $ 40,000,000 | |
Borrowing base multiplier (as a percentage) | 60.00% | |
Minimum amount of foreign subsidiaries voting interest not secured (as a percentage) | 65.00% | |
Additional interest in event of default (as a percentage) | 5.00% | |
Annual facility fee (as a percentage) | 0.25% | |
Outstanding borrowing under the Credit Facility | $ 0 | |
Prime Rate | ||
Short-term Debt [Line Items] | ||
Basis spread on variable rate (as a percentage) | 2.25% |
Commitments and Contingencies_2
Commitments and Contingencies (Narrative) (Details) - USD ($) | 3 Months Ended | |
Mar. 29, 2020 | Dec. 31, 2019 | |
Loss Contingencies [Line Items] | ||
Option to extend lease (in years) | 5 years | |
Option to terminate lease (in years) | 1 year | |
Number of days for non-cancellation of purchase obligations prior to expected shipment date | 30 days | |
Non-cancelable purchase commitments with suppliers | $ 51,400,000 | |
Liabilities recorded for director and officer indemnification agreements | 0 | $ 0 |
Liabilities recorded for customers, distributors, and resellers indemnification agreements | $ 0 | $ 0 |
Continued vesting period after termination without cause (in years) | 1 year | |
Liabilities for executive's employment agreements | $ 0 | |
Loss on Long-term Purchase Commitment | ||
Loss Contingencies [Line Items] | ||
Loss liability from committed purchases | $ 1,900,000 | |
46 to 60 Days | ||
Loss Contingencies [Line Items] | ||
Percentage of cancelable orders | 50.00% | |
31 to 45 Days | ||
Loss Contingencies [Line Items] | ||
Percentage of cancelable orders | 25.00% | |
Letter of Credit | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | $ 3,600,000 | |
Build-to-suit lease | Letter of Credit | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding | $ 3,100,000 | |
Minimum | 46 to 60 Days | ||
Loss Contingencies [Line Items] | ||
Required notice period prior to expected shipment date | 46 days | |
Minimum | 31 to 45 Days | ||
Loss Contingencies [Line Items] | ||
Required notice period prior to expected shipment date | 31 days | |
Maximum | 46 to 60 Days | ||
Loss Contingencies [Line Items] | ||
Required notice period prior to expected shipment date | 60 days | |
Maximum | 31 to 45 Days | ||
Loss Contingencies [Line Items] | ||
Required notice period prior to expected shipment date | 45 days | |
Federal Action | ||
Loss Contingencies [Line Items] | ||
Loss liability from committed purchases | $ 1,250,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Summary of Operating Lease Cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease cost | $ 1,837 | $ 863 |
Commitments and Contingencies_4
Commitments and Contingencies (Schedule of Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 1,486 | $ 756 |
Right-of-use assets obtained in exchange for lease liabilities | ||
Operating leases | $ 0 | $ 14,559 |
Commitments and Contingencies_5
Commitments and Contingencies (Summary of Weighted Averages Related to Operating Leases) (Details) | Mar. 29, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted average remaining lease term | 7 years 6 months |
Weighted average discount rate | 5.67% |
Commitments and Contingencies_6
Commitments and Contingencies (Summary of Operating Lease Maturity) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Operating Leases, After Adoption of 842 | ||
2020 (Remaining nine months) | $ 4,318 | $ 5,660 |
2021 | 5,698 | 5,735 |
2022 | 5,551 | 5,589 |
2023 | 4,874 | 4,908 |
2024 | 4,439 | 4,450 |
Thereafter | 14,655 | 14,669 |
Total lease payments | 39,535 | 41,011 |
Less: interest | (7,621) | (8,098) |
Total | 31,914 | 32,913 |
Current operating lease liabilities | 4,138 | 3,912 |
Non-current operating lease liabilities | $ 27,776 | $ 29,001 |
Commitments and Contingencies_7
Commitments and Contingencies (Schedule of Changes in Warranty Obligation) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at the beginning of the period | $ 3,169 | $ 3,712 |
Provision for warranty obligation made during the period | 207 | 0 |
Settlements made during the period | (188) | (511) |
Balance at the end of the period | $ 3,188 | $ 3,201 |
Employee Benefit Plans (Narrati
Employee Benefit Plans (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 29, 2020 | Mar. 03, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Accelerated share-based compensation cost | $ 7.4 | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total unrecognized compensation | $ 3.9 | ||
Weighted-average period of recognition of stock based compensation | 1 year 9 months 18 days | ||
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved (in shares) | 3,788,756 | ||
MPSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted, vesting term (in years) | 3 years | ||
RSUs, PSUs and MPSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total unrecognized compensation | $ 25.3 | ||
Weighted-average period of recognition of stock based compensation | 2 years 7 months 6 days | ||
2018 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Reserved stock for issuance, common stock | 7,115,000 | 2,630,000 | |
Number of shares reserved (in shares) | 3,031,005 | ||
Number of shares automatically added to shares authorized for issuance | 3,031,000 | ||
2018 Plan | Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted, vesting term (in years) | 4 years | ||
Options granted period (in years) | 10 years | ||
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved (in shares) | 757,751 | ||
ESPP | ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum percentage of compensation contributed by employees | 15.00% | ||
Percentage of stock price purchased at offering date (as a percentage) | 85.00% | ||
Offering period (in years) | 6 months | ||
Reserved stock for issuance, common stock | 1,500,000 | ||
Tranche One | 2018 Plan | Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted, vesting term (in years) | 3 years | ||
Minimum | 2018 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted, vesting term (in years) | 3 years | ||
Minimum | 2018 Plan | RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted, vesting term (in years) | 3 years | ||
Maximum | 2018 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted, vesting term (in years) | 4 years | ||
NETGEAR | Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total unrecognized compensation | $ 0.3 | ||
Weighted-average period of recognition of stock based compensation | 1 year 7 months 6 days | ||
NETGEAR | RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total unrecognized compensation | $ 6 | ||
Weighted-average period of recognition of stock based compensation | 1 year 7 months 6 days |
Employee Benefit Plans (Summary
Employee Benefit Plans (Summary of Available Shares for Future Grants) (Details) - shares shares in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2020 | Mar. 29, 2020 | Sep. 29, 2019 | Dec. 31, 2019 | |
Stock Options, IPO performance-based | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Number of shares issued in the transaction (in shares) | 2,800 | |||
RSUs | Tranche One | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
RSUs | Tranche Two | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
RSUs | Tranche Three | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
PSUs | Tranche One | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
PSUs | Tranche Two | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
PSUs | Tranche Three | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
MPSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Vesting period | 3 years | |||
2018 Plan | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Shares available for grants as of December 31, 2019 | 2,630 | 2,630 | ||
Additional authorized shares (in shares) | 3,031 | |||
Granted (in shares) | (795) | |||
Forfeited/cancelled (in shares) | 1,717 | |||
Shares traded for taxes (in shares) | 532 | |||
Shares available for grants as of March 29, 2020 | 7,115 | 2,630 | ||
2018 Plan | Stock Options, IPO performance-based | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Forfeited/cancelled (in shares) | 1,400 | |||
2018 Plan | PSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Forfeited/cancelled (in shares) | 200 | |||
2018 Plan | Stock Options | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Vesting period | 4 years | |||
2018 Plan | Stock Options | Tranche One | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Vesting period | 3 years | |||
Executive Officer | RSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 50.00% | |||
Executive Officer | PSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 25.00% | |||
Executive Officer | MPSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 25.00% | |||
IPO | 2018 Plan | Tranche One | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Vesting period | 24 months | |||
IPO | 2018 Plan | Tranche Two | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Vesting period | 4 years | |||
IPO | 2018 Plan | Performance Shares | Tranche Two | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 50.00% | |||
IPO | 2018 Plan | Performance Shares | Tranche Three | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 50.00% | |||
First Anniversary | IPO | 2018 Plan | Performance Shares | Tranche Two | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 25.00% | |||
First Anniversary | IPO | 2018 Plan | Performance Shares | Tranche Three | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 25.00% | |||
Second Anniversary | IPO | 2018 Plan | Performance Shares | Tranche Two | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 25.00% | |||
Second Anniversary | IPO | 2018 Plan | Performance Shares | Tranche Three | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Vesting period | 4 years | |||
Stock awards, annual vesting installments (as a percentage) | 25.00% |
Employee Benefit Plans (Schedul
Employee Benefit Plans (Schedule of Stock Option Activity) (Details) - $ / shares shares in Thousands | 1 Months Ended | 3 Months Ended |
Jan. 31, 2020 | Mar. 29, 2020 | |
Stock Options | ||
Number of shares | ||
Beginning balance (in shares) | 6,040 | 6,040 |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Cancelled (in shares) | (1,417) | |
Ending balance (in shares) | 4,623 | |
Vested and expected to vest as of March 29, 2020 (in shares) | 4,623 | |
Exercisable Options as of March 29, 2020 (in shares) | 3,375 | |
Weighted Average Exercise Price Per Share | ||
Beginning balance (in dollars per share) | $ 11.56 | $ 11.56 |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 0 | |
Cancelled (in dollars per share) | 15.92 | |
Ending balance (in dollars per share) | 10.22 | |
Weighted average exercise price, vested and expected to vest as of March 29, 2020 (USD per share) | 11.56 | |
Weighted average exercise price, Exercisable Options as of March 29, 2020 (USD per share) | $ 8.69 | |
NETGEAR | Stock Options | ||
Number of shares | ||
Beginning balance (in shares) | 205 | 205 |
Exercised (in shares) | (3) | |
Cancelled (in shares) | 0 | |
Expired (in shares) | 0 | |
Ending balance (in shares) | 202 | |
Vested and expected to vest as of March 29, 2020 (in shares) | 202 | |
Exercisable Options as of March 29, 2020 (in shares) | 168 | |
Weighted Average Exercise Price Per Share | ||
Beginning balance (in dollars per share) | $ 25.94 | $ 25.94 |
Exercised (in dollars per share) | 21.83 | |
Cancelled (in dollars per share) | 0 | |
Expired (in dollars per share) | 0 | |
Ending balance (in dollars per share) | 25.99 | |
Weighted average exercise price, vested and expected to vest as of March 29, 2020 (USD per share) | 25.99 | |
Weighted average exercise price, Exercisable Options as of March 29, 2020 (USD per share) | $ 24.39 | |
2018 Plan | Stock Options, IPO performance-based | ||
Number of shares | ||
Cancelled (in shares) | (1,400) |
Employee Benefit Plans (Sched_2
Employee Benefit Plans (Schedule of RSU Activity) (Details) | 3 Months Ended | |
Mar. 29, 2020$ / sharesshares | Sep. 29, 2019shares | |
RSUs | ||
Number of shares | ||
Beginning balance (in shares) | 7,851,000 | |
Granted (in shares) | 794,000 | |
Vested (in shares) | (1,375,000) | |
Forfeited / Cancelled (in shares) | (300,000) | |
Ending balance (in shares) | 6,970,000 | |
Weighted Average Grant Date Fair Value Per Share | ||
Beginning Balance (in dollars per share) | $ / shares | $ 6.50 | |
Granted (in dollars per share) | $ / shares | 4.06 | |
Vested (in dollars per share) | $ / shares | 7.14 | |
Forfeited / Cancelled (in dollars per share) | $ / shares | 4.84 | |
Ending Balance (in dollars per share) | $ / shares | $ 6.17 | |
MPSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Positive movement of benchmark (multiplier) | 3.3 | |
Negative movement of benchmark (multiplier) | 2.5 | |
Positive movement of benchmark (as a percentage) | 3.30% | |
Negative movement of benchmark (as a percentage) | 2.50% | |
Movement of benchmark, increment (as a percentage) | 1.00% | |
Threshold (as a percentage) | 30.00% | |
NETGEAR | RSUs | ||
Number of shares | ||
Beginning balance (in shares) | 278,000 | |
Vested (in shares) | (41,000) | |
Forfeited / Cancelled (in shares) | (9,000) | |
Ending balance (in shares) | 228,000 | |
Weighted Average Grant Date Fair Value Per Share | ||
Beginning Balance (in dollars per share) | $ / shares | $ 36.14 | |
Vested (in dollars per share) | $ / shares | 40.20 | |
Forfeited / Cancelled (in dollars per share) | $ / shares | 35.54 | |
Ending Balance (in dollars per share) | $ / shares | $ 35.44 | |
Tranche One | RSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |
Tranche One | PSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |
Tranche Two | RSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |
Tranche Two | PSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |
Tranche Three | RSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |
Tranche Three | PSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |
Maximum | MPSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Threshold (as a percentage) | 200.00% | |
Executive Officer | RSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 50.00% | |
Executive Officer | PSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 25.00% | |
Canceled during the period (in shares) | 200,000 | |
Executive Officer | MPSUs | ||
Weighted Average Grant Date Fair Value Per Share | ||
Stock awards, annual vesting installments (as a percentage) | 25.00% | |
Executive Officer | 2018 Plan | RSU, PSU, MPSU | ||
Weighted Average Grant Date Fair Value Per Share | ||
Granted (in shares) | 800,000 |
Employee Benefit Plans (Sched_3
Employee Benefit Plans (Schedule of Valuation and Expense Information) (Details) - ESPP | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life (in years) | 6 months | 6 months |
Risk-free interest rate | 1.55% | 2.49% |
Expected volatility | 73.00% | 97.60% |
Dividend yield | 0.00% | 0.00% |
Employee Benefit Plans (Sched_4
Employee Benefit Plans (Schedule of Total Stock-Based Compensation Expense Resulting from Stock Options, Restricted Stock Awards, and the Employee Stock Purchase Plan) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $ 12,773 | $ 4,653 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 503 | 369 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 1,660 | 1,297 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 751 | 940 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $ 9,859 | $ 2,047 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 145 | $ 220 |
Effective tax rate | (0.40%) | (0.50%) |
Net Income (Loss) Per Share (Sc
Net Income (Loss) Per Share (Schedule of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | |
Aug. 02, 2018 | Mar. 29, 2020 | Mar. 31, 2019 | |
Numerator: | |||
Net loss | $ (41,284) | $ (39,326) | $ (41,284) |
Denominator: | |||
Weighted average common shares - basic (in shares) | 76,560 | 74,409 | |
Potentially dilutive common share equivalent (in shares) | 0 | 0 | |
Weighted average common shares - dilutive (in shares) | 76,560 | 74,409 | |
Basic net loss per share (in dollars per share) | $ (0.51) | $ (0.55) | |
Diluted net loss per share (in dollars per share) | $ (0.51) | $ (0.55) | |
Anti-dilutive employee stock-based awards, excluded (in shares) | 8,003 | 10,030 |
Segment and Geographic Inform_3
Segment and Geographic Information (Narrative) (Details) | 3 Months Ended | 9 Months Ended |
Mar. 29, 2020regionsegment | Sep. 29, 2019segment | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 1 | |
Number of operating segments | 1 | 1 |
Number of geographic regions in which the Company conducts business | region | 3 |
Segment Information (Schedule o
Segment Information (Schedule of Net Revenue by Geographic Areas) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 65,450 | $ 57,880 |
United States (“U.S.”) | ||
Segment Reporting Information [Line Items] | ||
Revenue | 45,544 | 41,803 |
Americas (excluding U.S.) | ||
Segment Reporting Information [Line Items] | ||
Revenue | 4,614 | 2,563 |
EMEA | ||
Segment Reporting Information [Line Items] | ||
Revenue | 7,573 | 9,302 |
Asia Pacific | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 7,719 | $ 4,212 |
Segment Information (Schedule_2
Segment Information (Schedule of Long-Lived Asset by Geographic Areas) (Details) - USD ($) $ in Thousands | Mar. 29, 2020 | Dec. 31, 2019 |
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 19,284 | $ 21,352 |
United States (“U.S.”) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 15,426 | 17,100 |
Americas (excluding U.S.) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 807 | 904 |
EMEA | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 293 | 316 |
China | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 1,926 | 2,089 |
APAC (excluding China) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 832 | $ 943 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | 1 Months Ended |
May 31, 2020USD ($) | |
Subsequent Event | |
Subsequent Event [Line Items] | |
Proceeds from tenant improvement reimbursements | $ 3.5 |
Uncategorized Items - arlo20200
Label | Element | Value |
APIC, Share-based Payment Arrangement, Increase for Cost Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | $ 4,653,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 281,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 281,000 |