Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 03, 2023 | Jul. 03, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
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 | 2200 Faraday Ave., | ||
Entity Address, Address Line Two | Suite #150 | ||
Entity Address, City or Town | Carlsbad, | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92008 | ||
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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 527.6 | ||
Entity Common Stock, Shares Outstanding | 89,602,003 | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive proxy statement for its 2023 annual meeting of stockholders, which will be filed within 120 days of the registrant’s fiscal year end, are incorporated by reference into Part III of this Annual Report on Form 10-K. | ||
Entity Central Index Key | 0001736946 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Auditor Information [Abstract] | |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Location | San Jose, California |
Auditor Firm ID | 238 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 84,024 | $ 175,749 |
Short-term investments | 29,700 | 0 |
Accounts receivable, net | 65,960 | 79,564 |
Inventories | 46,554 | 38,390 |
Prepaid expenses and other current assets | 6,544 | 9,919 |
Total current assets | 232,782 | 303,622 |
Property and equipment, net | 7,336 | 9,595 |
Operating lease right-of-use assets, net | 12,809 | 14,814 |
Goodwill | 11,038 | 11,038 |
Restricted cash | 4,155 | 4,107 |
Other non-current assets | 4,081 | 4,314 |
Total assets | 272,201 | 347,490 |
Current liabilities: | ||
Accounts payable | 52,132 | 84,098 |
Deferred revenue | 11,291 | 29,442 |
Accrued liabilities | 98,855 | 97,389 |
Total current liabilities | 162,278 | 210,929 |
Non-current operating lease liabilities | 19,279 | 21,470 |
Other non-current liabilities | 2,949 | 2,439 |
Total liabilities | 184,506 | 234,838 |
Commitments and contingencies | ||
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: 88,887,139 at December 31, 2022 and 84,453,212 at December 31, 2021 | 89 | 84 |
Additional paid-in capital | 433,138 | 401,367 |
Accumulated other comprehensive loss | (107) | 0 |
Accumulated deficit | (345,425) | (288,799) |
Total stockholders’ equity | 87,695 | 112,652 |
Total liabilities and stockholders’ equity | $ 272,201 | $ 347,490 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares, issued (in shares) | 88,887,139 | 84,453,212 |
Common stock, shares, outstanding (in shares) | 88,887,139 | 84,453,212 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Total revenue | $ 490,414 | $ 435,137 | $ 357,154 |
Total cost of revenue | 354,379 | 327,102 | 301,765 |
Gross profit | 136,035 | 108,035 | 55,389 |
Operating expenses: | |||
Research and development | 64,709 | 59,063 | 60,137 |
Sales and marketing | 70,081 | 48,909 | 49,064 |
General and administrative | 55,932 | 49,489 | 51,096 |
Restructuring charges | 1,805 | 0 | 0 |
Impairment charges | 0 | 9,116 | 0 |
Others | 387 | 1,596 | (44) |
Total operating expenses | 192,914 | 168,173 | 160,253 |
Loss from operations | (56,879) | (60,138) | (104,864) |
Interest income | 926 | 11 | 802 |
Other income, net | 302 | 4,775 | 3,436 |
Loss before income taxes | (55,651) | (55,352) | (100,626) |
Provision for income taxes | 975 | 677 | 625 |
Net loss | $ (56,626) | $ (56,029) | $ (101,251) |
Net loss per share: | |||
Basic (in dollars per share) | $ (0.65) | $ (0.68) | $ (1.30) |
Diluted (in dollars per share) | $ (0.65) | $ (0.68) | $ (1.30) |
Weighted average shares used to compute net loss per share: | |||
Basic (in shares) | 87,173 | 82,688 | 78,084 |
Diluted (in shares) | 87,173 | 82,688 | 78,084 |
Comprehensive loss: | |||
Net loss | $ (56,626) | $ (56,029) | $ (101,251) |
Other comprehensive income (loss), net of tax | (107) | (3) | 5 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent, Total | (56,733) | (56,032) | (101,246) |
Products | |||
Total revenue | 353,935 | 331,620 | 284,868 |
Total cost of revenue | 308,692 | 285,334 | 263,905 |
Services | |||
Total revenue | 136,479 | 103,517 | 72,286 |
Total cost of revenue | $ 45,687 | $ 41,768 | $ 37,860 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common stock: | Additional paid-in capital: | Accumulated deficit: | Accumulated other comprehensive income (loss): |
Beginning balance at Dec. 31, 2019 | $ 203,376 | $ 76 | $ 334,821 | $ (131,519) | $ (2) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 27,418 | ||||
Settlement of liability classified restricted stock units | 4,242 | ||||
Issuance of common stock under stock-based compensation plans | 3 | 1,727 | |||
Issuance of common stock under employee stock purchase plan | 1 | 3,024 | |||
Restricted stock unit withholdings | (1) | (4,777) | |||
Net loss | (101,251) | (101,251) | |||
Other comprehensive income (loss), net of tax | 5 | ||||
Ending balance at Dec. 31, 2020 | 133,767 | $ 79 | 366,455 | (232,770) | 3 |
Beginning balance (in shares) at Dec. 31, 2019 | 75,786,000 | ||||
Common stock shares: | |||||
Issuance of common stock under stock-based compensation plans (in shares) | 3,720,000 | ||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 1,110,000 | ||||
Restricted stock unit withholdings (in shares) | (1,280,000) | ||||
Ending balance (in shares) at Dec. 31, 2020 | 79,336,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 24,792 | ||||
Settlement of liability classified restricted stock units | 15,095 | ||||
Issuance of common stock under stock-based compensation plans | $ 8 | 5,261 | |||
Issuance of common stock under employee stock purchase plan | 0 | 2,962 | |||
Restricted stock unit withholdings | (3) | (13,198) | |||
Net loss | (56,029) | (56,029) | |||
Other comprehensive income (loss), net of tax | (3) | ||||
Ending balance at Dec. 31, 2021 | $ 112,652 | $ 84 | 401,367 | (288,799) | 0 |
Common stock shares: | |||||
Issuance of common stock under stock-based compensation plans (in shares) | 6,538,000 | ||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 602,000 | ||||
Restricted stock unit withholdings (in shares) | (2,023,000) | ||||
Ending balance (in shares) at Dec. 31, 2021 | 84,453,212 | 84,453,000 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation expense | 36,985 | ||||
Settlement of liability classified restricted stock units | 8,733 | ||||
Issuance of common stock under stock-based compensation plans | $ 6 | 1,419 | |||
Issuance of common stock under employee stock purchase plan | 2 | 2,833 | |||
Restricted stock unit withholdings | (3) | (18,199) | |||
Net loss | $ (56,626) | (56,626) | |||
Other comprehensive income (loss), net of tax | (107) | ||||
Ending balance at Dec. 31, 2022 | $ 87,695 | $ 89 | $ 433,138 | $ (345,425) | $ (107) |
Common stock shares: | |||||
Issuance of common stock under stock-based compensation plans (in shares) | 6,155,000 | ||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 609,000 | ||||
Restricted stock unit withholdings (in shares) | (2,330,000) | ||||
Ending balance (in shares) at Dec. 31, 2022 | 88,887,139 | 88,887,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net loss | $ (56,626) | $ (56,029) | $ (101,251) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Stock-based compensation expense | 48,476 | 38,030 | 35,247 |
Impairment charges | 0 | 9,116 | 0 |
Depreciation and amortization | 4,768 | 5,975 | 10,206 |
Allowance for credit losses and inventory reserves | (190) | (3,125) | 964 |
Deferred income taxes | 181 | (296) | 50 |
Others | 24 | (3) | (238) |
Changes in assets and liabilities: | |||
Accounts receivable, net | 13,517 | (1,739) | 49,765 |
Inventories | (7,887) | 29,258 | 2,862 |
Prepaid expenses and other assets | 3,427 | (3,463) | 10,441 |
Accounts payable | (32,520) | 22,156 | (49,282) |
Deferred revenue | (19,281) | (38,919) | 3,607 |
Accrued and other liabilities | 149 | (24,158) | (8,901) |
Net cash used in operating activities | (45,962) | (23,197) | (46,530) |
Cash flows from investing activities: | |||
Purchases of property and equipment | (2,010) | (2,268) | (3,892) |
Purchases of short-term investments | (69,305) | 0 | (50,083) |
Proceeds from maturities of short-term investments | 39,542 | 20,000 | 50,000 |
Net cash provided by (used in) investing activities | (31,773) | 17,732 | (3,975) |
Cash flows from financing activities: | |||
Proceeds related to employee benefit plans | 4,260 | 8,231 | 4,755 |
Restricted stock unit withholdings | (18,202) | (13,201) | (4,778) |
Net cash used in financing activities | (13,942) | (4,970) | (23) |
Net decrease in cash, cash equivalents, and restricted cash | (91,677) | (10,435) | (50,528) |
Cash, cash equivalents, and restricted cash, at beginning of period | 179,856 | 190,291 | 240,819 |
Cash, cash equivalents, and restricted cash, at end of period | 88,179 | 179,856 | 190,291 |
Cash and cash equivalents | 84,024 | 175,749 | 186,127 |
Restricted cash | 4,155 | 4,107 | 4,164 |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Total | 88,179 | 179,856 | 190,291 |
Supplemental Cash Flow Information [Abstract] | |||
Cash paid for income taxes, net | 415 | 964 | 5,614 |
Non-cash investing activities: | |||
Purchases of property and equipment included in accounts payable and accrued liabilities | $ 946 | $ 379 | $ 564 |
Description of Business and Bas
Description of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Description of Business Arlo Technologies, Inc. (“Arlo”) combines an intelligent cloud infrastructure and mobile app with a variety of smart connected devices that transform the way people experience the connected lifestyle. Our deep expertise in product design, wireless connectivity, cloud infrastructure and cutting-edge AI capabilities focuses on delivering a seamless, smart home experience for Arlo users that is easy to setup and interact with every day. Our cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. We conduct business across three geographic regions—(i) the Americas; (ii) Europe, Middle-East and Africa (“EMEA”); and (iii) Asia Pacific (“APAC”)—and primarily generate revenue by selling devices through retail channels, wholesale distribution, wireless carrier channels, security solution providers, and Arlo’s direct to consumer store and paid subscription services. Our corporate headquarters is located in Carlsbad, California with other satellite offices across North America and various other global locations. Basis of Presentation We prepare our consolidated financial statements 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”). The consolidated financial statements include the accounts of Arlo and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. Fiscal periods Our fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. We report the 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. Reclassification Certain prior periods amounts have been reclassified to conform to the current period’s presentation. None of these reclassifications had a material impact to the consolidated financial statements. Use of estimates The preparation of 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 year ended December 31, 2022 are not necessarily indicative of the results that may be expected for any future period. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Cash and cash equivalents We invest excess cash primarily in government securities and money market funds and consider all highly liquid investments with an original maturity or a remaining maturity at the time of purchase of three months or less to be cash equivalents. We deposit cash and cash equivalents with high credit quality financial institutions. Restricted cash We maintain certain cash balances restricted as to withdrawal or use. Restricted cash is comprised primarily of cash used as a collateral for a letter of credit associated with our lease agreement for office space in San Jose, California. We deposit restricted cash with high credit quality financial institutions. Short-term investments Short-term investments are comprised of marketable securities that consist of government securities with an original maturity or a remaining maturity at the time of purchase of greater than three months and no more than 12 months. The marketable securities are held with a high quality financial institution, which acts as our custodian and investment manager. These marketable securities are classified as available-for-sale securities in accordance with the provisions of the authoritative guidance for investments and are carried at fair value with unrealized gains and losses are included in accumulated other comprehensive income (loss), net of tax, which is reported on consolidated statements of stockholders’ equity. Fair value measurements The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair values due to their short maturities. Short-term investments are recognized or disclosed at fair value in the financial statements on a recurring basis. The fair value of assets and liabilities is measured based on a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Trade accounts receivable We are exposed to credit losses primarily through sales of products and services. Allowance for current estimated credit losses 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 estimated 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. Monitoring activities include dispute resolution, payment confirmation, review of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. Although we have 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 accounts receivable. Concentrations of risk and other uncertainties Financial instruments that are potentially subject us to a concentration of credit risk mainly consist of cash equivalents, short term investments and accounts receivable. We believe that there is minimal credit risk associated with the investments of cash equivalents and short-term investments due to the restrictions placed on the type of investment that can be entered into under our investment policy. Our cash equivalents and short-term investments primarily consist of government securities and money market funds which are held and managed by high credit quality financial institutions. Our customers are primarily retailers, wholesale distributors and security solution providers who sell or distribute our products to a large group of end-users. We regularly perform credit evaluations of our customers’ financial condition and performance and consider factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks and current economic conditions that may affect our customers’ ability to pay. We do not require collateral from our customers. Historically, a substantial portion of revenue has been derived from a limited number of retailers and wholesale distribution partners. As of December 31, 2022 and 2021, four customers accounted for 28.4%, 26.8%, 16.6% and 13.3%, and three customers accounted for 35.3%, 20.1% and 10.1% of the total accounts receivable, net, respectively. No other customers accounted for 10% or greater of the total accounts receivable, net. During the year ended December 31, 2022, 2021 and 2020, one customer accounted for 40.1%, two customers accounted for 30.8%, and 13.0%, and four customers accounted for 20.6%, 17.3%, 14.6% and 12.2% of the total revenue, respectively. No other customers accounted for 10% or greater of the total revenue. Additionally, we receive certain of our components from a limited number of suppliers and rely on a limited number of third parties to manufacture all of our products. If any of the third-party manufacturers cannot or will not manufacture our products in required volumes, on a cost-effective basis, in a timely manner or at all, we will have to secure additional manufacturing capacity. Any interruption or delay in manufacturing could materially and adversely affect our business, results of operations and financial condition. At the date of issuance of our financial statements, we are not aware of any event which could cause the severe impact in a near term. Our products are concentrated in the connected lifestyle solution industries, which are characterized by rapid technological advances, changes in customer requirements and evolving regulatory requirements and industry standards. Our success depends on management’s ability to anticipate and/or to respond quickly and adequately to such changes. Any significant delays in the development or introduction of products and services could materially and adversely affect our business, results of operations and financial condition. 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. We write down inventories based on estimated excess and obsolete amounts, determined primarily based on demand forecasts, but takes into account market conditions, product development plans, product life expectancy and other factors. At the point of loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase of the newly established cost basis. While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is risk that additional charges may be necessary if current forecasts are greater than actual demand. Property and equipment, net Property and equipment are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Asset Category: Range of Useful Lives Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of remaining lease term or 7 years Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying value of the asset is reviewed on a regular basis for the existence of facts, both internal and external, that may suggest impairment. Operating leases Our operating leases comprised of offices, data centers, and other equipment. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, net, accrued liabilities, and non-current operating lease liabilities on the consolidated balance sheets. Leases with an initial term of 12 months or less are expensed as incurred and recorded on the consolidated statements of comprehensive loss. The lease expense for fixed lease payments is recorded on the consolidated statements of comprehensive loss on a straight-line basis over the lease term and variable lease payments are included in the lease expense when the obligation for those payments is incurred. Operating lease assets represent our right to use an underlying asset over the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, the incremental borrowing rate based on the information available is used at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease asset also includes any lease payments made before the lease commencement date less any lease incentives received. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise the options. The lease agreements with lease and non-lease components are generally accounted as a single component. In addition, certain lease agreements contain tenant improvement allowances (“TIA”) from the landlords. We record lessee-owned improvements as leasehold improvements within property and equipment, net on our consolidated balance sheets and the TIA as a reduction to the lease asset with the impact of the decrease recognized prospectively over the remaining lease term. We record lessor-owned improvements as prepaid rent within prepaid expenses and other current assets on our consolidated balance sheets and the TIA as a reduction to prepaid rent. Sublease income from our sublet office space in San Jose, California is recognized on a straight-line basis over the term of the sublease and is recorded as a reduction of lease expense. Goodwill We perform an annual impairment assessment of goodwill at the reporting unit level on the first day of the fourth fiscal quarter. We operate as one operating and reportable segment and identify that one reporting unit for the purpose of goodwill impairment testing, which is at the same level as our operating and reportable segment. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. Should certain events or indicators of impairment occur between annual impairment tests, we will perform the impairment test as those events or indicators occur. Examples of such events or circumstances include a significant decline in the expected future cash flows, a sustained, significant decline in our stock price and market capitalization, a significant adverse change in the business climate and slower growth rates. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying amount. The qualitative assessment considers macroeconomic conditions, industry and market considerations, cost factors, overall company financial performance, and events affecting our stock price. If the reporting unit does not pass the qualitative assessment, we estimate the fair value using a discounted cash flow method and compare the fair value with the carrying amount of our reporting unit, including goodwill. If the fair value is greater than the carrying amount of our reporting unit, no impairment is recorded. If the fair value is less than the carrying amount, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to our reporting unit. The impairment charge, if any, would be recorded to earnings in the consolidated statements of comprehensive loss. Revenue recognition Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Our product revenue is recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery, dependent upon the terms of the underlying contract. Our paid subscription services are billed in advance of the start of the monthly subscription and revenues are recognized ratably over subscription period, generally 30 days or 12 months in length. Revenue from all sales types is recognized at the transaction price, which is the amount we expect to be entitled to in exchange for transferring goods or providing services. Transaction price is calculated as selling price net of variable consideration which may include estimates for future returns, sales incentives, and price protection related to current period product revenue. Our standard obligation to our direct customers generally provides for a full refund in the event that such product is not merchantable or is found to be damaged or defective. In determining estimates for future returns, management analyzes historical sales and returns data, channel inventory levels, current economic trends, and changes in customer demand for our products. Sales incentives and price protection are determined based on a combination of the actual amounts committed and estimated future expenditure based upon historical customary business practice. Typically variable consideration does not need to be constrained as estimates are based on predictive historical data or future commitments that we plan and control. However, we continue to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. Contracts with multiple performance obligations Some of our contracts with customers contain multiple promised goods or services. Such contracts include hardware products with bundled services, various subscription services, and support. For these contracts, we account for the promises separately as individual performance obligations if they are distinct. Performance obligations are determined to be distinct if they are both capable of being distinct or separately identifiable within the context of the contract. In determining whether performance obligations meet the criteria for being distinct, we consider a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. The embedded software in most of the hardware products is not considered distinct and therefore the combined hardware and incidental software are treated as one performance obligation and recognized at the point in time when control of product transfers to the customer. Services that are included with certain hardware products are considered distinct and therefore the hardware and service are treated as separate performance obligations. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative stand-alone selling price basis. Stand-alone selling prices are generally determined based on the prices charged to customers or using an adjusted market assessment. Stand-alone selling price of the hardware is directly observable from add-on camera and base station sales. Stand-alone selling price of the premium services are directly observable from direct sales to end users while the service is estimated using an adjusted market approach. Revenue is then recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware is recognized at the time control of the product transfers to the customer. The transaction price allocated to the service is recognized over the specified service period or over the estimated useful life of the hardware, beginning when the customer is expected to activate their account. Useful life of the hardware is determined by industry norms, technical and financial relevance, frequency of new model releases, and user history. Long-term Supply Arrangement - Verisure We have entered into a Supply Agreement which includes product purchases, paid subscription services, and an option for Verisure S.à.r.l. (“Verisure”) to acquire development services by submitting a statement of work (“SOW”). Products sold come with a standard twelve months warranty. Verisure assumes responsibilities for all warranty claims, returns of products and certain technical support provided to the end users. We provide technical support for paid subscription services where Verisure cannot resolve the issue. Verisure is responsible for any marketing and promotion of our products and services sold in Europe. We concluded that we are acting as the principal in the Supply Agreement and determined that revenue should be presented gross. Products are priced at a cost plus markup as specified in the Supply Agreement. The paid subscription services is billed based on the number of active cameras monthly and is priced at a cost plus markup specified in the Supply Agreement. T he transaction price for products and paid subscription services is entirely variable because the consideration is dependent on the actual costs. For products, since quantity and product types are not specified in the agreement, contracts are not deemed to exist until we receive and accept the customer purchase order (“PO”). Each product with a valid PO is considered a single performance obligation. NRE Arrangement - Verisure The Supply Agreement also provides for certain development services under an SOW to Verisure (“NRE arrangement”), which Verisure pays non-refundable installments upon the commencement of agreed-upon milestones. There is a single performance obligation as the distinct goods and services promised under the SOW are highly interdependent or interrelated inputs that produce a single combined output given the nature of such arrangements. The output (or work-in-progress of such output) typically has no alternative use to us given the customized nature of the arrangement and we have enforceable rights given that the non-refundable milestone payments are prepayments in nature; control for NRE development services therefore transfers over time. We determined that the most appropriate measure of progress for revenue recognition is the input method based on cost because we can reasonably estimate the total costs for the NRE, and the costs incurred reasonably reflect our efforts to satisfy the performance obligation. The NRE costs include labor, material, overhead as well as the use of outside services. The total estimated NRE costs are based on a combination of historical costs together with quotes from vendors for supplying parts or services towards the completion. Adjustments to cost and profit estimates are made periodically due to changes in scope of work, hours to complete and estimated profitability, including those arising from final contract settlements. These changes may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Any losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. If total NRE costs calculated upon completion in the current period are more than the estimated total costs at completion used to calculate revenue in a prior period, then the profits in the current period will be lower than if the estimated costs used in the prior period calculation were equal to the actual total costs upon completion. Warranties Sales of hardware products regularly include warranties to end customers that cover bug fixes, minor updates such that the product continues to function according to published specifications in a dynamic environment, and phone support. These standard warranties are assurance type warranties and do not offer any services in addition to the assurance that the product will continue working as specified for one or more years. Therefore, warranties are not considered separate performance obligations in the arrangement. Instead, the expected cost of warranties is accrued as an expense in accordance with authoritative guidance. Sales incentives We accrue for sales incentives offered to our customers as a marketing expense if we receive an identifiable benefit in exchange and can reasonably estimate the fair value of the identifiable benefit received; otherwise, it is recorded as a contra revenue. As a consequence, we record a substantial portion of the channel marketing costs as a reduction of revenue. We record estimated reductions to revenue for sales incentives when the related revenue is recognized or ahead of customer or end customer commitment if customary business practice creates an implied expectation that such activities will occur in the future. Shipping and handling costs We include shipping and handling fees billed to customers in Revenue. Shipping and handling costs associated with inbound freight are included in Cost of revenue. In cases where we give a freight allowance to the customer for their own inbound freight costs, such costs are appropriately recorded as a reduction in Revenue. Shipping and handling costs associated with outbound freight are included in sales and marketing expenses. We have elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs associated with outbound freight totaled $3.4 million, $2.9 million and $2.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Contract costs We recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in operating expenses of sales and marketing and general and administrative on the consolidated statements of comprehensive loss. If the incremental costs of obtaining a contract, which consist of sales commissions, relate to a service recognized over a period longer than one year, costs are deferred and amortized in line with the related services over the period of benefit. Deferred commissions are classified as non-current based on the original amortization period of over one year. There were no deferred commissions as of December 31, 2022 and 2021. Contract balances Contract assets are recorded as accounts receivable, net on the consolidated balance sheets when we have an unconditional right to consideration. Contract liabilities are recorded as deferred revenue on the consolidated balance sheets when cash payments are received or due in advance of performance. Contract liabilities consist of advance payments and customer billings in advance of revenue recognition from subscription contracts where we have unsatisfied performance obligations. Advance payments include prepayments for NRE services under the Supply Agreement with Verisure. Payment terms vary by customer. The time between invoicing and when payment is due is not significant. For certain products or services and customer types, payment is required before the products or services are delivered to the customer. Performance obligations represent the transaction price allocated that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities. Research and development Costs incurred in the research and development of new products are expensed as incurred. Software development costs We expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Technological feasibility is typically reached shortly before the release of such products. As a result, development costs that meet the criteria for capitalization were $1.8 million for the year ended December 31, 2022. There was no capitalized development costs for the years ended 2021 and 2020. We capitalize software development costs related to those software applications to be used solely to meet internal needs during the application development stage. Capitalized software development costs are amortized using the straight-line amortization method over the estimated useful life of the applicable software. Costs capitalized for developing such software applications were not material as of December 31, 2022 and 2021. Advertising costs Advertising costs are expensed when incurred and included in sales and marketing on the consolidated statements of comprehensive loss. Total advertising costs were $27.1 million, $9.6 million and $12.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Stock-based compensation We measure stock-based compensation at the grant date based on the fair value of the award. The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) and performance-based restricted stock units is measured on the grant date based on the closing fair market value of our common stock. We utilize a Monte Carlo pricing model customized to the specific provisions to value the market-based restricted stock units on the grant date. The fair value determined using the Monte Carlo simulation model varies based on the assumptions used for the expected stock price volatility, the correlation coefficient between Arlo and Russell 2000 Index, risk-free interest rates, and dividend yield. Forfeitures are accounted for as they occur. Our Employee Stock Purchase Plan (“ESPP”) is intended to provide employees with the opportunity to purchase our common stock through accumulated payroll deductions at the end of specified purchase period. Eligible employees may contribute up to 15% of compensation, subject to certain income limits, to purchase our 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 purchasing period is generally six months. We determine the fair value using the Black-Scholes Model using various inputs, including its estimate of expected volatility, term, dividend yield and risk-free interest rate. The risk-free interest rate of the purchase rights granted under the ESPP is based on the implied yield currently available on U.S. Treasury securities, with a remaining term commensurate with the estimated expected term. Expected volatility of the purchase rights granted under the ESPP is based on historical volatility over the most recent period commensurate with the estimated expected term. We recognize compensation costs for RSUs. stock options, and ESPP on a straight-line basis over the requisite service period of the award, usually the vesting period, which is generally four years for stock options and three Foreign currency Our functional currency is the U.S. dollar. Foreign currency transactions of international subsidiaries are re-measured into U.S. dollars at the end-of-period exchange rates for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Revenue is re-measured at average exchange rates in effect during each period. Expenses are re-measured at average exchange rates in effect during each period, except for expenses related to non-monetary assets and liabilities, which are re-measured at historical exchange rates. Gains and losses arising from foreign currency transactions are included in other income, net on the consolidated statements comprehensive loss. Net loss per share Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. Potentially dilutive common shares include common shares issuable upon exercise of stock options, vesting of restricted stock awards and performance shares, and issuances of shares under the ESPP, which are reflected in diluted net loss per share by application of the treasury stock method. Potentially dilutive common shares are excluded from the computation of diluted net loss per share when their effect is anti-dilutive. Segment Information We operate as one operating and reportable segment. Our Chief Executive Officer (“CEO”) is identified as the Chief Operating Decision Maker (“CODM”), who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Income taxes We record the provision for income taxes in the consolidated financial statements using the asset and liability method. Under this method, we recognize income tax liabilities or receivables for the current year. We also recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the net amount that we believe is more likely than not to be realized. Our assessment considers the recognition of deferred tax assets on a jurisdictional basis. Accordingly, in assessing the future taxable income on a jurisdictional basis, we consider the effect of the transfer pricing policies on that income. We have recorded a valuation allowance against U.S. federal and state deferred tax assets and certain foreign tax attribute carryforwards since we do not anticipate to realize the benefits of these deferred tax assets. We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. As we expand internationally, we will face increased complexity in determining the appropriate tax jurisdictions for revenue and expense items. Our policy is to adjust these unrecognized tax benefits in the period when facts and circumstances change, such as the closing of a tax audit, the expiration of statute of limitation for a relevant taxing authority to examine a tax position, or when additional information becomes available. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in t |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Contract Balances The following table reflects the changes in contract balances for the years ended December 31, 2022 and 2021: Balance Sheet Location December 31, 2022 December 31, 2021 $ change % change (In thousands) Accounts receivable, net Accounts receivable, net $ 65,960 $ 79,564 $ (13,604) (17.1) % Contract liabilities - current Deferred revenue $ 11,291 $ 29,442 $ (18,151) (61.7) % Contract liabilities - non-current Other non-current liabilities $ 212 $ 1,344 $ (1,132) (84.2) % For the year ended December 31, 2022, compared to the previous year, accounts receivable, net decreased, primarily driven by the decrease in revenue in the fourth quarter of 2022, current portion of deferred revenue decreased, primarily due to utilization of Verisure prepayments for product purchases, Verisure NRE installment payments and recognition of prepaid service revenue, and non-current deferred revenue decreased due to the recognition of prepaid service revenue. For the years ended December 31, 2022 and 2021, $29.4 million and $53.1 million, respectively, of the recognized revenue was included in the contract liability balance at the beginning of the periods. There were no significant changes in estimates during the periods that would affect the contract balances. Refer to Note 4, Balance Sheet Components for further details of accounts receivable, net. Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and partially unsatisfied as of December 31, 2022 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 11,291 $ 202 $ 10 $ 11,503 During the five-year period commencing January 1, 2020, Verisure has an aggregate purchase commitment of $500.0 million. As of December 31, 2022, $336.7 million of the purchase commitment has been fulfilled with a backlog of $97.9 million. Disaggregation of Revenue We disaggregate our revenue into three geographic regions: the Americas, EMEA, and APAC, where we conduct our business. The following table presents revenue by geography. Year Ended December 31, 2022 2021 2020 (In thousands) Americas $ 273,981 $ 271,182 $ 269,395 EMEA 196,465 134,232 61,832 APAC 19,968 29,723 25,927 Total $ 490,414 $ 435,137 $ 357,154 |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | Balance Sheet Components Short-term investments As of December 31, 2022 As of December 31, 2021 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. Treasuries $ 29,849 $ — $ (149) $ 29,700 $ — $ — $ — $ — Accounts receivable, net As of December 31, 2022 2021 (In thousands) Gross accounts receivable $ 66,383 $ 79,901 Allowance for credit losses (423) (337) Total $ 65,960 $ 79,564 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. Years Ended December 31, 2022 2021 2020 (In thousands) Balance at the beginning of the period $ 337 $ 519 $ 609 Provision for (release of) expected credit losses 86 (182) 186 Amount recovered due to collection — — (276) Balance at the end of the period $ 423 $ 337 $ 519 Property and equipment, net The components of property and equipment are as follows: As of December 31, 2022 2021 (In thousands) Machinery and equipment $ 12,696 $ 13,302 Software 15,606 13,928 Computer equipment 3,992 4,062 Leasehold improvements 4,657 4,922 Furniture and fixtures 2,554 2,404 Total property and equipment, gross 39,505 38,618 Accumulated depreciation (32,169) (29,023) Total property and equipment, net (1) $ 7,336 $ 9,595 _________________________ (1) $1.7 million and $2.4 million property and equipment, net was included in the sublease arrangement for the San Jose office building as of December 31, 2022 and 2021, respectively. Depreciation expense pertaining to property and equipment was $4.8 million, $5.9 million and $8.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. Long-lived assets During the second quarter of 2021, we evaluated our real estate lease portfolio in light of the COVID-19 pandemic and the changing nature of office space use by our workforce. This evaluation included the decision to sublease our office space in San Jose, California. This change in the circumstances for the San Jose office space use led management to test the recoverability of the carrying amount of the asset group related to the sublease. On May 25, 2021, the carrying amount of the asset group exceeded the anticipated undiscounted value of the sublease income over the sublease term. Accordingly, we reviewed our operating lease right-of-use assets and other lease related assets including leasehold improvements, furniture, fixtures and equipment under the sublease asset group for impairment in accordance with Accounting Standards Codification ( “ ASC”) 360 Property, Plant, and Equipment . As a result of the evaluation, we recorded an impairment charge of $9.1 million, which included $6.8 million associated with operating lease right-of-use assets and $2.3 million associated with lease related property and equipment. The assets were written down to fair value as calculated using a discounted cash flow method (income approach) with unobservable inputs when are classified as Level 3 within the fair value hierarchy. The fair value of the asset group was determined by utilizing projected cash flows from the sublease, discounted by a risk-adjusted discount rate of 8.0% that reflects the level of risk associated with receiving future cash flows. Goodwill We have determined that there was no event occurred or circumstances changed during the year ended December 31, 2022 that would more likely than not reduce the fair value below the carrying amount. No goodwill impairment was recognized in the years ended December 31, 2022, 2021 and 2020 and the goodwill as of December 31, 2022 and 2021 was $11.0 million . Other non-current assets As of December 31, 2022 2021 (In thousands) Net deferred taxes assets $ 1,384 $ 1,565 Sublease initial direct cost 777 1,471 Other 1,920 1,278 Total $ 4,081 $ 4,314 Accrued liabilities As of December 31, 2022 2021 (In thousands) Sales incentives $ 35,681 $ 31,417 Sales returns 18,656 19,960 Accrued employee compensation 15,774 12,367 Cloud and other costs 11,154 10,759 Current operating lease liabilities 4,190 4,609 Professional services 3,703 2,505 Warranty obligations 1,174 1,330 Freight 1,050 8,086 Accrued restructuring charges 1,047 — Other 6,426 6,356 Total $ 98,855 $ 97,389 Other non-current liabilities As of December 31, 2022 2021 (In thousands) Non-current deferred revenue $ 212 $ 1,344 Non-current income taxes payable 77 94 Other 2,660 1,001 Total $ 2,949 $ 2,439 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair Value Measurements - Recurring Basis The following tables summarize assets measured at fair value on a recurring basis: As of December 31 2022 2021 (In thousands) Cash equivalents: money-market funds (<90 days) $ 12,614 $ 21,935 Cash equivalents: U.S. Treasuries (<90 days) 20,274 — Available-for-sale securities: U.S. Treasuries (1) 29,700 — Total $ 62,588 $ 21,935 _________________________ (1) Included in short-term investments on the consolidated balance sheets. Our investments in cash equivalents and available-for-sale securities are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. As of December 31, 2022 and 2021, assets and liabilities measured as Level 2 fair value were not material and there were no Level 3 fair value assets or liabilities measured on a recurring basis. Fair Value Measurements - Nonrecurring Basis We measure the fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount the asset may not be recoverable. For the year ended December 31, 2022, we have no assets or liabilities measured on a non-recurring basis. For the year ended December 31, 2021, in connection with the long-lived assets impairment analysis, we recorded an impairment charge of $9.1 million associated with our operating lease right-of-use assets and lease related property and equipment assets on a nonrecurring basis. Refer to Note 4, Balance Sheet Components , for further information about the impairment of our long-lived assets. |
Restructuring
Restructuring | 12 Months Ended |
Dec. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | RestructuringIn November 2022, we initiated a restructuring plan to reduce our cost structure to better align the operational needs of the business to current economic conditions while continuing to support our long-term strategy. This restructuring includes the reduction of headcount as well as the abandonment of certain lease contracts and the cancellation of contractual services arrangements with certain suppliers. We expect the completion date to be in the third quarter of 2023 with the total estimated restructuring charges of $1.9 million. The restructuring liabilities are included in accrued liabilities in the consolidated balance sheets. Restructuring activities for the year ended December 31, 2022 are as follows: Total Severance Expense Office Exit Expense Other Exit Expense (In thousands) Balance at the beginning of the period $ — $ — $ — $ — Restructuring charges 1,805 798 928 79 Cash payments (588) (579) — (9) Non-cash and other adjustments 48 — 63 (15) Balance at the end of the period $ 1,265 $ 219 $ 991 $ 55 Total costs incurred inception to date $ 1,805 $ 798 $ 928 $ 79 Total expected expense to be incurred as of December 31, 2022 $ 137 $ 137 $ — $ — |
Revolving Credit Facility
Revolving Credit Facility | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facility | Revolving Credit Facility On October 27, 2021, we entered into a Loan and Security Agreement (the “Credit Agreement”) with Bank of America, N.A., a national banking association, as lender (the “Lender”). The Credit Agreement provides for a three-year revolving credit facility (the “Credit Facility”) that matures on October 27, 2024. Borrowings under the Credit Facility are limited to the lesser of (x) $40.0 million, and (y) an amount equal to the borrowing base. The borrowing base will be the sum of (i) 90% of investment grade eligible receivables and (ii) 85% of non-investment grade eligible accounts, less applicable reserves established by the Lender. The Credit Agreement also includes a $5.0 million sublimit for the issuance by the Lender of letters of credit. In addition, the Credit Agreement includes an uncommitted accordion feature that allows us to request, from time to time, that the Lender increase the aggregate revolving loan commitments by up to an additional $25.0 million in the aggregate, subject to the satisfaction of certain conditions, including obtaining the Lender’s agreement to participate in each increase. The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes. Based on certain terms and conditions including eligible accounts receivable as of December 31, 2022, we had unused borrowing capacity of $22.2 million. The obligations under the Credit Agreement are secured by substantially all of our domestic working capital assets, including accounts receivable, cash and cash equivalents, inventory, and other assets to the extent related to such working capital assets. At our option, borrowings under the Credit Agreement will bear interest at a floating rate equal to: (i) the Bloomberg Short-Term Bank Yield Index rate plus the applicable rate of 2.0% to 2.5% determined based on our average daily availability for the prior fiscal quarter, or (ii) the base rate plus the applicable rate of 1.0% to 1.5% based on our average daily availability for the prior fiscal quarter. Among other fees, we are required to pay a monthly unused fee of 0.2% per annum on the amount by which the Lender’s aggregate commitment under the Credit Facility exceeds the average daily revolver usage during such month. The Credit Agreement contains events of default, representations and warranties, and affirmative and negative covenants customary for credit facilities of this type. The Credit Agreement also contains financial covenants that require us to (a) until we achieve a fixed charge coverage ratio of at least 1.00 to 1.00 for two consecutive quarters, maintain minimum liquidity of not less than $20.0 million at all times and (b) thereafter, if the Financial Covenant Trigger Period (as defined in the Credit Agreement) is in effect, maintain a fixed charge coverage ratio, tested quarterly on a trailing twelve month basis, of at least 1.00 to 1.00 at any time. As of December 31, 2022, we are in compliance with all the covenants of the Credit Agreement. If an event of default under the Credit Agreement occurs, then the Lender may cease making advances under the Credit Agreement and declare any outstanding obligations under the Credit Agreement to be immediately due and payable. In addition, if we file a bankruptcy petition, a bankruptcy petition is filed against us and is not dismissed or stayed within thirty days or we make a general assignment for the benefit of creditors, then any outstanding obligations under the Credit Agreement will automatically and without notice or demand become immediately due and payable. No amounts had been drawn under the Credit Facility as of December 31, 2022. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases Our operating leases comprise offices, equipment, data centers, and distribution centers, with various expiration dates through June 2029. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into our determination of lease payments. The terms of certain leases provide for rental payments on a graduated scale. Gross lease expense was $7.1 million, $7.0 million, and $7.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. On June 29, 2021, we entered into a sublease agreement with Vocera Communications, Inc. for approximately 78,000 rentable square feet of office space located at 3030 Orchard Parkway in San Jose, California. The initial term of the sublease commenced on February 1, 2022, and will expire on June 30, 2029, unless earlier terminated in accordance with the sublease. The sublease income was $2.0 million and $0.5 million as a reduction of lease expense for the years ended December 31, 2022 and 2021, respectively. Supplemental cash flow information related to operating leases was as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 6,375 $ 6,497 $ 5,991 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ 3,470 $ 1,646 $ 461 Weighted average remaining lease term and weighted average discount rate related to operating leases were as follows: As of December 31, 2022 2021 Weighted average remaining lease term 5.1 years 6.1 years Weighted average discount rate 5.69 % 5.77 % The future minimum undiscounted lease payments under operating leases and future non-cancelable rent payments from our subtenants for each of the next five years and thereafter as of December 31, 2022 were as follows: Operating Lease Payments Sublease Payments Net (In thousands) 2023 $ 5,394 $ (1,891) $ 3,503 2024 5,119 (1,947) 3,172 2025 3,894 (2,006) 1,888 2026 4,008 (2,066) 1,942 2027 3,986 (2,322) 1,664 Thereafter 5,130 (3,620) 1,510 Total future lease payments $ 27,531 $ (13,852) $ 13,679 Less: interest (4,062) Present value of future minimum lease payments $ 23,469 Accrued liabilities $ 4,190 Non-current operating lease liabilities 19,279 Total lease liabilities $ 23,469 Letters of Credit In connection with the lease agreement for our office space located in San Jose, California, we executed a letter of credit with the landlord as the beneficiary. As of December 31, 2022, we have 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 We have 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 December 31, 2022, we have approximately $44.3 million in non-cancelable purchase commitments with suppliers. As of December 31, 2022, a further $14.8 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements. Consequently, we may incur expenses for the materials and components, such as chipsets already purchased by the supplier to fulfill our orders if the purchase order is cancelled. Expenses incurred have historically not been significant relative to the original order value. As of December 31, 2022, the loss liability from committed purchases was not material. Warranty Obligations Changes in warranty obligations, which are included in accrued liabilities in the consolidated balance sheets, were as follows: Year Ended December 31, 2022 2021 2020 (In thousands) Balance at the beginning of the period $ 1,330 $ 2,451 $ 3,169 Provision for (release of) warranty obligations 145 (655) — Settlements (301) (466) (718) Balance at the end of the period $ 1,174 $ 1,330 $ 2,451 Litigation and Other Legal Matters We are involved in disputes, litigation, and other legal actions, including, but not limited to, the matters described below. In all cases, at each reporting period, we evaluate 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, we accrue for the amount or, if a range, we accrue 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 general and administrative expenses. We monitor developments in these legal matters that could affect the estimate we had previously accrued. In relation to such matters, we currently believe that there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position within the next 12 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 us may cause us to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require us to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, our 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 our estimates, which could result in the need to adjust the liability and record additional expenses. Securities Class Action Lawsuits and Derivative Suit 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 (the “ State Action”), and one complaint in the U.S. District Court for the Northern District of California (the “ Federal Action”) against us and certain of its executives and directors. The plaintiffs in the State Action allege that we failed to adequately disclose quality control problems and adverse sales trends ahead of our initial public offering (the “ IPO”), violating the Securities Act of 1933, as amended (the “ Securities Act”). The complaint seeks unspecified monetary damages and other relief on behalf of investors who purchased Company common stock issued pursuant and/or traceable to the IPO. In the Federal Action, the court appointed a shareholder named Matis Nayman as lead plaintiff. Lead plaintiff alleged violations of the Securities Act and the Securities Exchange Act of 1934, as amended, based on alleged materially false and misleading statements about our sales trends and products. In the amended complaint, lead plaintiff sought to represent a class of persons who purchased or otherwise acquired our common stock (i) during the period between August 3, 2018 through December 3, 2018 and/or (ii) pursuant to or traceable to the IPO. Lead plaintiff sought class certification, an award of unspecified damages, an award of costs and expenses, including attorneys’ fees, and other further relief as the court may deem just and proper. On August 6, 2019, defendants filed a motion to dismiss. The federal court granted that motion, and lead plaintiff filed an amended complaint. On June 12, 2020, lead plaintiff filed an unopposed motion for preliminary approval of a class action settlement for $1.25 million, which was also the amount that we had accrued for loss contingency. In October 2020, we made a $1.25 million payment to an escrow account administered by the court and plaintiff’s counsel (the “Settlement Fund”). The Settlement Fund was deemed to be in the custody of the court and remained subject to the jurisdiction of the court until such time as the Settlement Fund was distributed pursuant to the settlement agreement and/or further order of the court. On February 5, 2021, lead plaintiff filed a motion for final approval of the settlement. In advance of the final approval hearing, three of the named plaintiffs in the State Action requested exclusion from the settlement. The court held a final approval hearing on March 11, 2021, and, on March 25, 2021, entered an order and final judgment approving the settlement and, among other things, dismissed with prejudice all claims of lead plaintiff and the Settlement Class (as defined in the settlement agreement). The Federal Action is now closed. In the State Action, on May 5, 2021, the court held a status conference and instructed plaintiffs Perros, Patel, and Pham (“Plaintiffs”), who were the only Arlo stockholders to opt out of the federal settlement, to file an amended complaint by June 4, 2021. Plaintiffs filed their amended complaint, asserting their individual Securities Act claims, but also purporting to represent a new class of Arlo stockholders who purchased Arlo shares between December 3, 2018 and February 22, 2019. On June 21, 2021, the Arlo defendants filed a motion to dismiss the State Action (for forum non conveniens) based on the federal forum provision in Arlo’s certificate of incorporation. Plaintiffs opposed on July 28, 2021, and the Arlo defendants replied on August 13, 2021. On September 9, 2021, the court issued an order granting the Arlo defendants’ forum non conveniens motion, and on September 17, 2021, the court issued a final judgment dismissing the State Action in its entirety. On November 16, 2021, Plaintiffs filed a Notice of Appeal. The appeal is pending before the California Court of Appeal, Sixth Appellate District. Plaintiffs-Appellants filed their opening brief on May 20, 2022. Defendants-Respondents filed their responding brief on August 18, 2022, and Plaintiffs-Appellants filed their reply brief on September 7, 2022. The oral arguments on the appeal originally set for February 16, 2023 were postponed and have not yet been rescheduled. Leonard R. Pinto v. Arlo Technologies, Inc., et al. In addition to the State Action and the Federal Action, a purported stockholder named Leonard Pinto filed a tagalong derivative action on June 13, 2019 in the U.S. District Court for the Northern District of California, captioned Pinto v. Arlo Technologies, Inc. et al. , No. 19-CV-03354 (the “Derivative Action”). The Derivative Action is brought on behalf of us against the majority of our current directors. The complaint is based on the same alleged misconduct as the securities class actions but asserts claims for breach of fiduciary duty, waste of corporate assets, and violation of the Securities Exchange Act of 1934, as amended. On August 20, 2019, the court stayed the Derivative Action in deference to the Federal Action. On April 8, 2021, because it had granted final approval of the settlement in the Federal Action, the court lifted the stay in the Derivative Action and asked the parties to file a joint status report by April 22, 2021. In their status report, the parties stipulated to a schedule for plaintiff to file an amended complaint and for the parties to brief a motion to dismiss. Plaintiff filed his amended complaint on May 24, 2021. Defendants moved to dismiss the amended complaint on July 9, 2021. On August 23, 2021, plaintiff filed a second amended complaint. Defendants moved to dismiss the second amended complaint on December 17, 2021. Plaintiff filed his opposition on January 31, 2022, and defendants filed their reply on March 2, 2022. On July 28, 2022, the Court heard defendants’ motion to dismiss. At the hearing, the Court informed the parties that it was inclined to grant defendants’ motion to dismiss for lack of jurisdiction, and the Court’s corresponding written order dismissing the case followed on August 8, 2022. Skybell Technologies, Inc. v. Arlo Technologies, Inc. On December 18, 2020, Skybell Technologies, Inc., SB IP Holdings, LLC, and Eyetalk365, LLC (collectively, “Skybell”) filed a Section 337 complaint against us, Vivint Smart Home, Inc. and SimpliSafe, Inc. (collectively “Respondents”) at the U.S. International Trade Commission (“ITC”). The action alleges that our cameras and video doorbell cameras infringe certain patents (the “Asserted Patents”). On September 15, 2021, the Administrative Law Judge (“ALJ”) hearing the case at the ITC issued an Initial Determination (“ID”) ruling that all the Asserted Patents are invalid. Skybell appealed the ID by submitting its Petition for Review to the ITC on September 27, 2021, and the Respondents submitted their Response to the Petition to Review on October 4, 2021. On November 10, 2021, The ITC affirmed the ALJ’s ruling and did not grant any review of the ID, meaning that there is no trial on the ITC docket since there are no valid patents remaining, and the case is concluded at the ITC level. On January 9, 2022, Skybell filed its Notice of Appeal to the Federal Circuit to appeal the ITC’s rulings invalidating the Asserted Patents. On June 23, 2022, Skybell and the Respondents stipulated to the dismissal of the Skybell’s appeal, and on June 27, 2022, the Federal Circuit correspondingly dismissed the appeal. There was no material financial impact to us resulting from this litigation matter. Indemnifications |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefit and Share-Based Payment Arrangement, Noncash Expense [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans We grant options and restricted stock units (“RSUs”) under the 2018 Equity Incentive Plan (the “2018 Plan”), under which awards may be granted to all employees. We also grant performance-based and market-based restricted stock units (“PSUs”) to our executive officers periodically. Award vesting periods for the 2018 plan are generally three During the years ended December 31, 2022 and 2021, the Compensation Committee of the Board of Directors (the “Committee”) unanimously approved amendments to the 2018 Plan to, among other things, reserve an additional 3,000,000 shares and 1,500,000, respectively, of our common stock to be used exclusively for grants of awards to individuals who were not previously employees or non-employee directors (or following a bona fide period of non-employment), as an inducement material to the individual’s entry into employment with us within the meaning of Rule 303A.08 of the New York Stock Exchange (the “NYSE”) Listed Company Manual (“Rule 303A.08”). The 2018 Plan was amended by the Committee without stockholder approval pursuant to Rule 303A.08. On January 21, 2022, we registered an aggregate of up to 4,222,270 shares of common stock on a Registration Statement on Form S-8, including 3,377,816 shares issuable pursuant to the 2018 Plan that were automatically added to the shares authorized for issuance under the 2018 Plan and 844,454 shares issuable pursuant to the Employee Stock Purchase Plan (“ESPP”) that were automatically added to the shares authorized for issuance on January 1, 2022, both pursuant to an “evergreen” provision contained in the respective plans. The following table sets forth the available shares for grants as of December 31, 2022: Number of Shares (In thousands) Shares available for grants as of December 31, 2021 2,509 Additional authorized shares 6,378 Granted (9,758) Forfeited/ cancelled 2,753 Shares traded for taxes 2,331 Shares available for grants as of December 31, 2022 4,213 Employee Stock Purchase Plan We sponsor the ESPP to eligible employees. As of December 31, 2022, approximately 1.6 million shares were available for issuance under the ESPP. The following table sets forth the weighted average assumptions used to estimate the fair value of purchase rights granted under the ESPP. ESPP 2022 2021 2020 Expected life (in years) 0.5 0.5 0.5 Risk-free interest rate 3.29 % 0.07 % 0.84 % Expected volatility 69.2 % 63.8 % 102.0 % Option Activity Stock option activity during the year ended of December 31, 2022 was as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Aggregate (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2021 2,574 $ 10.55 Granted — — Exercised (209) 6.81 Forfeited/ cancelled (3) 16.00 Expired (280) 15.57 Outstanding as of December 31, 2022 2,082 $ 10.24 3.82 $ — Vested and expected to vest 2,082 $ 10.24 3.82 $ — Exercisable Options as of December 31, 2022 2,082 $ 10.24 3.82 $ — Year Ended December 31, 2022 2021 2020 (In millions) Total intrinsic value of options exercised $ 0.9 $ 2.2 $ 0.2 Total fair value of options vested $ 2.3 $ 2.6 $ 1.0 RSU Activity RSU activity, excluding PSU activity, during the year ended of December 31, 2022 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Aggregate (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2021 10,080 $ 5.73 Granted 6,811 7.23 Vested (5,316) 6.39 Forfeited (2,088) 6.11 Outstanding as of December 31, 2022 9,487 $ 6.36 1.46 $ 33,299 Year Ended December 31, 2022 2021 2020 (In millions, except per share data) Total intrinsic value of RSUs vested (the release date fair value) $ 41.4 $ 36.4 $ 13.0 Total fair value of RSUs vested (the grant date fair value) $ 34.0 $ 31.3 $ 22.2 RSU granted weighted-average fair value per share $ 7.23 $ 7.32 $ 3.03 PSU Activity During the years ended December 31, 2022 and 2021, our executive officers were granted performance-based awards with vesting occurring at the end of a three PSU activity during the year ended of December 31, 2022 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Aggregate (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2021 2,106 $ 5.39 Granted 2,952 6.52 Vested (631) 4.27 Forfeited (386) 7.18 Outstanding as of December 31, 2022 4,041 $ 6.22 1.12 $ 14,184 Year Ended December 31, 2022 2021 2020 (In millions, except per share data) Total intrinsic value of PSUs vested (the release date fair value) $ 4.8 $ 1.4 $ — Total fair value of PSUs vested (the grant date fair value) $ 2.7 $ 0.6 $ — PSU granted weighted-average fair value per share $ 6.52 $ 6.74 $ 3.43 Stock-Based Compensation Expense The following table sets forth the stock-based compensation expense included in our consolidated statements of comprehensive loss: Year Ended December 31, 2022 2021 2020 (In thousands) Cost of revenue $ 4,841 $ 3,917 $ 2,961 Research and development 12,317 10,865 9,055 Sales and marketing 6,290 5,392 4,106 General and administrative 25,028 17,856 19,125 Total $ 48,476 $ 38,030 $ 35,247 As of December 31, 2022, there was no unrecognized compensation cost related to stock options. Approximately $74.1 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.9 years as of December 31, 2022. 401(K) Plan We have a 401(K) Plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. We match 50% of contributions for employees up to a maximum of $2,000 in employee contributions per fiscal year. During the years ended December 31, 2022, 2021 and 2020, we recognized expense of approximately $1.1 million, $1.1 million and $0.9 million, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income (loss) before provision for income taxes consisted of the following: Year Ended December 31, 2022 2021 2020 (In thousands) United States $ (60,374) $ (59,370) $ (104,551) International 4,723 4,018 3,925 Total $ (55,651) $ (55,352) $ (100,626) Provision for income taxes consisted of the following: Year Ended December 31, 2022 2021 2020 (In thousands) Current: U.S. Federal $ 166 $ — $ — State 87 21 84 Foreign 601 989 438 854 1,010 522 Deferred: U.S. Federal — — — State — — — Foreign 121 (333) 103 121 (333) 103 Total $ 975 $ 677 $ 625 The effective tax rate differed from the U.S. federal income tax rate as follows: Year Ended December 31, 2022 2021 2020 Tax benefit at U.S. federal income tax rate 21.0 % 21.0 % 21.0 % State tax benefit, net of federal benefit 1.9 % 2.9 % 4.4 % Impact of international operations 1.3 % 1.3 % 0.8 % U.S. taxes on foreign entities — % (3.9) % 2.5 % Stock-based compensation (7.3) % (3.0) % (4.2) % U.S. federal tax credits 3.7 % 1.6 % 1.6 % Change in valuation allowance (21.8) % (20.3) % (26.4) % Non-deductible transaction costs (0.1) % (0.6) % (0.1) % Other (0.5) % (0.2) % (0.2) % Provision for income taxes (1.8) % (1.2) % (0.6) % The significant components of net deferred tax assets consisted of the following: As of December 31, 2022 2021 (In thousands) Deferred Tax Assets: Accruals and allowances $ 11,330 $ 10,369 Net operating loss carryforwards 22,622 26,236 Stock-based compensation 3,527 3,956 Lease liabilities 5,706 6,170 Deferred revenue 409 1,763 Tax credit carryforwards 11,510 8,100 Depreciation and amortization 3,307 3,989 Capitalized research and development expenses 40,016 26,186 Total deferred tax assets 98,427 86,769 Deferred Tax Liabilities: Operating lease right-of-use assets (3,174) (3,462) Total deferred tax liabilities (3,174) (3,462) Valuation Allowance (93,869) (81,742) Net deferred tax assets $ 1,384 $ 1,565 Changes in valuation allowance for deferred tax assets were as follows: Year Ended December 31, 2022 2021 2020 (In thousands) Balance at the beginning of the period $ 81,742 $ 70,496 $ 43,917 Additions (1) 16,798 11,246 26,579 Deductions (2) (4,671) — — Balance at the end of the period $ 93,869 $ 81,742 $ 70,496 ________________________ (1) Additions are primarily increases in tax attribute carryforwards and capitalized expenditures for income tax purposes. (2) Deductions present the utilization of U.S. federal and state net operating losses and tax credit attributes. Realization of the deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. We do not anticipate to realize the net U.S. federal and state deferred tax assets and certain foreign tax attributes, which have been fully offset by a valuation allowance. As of December 31, 2022 and 2021, the valuation allowance was $93.9 million and $81.7 million, respectively. The utilization of net operating loss and credit carryforwards may be subject to annual limitation due to the ownership changes provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of portions of the net operating loss and tax credit carryforwards before utilization. As of December 31, 2022, net operating loss carryforwards consisted of the following: Amount Beginning Year of Expiration (in thousands) U.S. federal (1) $ 8,642 2031 U.S. federal (1)(2) 82,547 Indefinite California 28,924 2028 Other states 32,366 2023 _________________________ (1) All of the losses are subject to annual usage limitations under Internal Revenue Code Section 382. (2) All of the losses are subject to usage limitation of 80% of taxable income in a year when the losses will be utilized. As of December 31, 2022, tax credit carryforwards consisted of the following: Amount Beginning Year of Expiration (in thousands) U.S. federal $ 6,502 2039 California 6,396 Indefinite Foreign 2,302 2041 As of December 31, 2022, withholding taxes and state income taxes expected to be incurred on the foreign subsidiaries’ earnings that are not indefinitely reinvested are immaterial. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits was as follows: Year Ended December 31, 2022 2021 2020 (In thousands) Balance at the beginning of the period $ 1,736 $ 1,355 $ 704 Additions for tax positions taken during the current year 765 444 503 Additions (reductions) for tax positions taken during a prior year 275 (58) 148 Reductions as a result of a lapse of the applicable statute of limitations (13) (5) — Balance at the end of the period $ 2,763 $ 1,736 $ 1,355 The total amount of unrecognized tax benefits, including immaterial interest and penalties, was $2.8 million and $1.7 million as of December 31, 2022 and 2021, respectively. We recognize interest and penalties accrued related to unrecognized tax benefits as part of the provision for income taxes. We file income tax returns in the U.S. and numerous foreign jurisdictions. We are subject to income tax examinations by taxing authorities globally for years ending or after December 31, 2018. As a result of the spin-off of Arlo from NETGEAR in 2018, Arlo filed the consolidated U.S. federal and various combined state income tax returns with NETGEAR for the calendar year ended December 31, 2018. The IRS has examined NETGEAR’s U.S. federal income tax return for the calendar year of 2018 and such examination was closed in 2022 without any adjustments. In addition, the California Franchise Tax Board began an examination of NETGEAR’s 2018 tax year. Our estimate of the potential outcome of any uncertain tax positions is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time. We believe that the estimate has adequately reflected these matters. However, the future results may include adjustments to estimates in the period the audits will be resolved, which may impact the effective tax rate. We don't expect a significant change in unrecognized tax benefits within the next twelve months. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Year Ended December 31, 2022 2021 2020 (In thousands, except for per share data) Numerator: Net loss $ (56,626) $ (56,029) $ (101,251) Denominator: Weighted average common shares - basic 87,173 82,688 78,084 Potentially dilutive common shares — — — Weighted average common shares - dilutive 87,173 82,688 78,084 Basic net loss per share $ (0.65) $ (0.68) $ (1.30) Diluted net loss per share $ (0.65) $ (0.68) $ (1.30) Anti-dilutive employee stock-based awards, excluded 5,451 5,041 5,623 |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information Segment Information We operate as one operating and reportable segment. Our Chief Executive Officer (“CEO”) is identified as the Chief Operating Decision Maker (“CODM”), who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Geographic Information for Revenue Revenue consists of gross product shipments and service revenue, less allowances for estimated sales returns, price protection, end-user customer rebates, net changes in deferred revenue, and other channel sales incentives deemed to be a reduction of revenue per the authoritative guidance. Sales and usage-based taxes are excluded from revenue. For reporting purposes, revenue by geography is generally based upon the ship-to location of the customer for device sales and device location for service sales. The following table presents revenue by geography. For comparative purposes, amounts in prior periods have been recast. Year Ended December 31, 2022 2021 2020 (In thousands) United States $ 268,435 $ 265,844 $ 259,023 Spain 135,896 83,779 5,385 Ireland 44,287 40,877 49,437 Other countries 41,796 44,637 43,309 Total $ 490,414 $ 435,137 $ 357,154 Geographic Information for Long-Lived Assets Long-lived assets include property and equipment, net and operating lease right-of-use assets, net. Our long-lived assets are based on the physical location of the assets. The following table presents long-lived assets by geography. For comparative purposes, amounts in prior periods have been recast. As of December 31, 2022 2021 (In thousands) United States $ 17,762 $ 19,587 Other countries 2,383 4,822 Total $ 20,145 $ 24,409 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation We prepare our consolidated financial statements 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”). The consolidated financial statements include the accounts of Arlo and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. |
Fiscal periods | Fiscal periods Our fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. We report the 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. |
Reclassification | Reclassification Certain prior periods amounts have been reclassified to conform to the current period’s presentation. None of these reclassifications had a material impact to the consolidated financial statements. |
Use of estimates | Use of estimates The preparation of 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 year ended December 31, 2022 are not necessarily indicative of the results that may be expected for any future period. |
Cash and cash equivalents and restricted cash | Cash and cash equivalents We invest excess cash primarily in government securities and money market funds and consider all highly liquid investments with an original maturity or a remaining maturity at the time of purchase of three months or less to be cash equivalents. We deposit cash and cash equivalents with high credit quality financial institutions. Restricted cash We maintain certain cash balances restricted as to withdrawal or use. Restricted cash is comprised primarily of cash used as a collateral for a letter of credit associated with our lease agreement for office space in San Jose, California. We deposit restricted cash with high credit quality financial institutions. |
Short-term investments | Short-term investments Short-term investments are comprised of marketable securities that consist of government securities with an original maturity or a remaining maturity at the time of purchase of greater than three months and no more than 12 months. The marketable securities are held with a high quality financial institution, which acts as our custodian and investment manager. These marketable securities are classified as available-for-sale securities in accordance with the provisions of the authoritative guidance for investments and are carried at fair value with unrealized gains and losses are included in accumulated other comprehensive income (loss), net of tax, which is reported on consolidated statements of stockholders’ equity. |
Fair value measurements | Fair value measurements The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair values due to their short maturities. Short-term investments are recognized or disclosed at fair value in the financial statements on a recurring basis. The fair value of assets and liabilities is measured based on a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). |
Trade accounts receivable | Trade accounts receivable We are exposed to credit losses primarily through sales of products and services. Allowance for current estimated credit losses 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 estimated 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. Monitoring activities include dispute resolution, payment confirmation, review of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. Although we have 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 accounts receivable. |
Concentrations of risk and other uncertainties | Concentrations of risk and other uncertainties Financial instruments that are potentially subject us to a concentration of credit risk mainly consist of cash equivalents, short term investments and accounts receivable. We believe that there is minimal credit risk associated with the investments of cash equivalents and short-term investments due to the restrictions placed on the type of investment that can be entered into under our investment policy. Our cash equivalents and short-term investments primarily consist of government securities and money market funds which are held and managed by high credit quality financial institutions. |
Inventories | 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. We write down inventories based on estimated excess and obsolete amounts, determined primarily based on demand forecasts, but takes into account market conditions, product development plans, product life expectancy and other factors. At the point of loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase of the newly established cost basis. While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is risk that additional charges may be necessary if current forecasts are greater than actual demand. |
Property and equipment, net | Property and equipment, net Property and equipment are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Asset Category: Range of Useful Lives Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of remaining lease term or 7 years Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying value of the asset is reviewed on a regular basis for the existence of facts, both internal and external, that may suggest impairment. |
Operating Leases | Operating leases Our operating leases comprised of offices, data centers, and other equipment. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, net, accrued liabilities, and non-current operating lease liabilities on the consolidated balance sheets. Leases with an initial term of 12 months or less are expensed as incurred and recorded on the consolidated statements of comprehensive loss. The lease expense for fixed lease payments is recorded on the consolidated statements of comprehensive loss on a straight-line basis over the lease term and variable lease payments are included in the lease expense when the obligation for those payments is incurred. Operating lease assets represent our right to use an underlying asset over the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, the incremental borrowing rate based on the information available is used at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease asset also includes any lease payments made before the lease commencement date less any lease incentives received. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise the options. The lease agreements with lease and non-lease components are generally accounted as a single component. In addition, certain lease agreements contain tenant improvement allowances (“TIA”) from the landlords. We record lessee-owned improvements as leasehold improvements within property and equipment, net on our consolidated balance sheets and the TIA as a reduction to the lease asset with the impact of the decrease recognized prospectively over the remaining lease term. We record lessor-owned improvements as prepaid rent within prepaid expenses and other current assets on our consolidated balance sheets and the TIA as a reduction to prepaid rent. Sublease income from our sublet office space in San Jose, California is recognized on a straight-line basis over the term of the sublease and is recorded as a reduction of lease expense. |
Goodwill | Goodwill We perform an annual impairment assessment of goodwill at the reporting unit level on the first day of the fourth fiscal quarter. We operate as one operating and reportable segment and identify that one reporting unit for the purpose of goodwill impairment testing, which is at the same level as our operating and reportable segment. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. Should certain events or indicators of impairment occur between annual impairment tests, we will perform the impairment test as those events or indicators occur. Examples of such events or circumstances include a significant decline in the expected future cash flows, a sustained, significant decline in our stock price and market capitalization, a significant adverse change in the business climate and slower growth rates. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying amount. The qualitative assessment considers macroeconomic conditions, industry and market considerations, cost factors, overall company financial performance, and events affecting our stock price. If the reporting unit does not pass the qualitative assessment, we estimate the fair value using a discounted cash flow method and compare the fair value with the carrying amount of our reporting unit, including goodwill. If the fair value is greater than the carrying amount of our reporting unit, no impairment is recorded. If the fair value is less than the carrying amount, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to our reporting unit. The impairment charge, if any, would be recorded to earnings in the consolidated statements of comprehensive loss. |
Revenue recognition | Revenue recognition Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Our product revenue is recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery, dependent upon the terms of the underlying contract. Our paid subscription services are billed in advance of the start of the monthly subscription and revenues are recognized ratably over subscription period, generally 30 days or 12 months in length. Revenue from all sales types is recognized at the transaction price, which is the amount we expect to be entitled to in exchange for transferring goods or providing services. Transaction price is calculated as selling price net of variable consideration which may include estimates for future returns, sales incentives, and price protection related to current period product revenue. Our standard obligation to our direct customers generally provides for a full refund in the event that such product is not merchantable or is found to be damaged or defective. In determining estimates for future returns, management analyzes historical sales and returns data, channel inventory levels, current economic trends, and changes in customer demand for our products. Sales incentives and price protection are determined based on a combination of the actual amounts committed and estimated future expenditure based upon historical customary business practice. Typically variable consideration does not need to be constrained as estimates are based on predictive historical data or future commitments that we plan and control. However, we continue to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. Contracts with multiple performance obligations Some of our contracts with customers contain multiple promised goods or services. Such contracts include hardware products with bundled services, various subscription services, and support. For these contracts, we account for the promises separately as individual performance obligations if they are distinct. Performance obligations are determined to be distinct if they are both capable of being distinct or separately identifiable within the context of the contract. In determining whether performance obligations meet the criteria for being distinct, we consider a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. The embedded software in most of the hardware products is not considered distinct and therefore the combined hardware and incidental software are treated as one performance obligation and recognized at the point in time when control of product transfers to the customer. Services that are included with certain hardware products are considered distinct and therefore the hardware and service are treated as separate performance obligations. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative stand-alone selling price basis. Stand-alone selling prices are generally determined based on the prices charged to customers or using an adjusted market assessment. Stand-alone selling price of the hardware is directly observable from add-on camera and base station sales. Stand-alone selling price of the premium services are directly observable from direct sales to end users while the service is estimated using an adjusted market approach. Revenue is then recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware is recognized at the time control of the product transfers to the customer. The transaction price allocated to the service is recognized over the specified service period or over the estimated useful life of the hardware, beginning when the customer is expected to activate their account. Useful life of the hardware is determined by industry norms, technical and financial relevance, frequency of new model releases, and user history. Long-term Supply Arrangement - Verisure We have entered into a Supply Agreement which includes product purchases, paid subscription services, and an option for Verisure S.à.r.l. (“Verisure”) to acquire development services by submitting a statement of work (“SOW”). Products sold come with a standard twelve months warranty. Verisure assumes responsibilities for all warranty claims, returns of products and certain technical support provided to the end users. We provide technical support for paid subscription services where Verisure cannot resolve the issue. Verisure is responsible for any marketing and promotion of our products and services sold in Europe. We concluded that we are acting as the principal in the Supply Agreement and determined that revenue should be presented gross. Products are priced at a cost plus markup as specified in the Supply Agreement. The paid subscription services is billed based on the number of active cameras monthly and is priced at a cost plus markup specified in the Supply Agreement. T he transaction price for products and paid subscription services is entirely variable because the consideration is dependent on the actual costs. For products, since quantity and product types are not specified in the agreement, contracts are not deemed to exist until we receive and accept the customer purchase order (“PO”). Each product with a valid PO is considered a single performance obligation. NRE Arrangement - Verisure The Supply Agreement also provides for certain development services under an SOW to Verisure (“NRE arrangement”), which Verisure pays non-refundable installments upon the commencement of agreed-upon milestones. There is a single performance obligation as the distinct goods and services promised under the SOW are highly interdependent or interrelated inputs that produce a single combined output given the nature of such arrangements. The output (or work-in-progress of such output) typically has no alternative use to us given the customized nature of the arrangement and we have enforceable rights given that the non-refundable milestone payments are prepayments in nature; control for NRE development services therefore transfers over time. We determined that the most appropriate measure of progress for revenue recognition is the input method based on cost because we can reasonably estimate the total costs for the NRE, and the costs incurred reasonably reflect our efforts to satisfy the performance obligation. The NRE costs include labor, material, overhead as well as the use of outside services. The total estimated NRE costs are based on a combination of historical costs together with quotes from vendors for supplying parts or services towards the completion. Adjustments to cost and profit estimates are made periodically due to changes in scope of work, hours to complete and estimated profitability, including those arising from final contract settlements. These changes may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Any losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. If total NRE costs calculated upon completion in the current period are more than the estimated total costs at completion used to calculate revenue in a prior period, then the profits in the current period will be lower than if the estimated costs used in the prior period calculation were equal to the actual total costs upon completion. Warranties Sales of hardware products regularly include warranties to end customers that cover bug fixes, minor updates such that the product continues to function according to published specifications in a dynamic environment, and phone support. These standard warranties are assurance type warranties and do not offer any services in addition to the assurance that the product will continue working as specified for one or more years. Therefore, warranties are not considered separate performance obligations in the arrangement. Instead, the expected cost of warranties is accrued as an expense in accordance with authoritative guidance. Sales incentives We accrue for sales incentives offered to our customers as a marketing expense if we receive an identifiable benefit in exchange and can reasonably estimate the fair value of the identifiable benefit received; otherwise, it is recorded as a contra revenue. As a consequence, we record a substantial portion of the channel marketing costs as a reduction of revenue. We record estimated reductions to revenue for sales incentives when the related revenue is recognized or ahead of customer or end customer commitment if customary business practice creates an implied expectation that such activities will occur in the future. Shipping and handling costs We include shipping and handling fees billed to customers in Revenue. Shipping and handling costs associated with inbound freight are included in Cost of revenue. In cases where we give a freight allowance to the customer for their own inbound freight costs, such costs are appropriately recorded as a reduction in Revenue. Shipping and handling costs associated with outbound freight are included in sales and marketing expenses. We have elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs associated with outbound freight totaled $3.4 million, $2.9 million and $2.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Contract costs We recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in operating expenses of sales and marketing and general and administrative on the consolidated statements of comprehensive loss. If the incremental costs of obtaining a contract, which consist of sales commissions, relate to a service recognized over a period longer than one year, costs are deferred and amortized in line with the related services over the period of benefit. Deferred commissions are classified as non-current based on the original amortization period of over one year. There were no deferred commissions as of December 31, 2022 and 2021. Contract balances Contract assets are recorded as accounts receivable, net on the consolidated balance sheets when we have an unconditional right to consideration. Contract liabilities are recorded as deferred revenue on the consolidated balance sheets when cash payments are received or due in advance of performance. Contract liabilities consist of advance payments and customer billings in advance of revenue recognition from subscription contracts where we have unsatisfied performance obligations. Advance payments include prepayments for NRE services under the Supply Agreement with Verisure. |
Research and development, Software development costs | Research and development Costs incurred in the research and development of new products are expensed as incurred. Software development costs We expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Technological feasibility is typically reached shortly before the release of such products. As a result, development costs that meet the criteria for capitalization were $1.8 million for the year ended December 31, 2022. There was no capitalized development costs for the years ended 2021 and 2020. We capitalize software development costs related to those software applications to be used solely to meet internal needs during the application development stage. Capitalized software development costs are amortized using the straight-line amortization method over the estimated useful life of the applicable software. Costs capitalized for developing such software applications were not material as of December 31, 2022 and 2021. |
Advertising costs | Advertising costsAdvertising costs are expensed when incurred and included in sales and marketing on the consolidated statements of comprehensive loss. |
Stock-based compensation | Stock-based compensation We measure stock-based compensation at the grant date based on the fair value of the award. The fair value of stock options is estimated on the grant date using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) and performance-based restricted stock units is measured on the grant date based on the closing fair market value of our common stock. We utilize a Monte Carlo pricing model customized to the specific provisions to value the market-based restricted stock units on the grant date. The fair value determined using the Monte Carlo simulation model varies based on the assumptions used for the expected stock price volatility, the correlation coefficient between Arlo and Russell 2000 Index, risk-free interest rates, and dividend yield. Forfeitures are accounted for as they occur. Our Employee Stock Purchase Plan (“ESPP”) is intended to provide employees with the opportunity to purchase our common stock through accumulated payroll deductions at the end of specified purchase period. Eligible employees may contribute up to 15% of compensation, subject to certain income limits, to purchase our 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 purchasing period is generally six months. We determine the fair value using the Black-Scholes Model using various inputs, including its estimate of expected volatility, term, dividend yield and risk-free interest rate. The risk-free interest rate of the purchase rights granted under the ESPP is based on the implied yield currently available on U.S. Treasury securities, with a remaining term commensurate with the estimated expected term. Expected volatility of the purchase rights granted under the ESPP is based on historical volatility over the most recent period commensurate with the estimated expected term. We recognize compensation costs for RSUs. stock options, and ESPP on a straight-line basis over the requisite service period of the award, usually the vesting period, which is generally four years for stock options and three |
Foreign currency | Foreign currency Our functional currency is the U.S. dollar. Foreign currency transactions of international subsidiaries are re-measured into U.S. dollars at the end-of-period exchange rates for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Revenue is re-measured at average exchange rates in effect during each period. Expenses are re-measured at average exchange rates in effect during each period, except for expenses related to non-monetary assets and liabilities, which are re-measured at historical exchange rates. Gains and losses arising from foreign currency transactions are included in other income, net on the consolidated statements comprehensive loss. |
Net loss per share | Net loss per share Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. Potentially dilutive common shares include common shares issuable upon exercise of stock options, vesting of restricted stock awards and performance shares, and issuances of shares under the ESPP, which are reflected in diluted net loss per share by application of the treasury stock method. Potentially dilutive common shares are excluded from the computation of diluted net loss per share when their effect is anti-dilutive. |
Segment Information | Segment Information We operate as one operating and reportable segment. Our Chief Executive Officer (“CEO”) is identified as the Chief Operating Decision Maker (“CODM”), who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. |
Income taxes | Income taxes We record the provision for income taxes in the consolidated financial statements using the asset and liability method. Under this method, we recognize income tax liabilities or receivables for the current year. We also recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the net amount that we believe is more likely than not to be realized. Our assessment considers the recognition of deferred tax assets on a jurisdictional basis. Accordingly, in assessing the future taxable income on a jurisdictional basis, we consider the effect of the transfer pricing policies on that income. We have recorded a valuation allowance against U.S. federal and state deferred tax assets and certain foreign tax attribute carryforwards since we do not anticipate to realize the benefits of these deferred tax assets. We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. As we expand internationally, we will face increased complexity in determining the appropriate tax jurisdictions for revenue and expense items. Our policy is to adjust these unrecognized tax benefits in the period when facts and circumstances change, such as the closing of a tax audit, the expiration of statute of limitation for a relevant taxing authority to examine a tax position, or when additional information becomes available. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on the financial condition and operating results. The provision for income taxes includes the effects of any accruals that we believe are appropriate, as well as the related interest and penalties. Legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act introduced the global intangible low-taxed income (“GILTI”) provisions effective in 2018, which generally impose a tax on the net income earned by foreign subsidiaries of a U.S company in excess of a deemed return on their tangible assets. We recognize the tax on GILTI as a period cost when the tax is incurred. |
Recent accounting pronouncements | Recent accounting pronouncements Emerging Growth Company Status As an emerging growth company (“EGC”), we may, under the Jumpstart Our Business Startups Act, delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, unless we otherwise irrevocably elect not to avail ourselves of this exemption. We did not make such an irrevocable election and have not delayed the adoption of any applicable accounting standards. Accounting Pronouncements Recently Adopted In 2022, we adopted Accounting Standards Update (“ASU”) 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The ASU 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”). The adoption of this guidance did not have a material impact on our financial statements and related disclosures. Accounting Pronouncements Not Yet Effective We have considered all recent accounting pronouncements issued, but not yet effective, and do not expect any to have a material effect on our financial statements and related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Property, Plant and Equipment Range of Useful Lives | Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Asset Category: Range of Useful Lives Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of remaining lease term or 7 years |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Changes in Contract Balances | The following table reflects the changes in contract balances for the years ended December 31, 2022 and 2021: Balance Sheet Location December 31, 2022 December 31, 2021 $ change % change (In thousands) Accounts receivable, net Accounts receivable, net $ 65,960 $ 79,564 $ (13,604) (17.1) % Contract liabilities - current Deferred revenue $ 11,291 $ 29,442 $ (18,151) (61.7) % Contract liabilities - non-current Other non-current liabilities $ 212 $ 1,344 $ (1,132) (84.2) % |
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 and partially unsatisfied as of December 31, 2022 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 11,291 $ 202 $ 10 $ 11,503 |
Schedule of Disaggregation of Revenue | We disaggregate our revenue into three geographic regions: the Americas, EMEA, and APAC, where we conduct our business. The following table presents revenue by geography. Year Ended December 31, 2022 2021 2020 (In thousands) Americas $ 273,981 $ 271,182 $ 269,395 EMEA 196,465 134,232 61,832 APAC 19,968 29,723 25,927 Total $ 490,414 $ 435,137 $ 357,154 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Available-for-Sale Short-Term Investments | Short-term investments As of December 31, 2022 As of December 31, 2021 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. Treasuries $ 29,849 $ — $ (149) $ 29,700 $ — $ — $ — $ — |
Schedule of Accounts Receivable, Net | Accounts receivable, net As of December 31, 2022 2021 (In thousands) Gross accounts receivable $ 66,383 $ 79,901 Allowance for credit losses (423) (337) Total $ 65,960 $ 79,564 |
Schedule of Allowance for Doubtful Accounts | 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. Years Ended December 31, 2022 2021 2020 (In thousands) Balance at the beginning of the period $ 337 $ 519 $ 609 Provision for (release of) expected credit losses 86 (182) 186 Amount recovered due to collection — — (276) Balance at the end of the period $ 423 $ 337 $ 519 |
Schedule of Property and Equipment, Net | Property and equipment, net The components of property and equipment are as follows: As of December 31, 2022 2021 (In thousands) Machinery and equipment $ 12,696 $ 13,302 Software 15,606 13,928 Computer equipment 3,992 4,062 Leasehold improvements 4,657 4,922 Furniture and fixtures 2,554 2,404 Total property and equipment, gross 39,505 38,618 Accumulated depreciation (32,169) (29,023) Total property and equipment, net (1) $ 7,336 $ 9,595 _________________________ (1) $1.7 million and $2.4 million property and equipment, net was included in the sublease arrangement for the San Jose office building as of December 31, 2022 and 2021, respectively. |
Schedule of Other Non-Current Assets | Other non-current assets As of December 31, 2022 2021 (In thousands) Net deferred taxes assets $ 1,384 $ 1,565 Sublease initial direct cost 777 1,471 Other 1,920 1,278 Total $ 4,081 $ 4,314 |
Schedule of Other Accrued Liabilities | Accrued liabilities As of December 31, 2022 2021 (In thousands) Sales incentives $ 35,681 $ 31,417 Sales returns 18,656 19,960 Accrued employee compensation 15,774 12,367 Cloud and other costs 11,154 10,759 Current operating lease liabilities 4,190 4,609 Professional services 3,703 2,505 Warranty obligations 1,174 1,330 Freight 1,050 8,086 Accrued restructuring charges 1,047 — Other 6,426 6,356 Total $ 98,855 $ 97,389 |
Schedule of Other Non-Current Liabilities | Other non-current liabilities As of December 31, 2022 2021 (In thousands) Non-current deferred revenue $ 212 $ 1,344 Non-current income taxes payable 77 94 Other 2,660 1,001 Total $ 2,949 $ 2,439 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value, Assets Measured on Recurring Basis | The following tables summarize assets measured at fair value on a recurring basis: As of December 31 2022 2021 (In thousands) Cash equivalents: money-market funds (<90 days) $ 12,614 $ 21,935 Cash equivalents: U.S. Treasuries (<90 days) 20,274 — Available-for-sale securities: U.S. Treasuries (1) 29,700 — Total $ 62,588 $ 21,935 _________________________ (1) Included in short-term investments on the consolidated balance sheets. |
Restructuring (Tables)
Restructuring (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Activties | The restructuring liabilities are included in accrued liabilities in the consolidated balance sheets. Restructuring activities for the year ended December 31, 2022 are as follows: Total Severance Expense Office Exit Expense Other Exit Expense (In thousands) Balance at the beginning of the period $ — $ — $ — $ — Restructuring charges 1,805 798 928 79 Cash payments (588) (579) — (9) Non-cash and other adjustments 48 — 63 (15) Balance at the end of the period $ 1,265 $ 219 $ 991 $ 55 Total costs incurred inception to date $ 1,805 $ 798 $ 928 $ 79 Total expected expense to be incurred as of December 31, 2022 $ 137 $ 137 $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease Information | Supplemental cash flow information related to operating leases was as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 6,375 $ 6,497 $ 5,991 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ 3,470 $ 1,646 $ 461 Weighted average remaining lease term and weighted average discount rate related to operating leases were as follows: As of December 31, 2022 2021 Weighted average remaining lease term 5.1 years 6.1 years Weighted average discount rate 5.69 % 5.77 % |
Summary of Operating Lease Maturity | The future minimum undiscounted lease payments under operating leases and future non-cancelable rent payments from our subtenants for each of the next five years and thereafter as of December 31, 2022 were as follows: Operating Lease Payments Sublease Payments Net (In thousands) 2023 $ 5,394 $ (1,891) $ 3,503 2024 5,119 (1,947) 3,172 2025 3,894 (2,006) 1,888 2026 4,008 (2,066) 1,942 2027 3,986 (2,322) 1,664 Thereafter 5,130 (3,620) 1,510 Total future lease payments $ 27,531 $ (13,852) $ 13,679 Less: interest (4,062) Present value of future minimum lease payments $ 23,469 Accrued liabilities $ 4,190 Non-current operating lease liabilities 19,279 Total lease liabilities $ 23,469 |
Schedule of Changes in Warranty Obligation | Changes in warranty obligations, which are included in accrued liabilities in the consolidated balance sheets, were as follows: Year Ended December 31, 2022 2021 2020 (In thousands) Balance at the beginning of the period $ 1,330 $ 2,451 $ 3,169 Provision for (release of) warranty obligations 145 (655) — Settlements (301) (466) (718) Balance at the end of the period $ 1,174 $ 1,330 $ 2,451 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 grants as of December 31, 2022: Number of Shares (In thousands) Shares available for grants as of December 31, 2021 2,509 Additional authorized shares 6,378 Granted (9,758) Forfeited/ cancelled 2,753 Shares traded for taxes 2,331 Shares available for grants as of December 31, 2022 4,213 |
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 the ESPP. ESPP 2022 2021 2020 Expected life (in years) 0.5 0.5 0.5 Risk-free interest rate 3.29 % 0.07 % 0.84 % Expected volatility 69.2 % 63.8 % 102.0 % |
Schedule of Stock Option Activity | Stock option activity during the year ended of December 31, 2022 was as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Aggregate (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2021 2,574 $ 10.55 Granted — — Exercised (209) 6.81 Forfeited/ cancelled (3) 16.00 Expired (280) 15.57 Outstanding as of December 31, 2022 2,082 $ 10.24 3.82 $ — Vested and expected to vest 2,082 $ 10.24 3.82 $ — Exercisable Options as of December 31, 2022 2,082 $ 10.24 3.82 $ — Year Ended December 31, 2022 2021 2020 (In millions) Total intrinsic value of options exercised $ 0.9 $ 2.2 $ 0.2 Total fair value of options vested $ 2.3 $ 2.6 $ 1.0 |
Schedule of RSU Activity | RSU activity, excluding PSU activity, during the year ended of December 31, 2022 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Aggregate (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2021 10,080 $ 5.73 Granted 6,811 7.23 Vested (5,316) 6.39 Forfeited (2,088) 6.11 Outstanding as of December 31, 2022 9,487 $ 6.36 1.46 $ 33,299 Year Ended December 31, 2022 2021 2020 (In millions, except per share data) Total intrinsic value of RSUs vested (the release date fair value) $ 41.4 $ 36.4 $ 13.0 Total fair value of RSUs vested (the grant date fair value) $ 34.0 $ 31.3 $ 22.2 RSU granted weighted-average fair value per share $ 7.23 $ 7.32 $ 3.03 |
Schedule of PSU Activity | PSU activity during the year ended of December 31, 2022 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Aggregate (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2021 2,106 $ 5.39 Granted 2,952 6.52 Vested (631) 4.27 Forfeited (386) 7.18 Outstanding as of December 31, 2022 4,041 $ 6.22 1.12 $ 14,184 Year Ended December 31, 2022 2021 2020 (In millions, except per share data) Total intrinsic value of PSUs vested (the release date fair value) $ 4.8 $ 1.4 $ — Total fair value of PSUs vested (the grant date fair value) $ 2.7 $ 0.6 $ — PSU granted weighted-average fair value per share $ 6.52 $ 6.74 $ 3.43 |
Schedule of Stock-Based Compensation Expense | The following table sets forth the stock-based compensation expense included in our consolidated statements of comprehensive loss: Year Ended December 31, 2022 2021 2020 (In thousands) Cost of revenue $ 4,841 $ 3,917 $ 2,961 Research and development 12,317 10,865 9,055 Sales and marketing 6,290 5,392 4,106 General and administrative 25,028 17,856 19,125 Total $ 48,476 $ 38,030 $ 35,247 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income (Loss) before Provision for Income Taxes | Income (loss) before provision for income taxes consisted of the following: Year Ended December 31, 2022 2021 2020 (In thousands) United States $ (60,374) $ (59,370) $ (104,551) International 4,723 4,018 3,925 Total $ (55,651) $ (55,352) $ (100,626) |
Summary of Income Tax Expense | Provision for income taxes consisted of the following: Year Ended December 31, 2022 2021 2020 (In thousands) Current: U.S. Federal $ 166 $ — $ — State 87 21 84 Foreign 601 989 438 854 1,010 522 Deferred: U.S. Federal — — — State — — — Foreign 121 (333) 103 121 (333) 103 Total $ 975 $ 677 $ 625 |
Schedule of Effective Income Tax Rate Reconciliation | The effective tax rate differed from the U.S. federal income tax rate as follows: Year Ended December 31, 2022 2021 2020 Tax benefit at U.S. federal income tax rate 21.0 % 21.0 % 21.0 % State tax benefit, net of federal benefit 1.9 % 2.9 % 4.4 % Impact of international operations 1.3 % 1.3 % 0.8 % U.S. taxes on foreign entities — % (3.9) % 2.5 % Stock-based compensation (7.3) % (3.0) % (4.2) % U.S. federal tax credits 3.7 % 1.6 % 1.6 % Change in valuation allowance (21.8) % (20.3) % (26.4) % Non-deductible transaction costs (0.1) % (0.6) % (0.1) % Other (0.5) % (0.2) % (0.2) % Provision for income taxes (1.8) % (1.2) % (0.6) % |
Schedule of Deferred Tax Assets and Liabilities | The significant components of net deferred tax assets consisted of the following: As of December 31, 2022 2021 (In thousands) Deferred Tax Assets: Accruals and allowances $ 11,330 $ 10,369 Net operating loss carryforwards 22,622 26,236 Stock-based compensation 3,527 3,956 Lease liabilities 5,706 6,170 Deferred revenue 409 1,763 Tax credit carryforwards 11,510 8,100 Depreciation and amortization 3,307 3,989 Capitalized research and development expenses 40,016 26,186 Total deferred tax assets 98,427 86,769 Deferred Tax Liabilities: Operating lease right-of-use assets (3,174) (3,462) Total deferred tax liabilities (3,174) (3,462) Valuation Allowance (93,869) (81,742) Net deferred tax assets $ 1,384 $ 1,565 |
Schedule of Valuation Allowance for Deferred Income Tax Assets | Changes in valuation allowance for deferred tax assets were as follows: Year Ended December 31, 2022 2021 2020 (In thousands) Balance at the beginning of the period $ 81,742 $ 70,496 $ 43,917 Additions (1) 16,798 11,246 26,579 Deductions (2) (4,671) — — Balance at the end of the period $ 93,869 $ 81,742 $ 70,496 ________________________ (1) Additions are primarily increases in tax attribute carryforwards and capitalized expenditures for income tax purposes. (2) Deductions present the utilization of U.S. federal and state net operating losses and tax credit attributes. |
Summary of Operating Loss Carryforwards | As of December 31, 2022, net operating loss carryforwards consisted of the following: Amount Beginning Year of Expiration (in thousands) U.S. federal (1) $ 8,642 2031 U.S. federal (1)(2) 82,547 Indefinite California 28,924 2028 Other states 32,366 2023 _________________________ (1) All of the losses are subject to annual usage limitations under Internal Revenue Code Section 382. (2) All of the losses are subject to usage limitation of 80% of taxable income in a year when the losses will be utilized. |
Summary of Tax Credit Carryforwards | As of December 31, 2022, tax credit carryforwards consisted of the following: Amount Beginning Year of Expiration (in thousands) U.S. federal $ 6,502 2039 California 6,396 Indefinite Foreign 2,302 2041 |
Reconciliation of Gross Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits was as follows: Year Ended December 31, 2022 2021 2020 (In thousands) Balance at the beginning of the period $ 1,736 $ 1,355 $ 704 Additions for tax positions taken during the current year 765 444 503 Additions (reductions) for tax positions taken during a prior year 275 (58) 148 Reductions as a result of a lapse of the applicable statute of limitations (13) (5) — Balance at the end of the period $ 2,763 $ 1,736 $ 1,355 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share | Year Ended December 31, 2022 2021 2020 (In thousands, except for per share data) Numerator: Net loss $ (56,626) $ (56,029) $ (101,251) Denominator: Weighted average common shares - basic 87,173 82,688 78,084 Potentially dilutive common shares — — — Weighted average common shares - dilutive 87,173 82,688 78,084 Basic net loss per share $ (0.65) $ (0.68) $ (1.30) Diluted net loss per share $ (0.65) $ (0.68) $ (1.30) Anti-dilutive employee stock-based awards, excluded 5,451 5,041 5,623 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Net Revenue by Geography | The following table presents revenue by geography. For comparative purposes, amounts in prior periods have been recast. Year Ended December 31, 2022 2021 2020 (In thousands) United States $ 268,435 $ 265,844 $ 259,023 Spain 135,896 83,779 5,385 Ireland 44,287 40,877 49,437 Other countries 41,796 44,637 43,309 Total $ 490,414 $ 435,137 $ 357,154 |
Schedule of Long-Lived Asset By Geographic Areas | The following table presents long-lived assets by geography. For comparative purposes, amounts in prior periods have been recast. As of December 31, 2022 2021 (In thousands) United States $ 17,762 $ 19,587 Other countries 2,383 4,822 Total $ 20,145 $ 24,409 |
Description of Business and B_2
Description of Business and Basis of Presentation (Details) | 12 Months Ended |
Dec. 31, 2022 region | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of geographic regions in which the company conducts business | 3 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment reporting_unit | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of reporting units | reporting_unit | 1 | ||
Product warranty term | 12 months | ||
Total cost of revenue | $ 354,379,000 | $ 327,102,000 | $ 301,765,000 |
Contract with customer, liability, noncurrent | $ 212,000 | 1,344,000 | |
Number of reportable segments | segment | 1 | ||
Number of operating segments | segment | 1 | ||
Software Development | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Development costs | $ 1,800,000 | 0 | 0 |
Employee Stock | ESPP | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Maximum percentage of compensation contributed by employees (as a percentage) | 15% | ||
ESPP purchase price of common stock, percent of market price | 85% | ||
Offering period (in years) | 6 months | ||
Stock Options | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Vesting period | 4 years | ||
Shipping and Handling | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Total cost of revenue | $ 3,400,000 | 2,900,000 | 2,700,000 |
Deferred Commission | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract with customer, liability, noncurrent | 0 | 0 | |
Advertising | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Total cost of revenue | $ 27,100,000 | $ 9,600,000 | $ 12,700,000 |
Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Subscription contracts term | 30 days | ||
Minimum | RSUs | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Vesting period | 3 years | ||
Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Subscription contracts term | 12 months | ||
Maximum | RSUs | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Vesting period | 4 years | ||
Customer One | Customer Concentration Risk | Accounts Receivable | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (as a percentage) | 28.40% | 35.30% | |
Customer One | Customer Concentration Risk | Revenue | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (as a percentage) | 40.10% | 30.80% | 20.60% |
Customer Two | Customer Concentration Risk | Accounts Receivable | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (as a percentage) | 26.80% | 20.10% | |
Customer Two | Customer Concentration Risk | Revenue | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (as a percentage) | 13% | 17.30% | |
Customer Three | Customer Concentration Risk | Accounts Receivable | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (as a percentage) | 16.60% | 10.10% | |
Customer Three | Customer Concentration Risk | Revenue | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (as a percentage) | 14.60% | ||
Customer Four | Customer Concentration Risk | Accounts Receivable | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (as a percentage) | 13.30% | ||
Customer Four | Customer Concentration Risk | Revenue | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Concentration risk (as a percentage) | 12.20% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Property, Plant and Equipment Range of Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 2 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 5 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 2 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 5 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 2 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 3 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 7 years |
Revenue - Schedule of Changes i
Revenue - Schedule of Changes in Contract Balances (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Accounts receivable, net | |
Beginning balance | $ 79,564 |
$ change | $ (13,604) |
% change | (17.10%) |
Ending balance | $ 65,960 |
Contract liabilities - current | |
Beginning balance | 29,442 |
$ change | $ (18,151) |
% change | (61.70%) |
Ending balance | $ 11,291 |
Contract liabilities - non-current | |
Beginning balance | 1,344 |
$ change | $ (1,132) |
% change | (84.20%) |
Ending balance | $ 212 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) $ in Millions | 12 Months Ended | 36 Months Ended | ||
Jan. 01, 2020 USD ($) | Dec. 31, 2022 USD ($) region | Dec. 31, 2021 USD ($) | Dec. 31, 2022 USD ($) | |
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized for satisfaction of performance obligations in contract liability balance at start of period | $ 29.4 | $ 53.1 | ||
Unrecorded unconditional purchase obligation | $ 97.9 | $ 97.9 | ||
Purchase commitment fulfilled | $ 336.7 | |||
Number of geographic regions in which the company conducts business | region | 3 | |||
Verisure S.a.r.l | Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Purchase obligation term | 5 years | |||
Unrecorded unconditional purchase obligation | $ 500 |
Revenue - Schedule of Remaining
Revenue - Schedule of Remaining Performance Obligations (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations | $ 11,503 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations | $ 11,291 |
Remaining performance obligations, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations | $ 202 |
Remaining performance obligations, expected timing of satisfaction | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations | $ 10 |
Remaining performance obligations, expected timing of satisfaction |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 490,414 | $ 435,137 | $ 357,154 |
Americas | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 273,981 | 271,182 | 269,395 |
EMEA | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 196,465 | 134,232 | 61,832 |
APAC | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 19,968 | $ 29,723 | $ 25,927 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Available-for-Sale Short-Term Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Securities, Available-For-Sale [Line Items] | ||
Estimated Fair Value | $ 29,700 | $ 0 |
U.S. Treasuries | ||
Debt Securities, Available-For-Sale [Line Items] | ||
Amortized Cost | 29,849 | 0 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (149) | 0 |
Estimated Fair Value | $ 29,700 | $ 0 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||||
Gross accounts receivable | $ 66,383 | $ 79,901 | ||
Allowance for credit losses | (423) | (337) | $ (519) | $ (609) |
Total | $ 65,960 | $ 79,564 |
Balance Sheet Components - Sc_3
Balance Sheet Components - Schedule of Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Balance at the beginning of the period | $ 337 | $ 519 | $ 609 |
Provision for (release of) expected credit losses | 86 | (182) | 186 |
Amount recovered due to collection | 0 | 0 | (276) |
Balance at the end of the period | $ 423 | $ 337 | $ 519 |
Balance Sheet Components - Sc_4
Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Total property and equipment, gross | $ 39,505 | $ 38,618 |
Accumulated depreciation | (32,169) | (29,023) |
Total property and equipment, net | 7,336 | 9,595 |
Property and equipment net included in sublease arrangement | 1,700 | 2,400 |
Machinery and equipment | ||
Total property and equipment, gross | 12,696 | 13,302 |
Software | ||
Total property and equipment, gross | 15,606 | 13,928 |
Computer equipment | ||
Total property and equipment, gross | 3,992 | 4,062 |
Leasehold improvements | ||
Total property and equipment, gross | 4,657 | 4,922 |
Furniture and fixtures | ||
Total property and equipment, gross | $ 2,554 | $ 2,404 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment, Other Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |||
Depreciation expense | $ 4.8 | $ 5.9 | $ 8.8 |
Balance Sheet Components - Long
Balance Sheet Components - Long-lived Assets and Right-of-use Assets Impairment (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 27, 2021 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Derivatives, Fair Value [Line Items] | ||||
Impairment charges | $ 9,100 | $ 0 | $ 9,116 | $ 0 |
Impairment related to right-of-use assets | 6,800 | |||
Impairment of other lease related property and equipment assets | $ 2,300 | |||
Fair Value, Inputs, Level 3 | Measurement Input, Discount Rate | ||||
Derivatives, Fair Value [Line Items] | ||||
Market derived discount rate | 0.080 |
Balance Sheet Components - Good
Balance Sheet Components - Goodwill (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill impairment loss | $ 0 | $ 0 | $ 0 |
Goodwill | $ 11,038,000 | $ 11,038,000 |
Balance Sheet Components - Sc_5
Balance Sheet Components - Schedule of Other Non-Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Balance Sheet Related Disclosures [Abstract] | ||
Net deferred taxes assets | $ 1,384 | $ 1,565 |
Sublease initial direct cost | 777 | 1,471 |
Other | 1,920 | 1,278 |
Total | $ 4,081 | $ 4,314 |
Balance Sheet Components - Sc_6
Balance Sheet Components - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Balance Sheet Related Disclosures [Abstract] | ||
Sales incentives | $ 35,681 | $ 31,417 |
Sales returns | 18,656 | 19,960 |
Accrued employee compensation | 15,774 | 12,367 |
Cloud and other costs | 11,154 | 10,759 |
Current operating lease liabilities | 4,190 | 4,609 |
Professional services | 3,703 | 2,505 |
Warranty obligations | 1,174 | 1,330 |
Freight | 1,050 | 8,086 |
Accrued restructuring charges | 1,047 | 0 |
Other | 6,426 | 6,356 |
Accrued liabilities | $ 98,855 | $ 97,389 |
Operating lease, liability, Statement of Financial Position | Accrued liabilities | Accrued liabilities |
Balance Sheet Components - Sc_7
Balance Sheet Components - Schedule of Other Non-Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Receivables [Abstract] | ||
Non-current deferred revenue | $ 212 | $ 1,344 |
Non-current income taxes payable | 77 | 94 |
Other | 2,660 | 1,001 |
Total | $ 2,949 | $ 2,439 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Valuation of Company's Financial Instruments by Various Levels (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities: U.S. treasuries | $ 29,700 | $ 0 |
Total | 62,588 | 21,935 |
Money-market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 12,614 | 21,935 |
U.S. Treasuries | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 20,274 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jun. 27, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | ||||
Impairment charges | $ 9,100,000 | $ 0 | $ 9,116,000 | $ 0 |
Fair Value, Measurements, Recurring | ||||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||||
Assets measured at fair value | 62,588,000 | 21,935,000 | ||
Fair Value, Measurements, Nonrecurring | ||||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||||
Assets measured at fair value | 0 | 0 | ||
Liabilities measured at fair value | 0 | 0 | ||
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | ||||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||||
Assets measured at fair value | 0 | 0 | ||
Liabilities measured at fair value | $ 0 | $ 0 |
Restructuring - Narrative (Deta
Restructuring - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Nov. 30, 2022 |
Restructuring and Related Activities [Abstract] | ||
Total estimated restructuring charges | $ 137 | $ 1,900 |
Restructuring - Schedule of Res
Restructuring - Schedule of Restructuring Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Nov. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Balance at the beginning of the period | $ 0 | |||
Restructuring charges | 1,805 | $ 0 | $ 0 | |
Cash payments | (588) | |||
Non-cash and other adjustments | 48 | |||
Balance at the end of the period | $ 1,265 | 0 | ||
Restructuring, Incurred Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | Restructuring charges | |||
Total costs incurred inception to date | $ 1,805 | |||
Total estimated restructuring charges | 137 | $ 1,900 | ||
Severance Expense | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance at the beginning of the period | 0 | |||
Restructuring charges | 798 | |||
Cash payments | (579) | |||
Non-cash and other adjustments | 0 | |||
Balance at the end of the period | 219 | 0 | ||
Total costs incurred inception to date | 798 | |||
Total estimated restructuring charges | 137 | |||
Office Exit Expense | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance at the beginning of the period | 0 | |||
Restructuring charges | 928 | |||
Cash payments | 0 | |||
Non-cash and other adjustments | 63 | |||
Balance at the end of the period | 991 | 0 | ||
Total costs incurred inception to date | 928 | |||
Total estimated restructuring charges | 0 | |||
Other Exit Expense | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance at the beginning of the period | 0 | |||
Restructuring charges | 79 | |||
Cash payments | (9) | |||
Non-cash and other adjustments | (15) | |||
Balance at the end of the period | 55 | $ 0 | ||
Total costs incurred inception to date | 79 | |||
Total estimated restructuring charges | $ 0 |
Revolving Credit Facility (Deta
Revolving Credit Facility (Details) - Loan And Security Agreement - Line of Credit - BANK OF AMERICA, NATIONAL ASSOCIATION | Oct. 27, 2021 USD ($) consecutiveQuarter | Dec. 31, 2022 USD ($) |
Bloomberg Short-Term Bank Yield Index | Minimum | ||
Short-term Debt [Line Items] | ||
Basis spread on variable rate (as a percentage) | 2% | |
Bloomberg Short-Term Bank Yield Index | Maximum | ||
Short-term Debt [Line Items] | ||
Basis spread on variable rate (as a percentage) | 2.50% | |
Base Rate | Minimum | ||
Short-term Debt [Line Items] | ||
Basis spread on variable rate (as a percentage) | 1% | |
Base Rate | Maximum | ||
Short-term Debt [Line Items] | ||
Basis spread on variable rate (as a percentage) | 1.50% | |
Revolving Credit Facility | ||
Short-term Debt [Line Items] | ||
Debt term (in years) | 3 years | |
Maximum borrowing capacity | $ 40,000,000 | |
Investment grade percent | 90% | |
Non investment grade percent | 85% | |
Accordion feature, increase limit | $ 25,000,000 | |
Borrowing capacity | $ 22,200,000 | |
Unused capacity, commitment fee percentage | 0.20% | |
Fixed charge coverage ratio minimum | 100% | |
Debt instrument, covenant, fixed charge coverage ratio minimum, number of consecutive quarters | consecutiveQuarter | 2 | |
Covenant, minimum liquidity not less than | $ 20,000,000 | |
Covenant, fixed charge coverage ratio twelve month basis minimum | 100% | |
Debt instrument, covenant, bankruptcy petition dismissal or stay period | 30 days | |
Outstanding borrowing under the credit facility | $ 0 | |
Letters of Credit | ||
Short-term Debt [Line Items] | ||
Maximum borrowing capacity | $ 5,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Feb. 05, 2021 plaintiff | Jun. 12, 2020 USD ($) | Dec. 11, 2018 claim | Oct. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) ft² | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Loss Contingencies [Line Items] | |||||||
Operating lease, expense | $ 7,100 | $ 7,000 | $ 7,000 | ||||
Rentable area of property | ft² | 78,000 | ||||||
Sublease income | $ 2,000 | $ 500 | |||||
Number of days for non-cancellation of purchase obligations prior to expected shipment date | 30 days | ||||||
Non-cancelable purchase commitments with suppliers | $ 44,300 | ||||||
Long-term purchase commitment, amount | $ 14,800 | ||||||
Number of complaints | claim | 6 | ||||||
Federal Action | |||||||
Loss Contingencies [Line Items] | |||||||
Litigation class action settlement amount | $ 1,250 | ||||||
Payments for legal settlement | $ 1,250 | ||||||
Plaintiffs requested exclusion from settlement | plaintiff | 3 | ||||||
46 to 60 Days | |||||||
Loss Contingencies [Line Items] | |||||||
Percentage of cancelable orders | 50% | ||||||
46 to 60 Days | Minimum | |||||||
Loss Contingencies [Line Items] | |||||||
Required notice period prior to expected shipment date | 46 days | ||||||
46 to 60 Days | Maximum | |||||||
Loss Contingencies [Line Items] | |||||||
Required notice period prior to expected shipment date | 60 days | ||||||
31 to 45 Days | |||||||
Loss Contingencies [Line Items] | |||||||
Percentage of cancelable orders | 25% | ||||||
31 to 45 Days | Minimum | |||||||
Loss Contingencies [Line Items] | |||||||
Required notice period prior to expected shipment date | 31 days | ||||||
31 to 45 Days | Maximum | |||||||
Loss Contingencies [Line Items] | |||||||
Required notice period prior to expected shipment date | 45 days | ||||||
Letters of Credit | |||||||
Loss Contingencies [Line Items] | |||||||
Unused letters of credit outstanding | $ 3,600 | ||||||
Letters of Credit | Build-to-Suit | |||||||
Loss Contingencies [Line Items] | |||||||
Unused letters of credit outstanding | $ 3,100 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | $ 6,375 | $ 6,497 | $ 5,991 |
Right-of-use assets obtained in exchange for lease liabilities | |||
Operating leases | $ 3,470 | $ 1,646 | $ 461 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Weighted Averages Related to Operating Leases (Details) | Dec. 31, 2022 | Dec. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Weighted average remaining lease term | 5 years 1 month 6 days | 6 years 1 month 6 days |
Weighted average discount rate | 5.69% | 5.77% |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Lease Payments | ||
2023 | $ 5,394 | |
2024 | 5,119 | |
2025 | 3,894 | |
2026 | 4,008 | |
2027 | 3,986 | |
Thereafter | 5,130 | |
Total future lease payments | 27,531 | |
Less: interest | (4,062) | |
Total lease liabilities | 23,469 | |
Accrued liabilities | 4,190 | $ 4,609 |
Non-current operating lease liabilities | 19,279 | $ 21,470 |
Sublease Payments | ||
2023 | (1,891) | |
2024 | (1,947) | |
2025 | (2,006) | |
2026 | (2,066) | |
2027 | (2,322) | |
Thereafter | (3,620) | |
Total future lease payments | (13,852) | |
Net | ||
2023 | 3,503 | |
2024 | 3,172 | |
2025 | 1,888 | |
2026 | 1,942 | |
2027 | 1,664 | |
Thereafter | 1,510 | |
Total future lease payments | $ 13,679 |
Commitments and Contingencies_5
Commitments and Contingencies - Schedule of Changes in Warranty Obligation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Balance at the beginning of the period | $ 1,330 | $ 2,451 | $ 3,169 |
Provision for (release of) warranty obligations | 145 | (655) | 0 |
Settlements | (301) | (466) | (718) |
Balance at the end of the period | $ 1,174 | $ 1,330 | $ 2,451 |
Employee Benefit Plans - Narrat
Employee Benefit Plans - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jan. 21, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Additional authorized shares (in shares) | 4,222,270 | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Total unrecognized compensation | $ 0 | ||
RSUs and PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total unrecognized compensation | $ 74,100,000 | ||
Weighted-average period of recognition of stock based compensation (in years) | 1 year 10 months 24 days | ||
2018 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Available for future grants (in shares) | 4,200,000 | ||
Additional authorized shares (in shares) | 3,377,816 | 6,378,000 | |
Reserved stock for issuance, common stock (in shares) | 4,213,000 | 2,509,000 | |
2018 Plan | Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Award expiration period | 10 years | ||
ESPP purchase price of common stock, percent of market price | 100% | ||
2018 Plan | Stock Options | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 12 months | ||
2018 Plan | Stock Options | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
2018 Plan Amendments | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Additional authorized shares (in shares) | 3,000,000 | 1,500,000 | |
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Additional authorized shares (in shares) | 844,454 | ||
ESPP | Employee Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
ESPP purchase price of common stock, percent of market price | 85% | ||
Reserved stock for issuance, common stock (in shares) | 1,600,000 | ||
Minimum | 2018 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Minimum | 2018 Plan | PSU | Executive Officer | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Maximum | 2018 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Maximum | 2018 Plan | PSU | Executive Officer | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 5 years |
Employee Benefit Plans - Arlo S
Employee Benefit Plans - Arlo Summary of Available Shares for Future Grants (Details) - shares | 12 Months Ended | |
Jan. 21, 2022 | Dec. 31, 2022 | |
Number of Shares | ||
Additional authorized shares (in shares) | 4,222,270 | |
2018 Plan | ||
Number of Shares | ||
Beginning balance (in shares) | 2,509,000 | |
Additional authorized shares (in shares) | 3,377,816 | 6,378,000 |
Granted (in shares) | (9,758,000) | |
Forfeited / cancelled (in shares) | 2,753,000 | |
Shares traded for taxes (in shares) | 2,331,000 | |
Ending balance (in shares) | 4,213,000 |
Employee Benefit Plans - Arlo W
Employee Benefit Plans - Arlo Weighted-Average Assumptions (Details) - Employee Stock | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life (in years) | 6 months | 6 months | 6 months |
Risk-free interest rate | 3.29% | 0.07% | 0.84% |
Expected volatility | 69.20% | 63.80% | 102% |
Employee Benefit Plans - Schedu
Employee Benefit Plans - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Weighted Average Exercise Price Per Share | |||
Weighted average remaining term (in years) | 1 year 5 months 15 days | ||
Outstanding shares, Aggregate intrinsic value | $ 33,299 | ||
Stock Options | |||
Number of Shares | |||
Beginning balance (in shares) | 2,574 | ||
Granted (in shares) | 0 | ||
Exercised (in shares) | (209) | ||
Forfeited/ cancelled (in shares) | (3) | ||
Expired (in shares) | (280) | ||
Ending balance (in shares) | 2,082 | 2,574 | |
Number of shares, Vested and expected to vest (in shares) | 2,082 | ||
Number of shares, Exercisable Options (in shares) | 2,082 | ||
Weighted Average Exercise Price Per Share | |||
Beginning balance (in dollars per share) | $ 10.55 | ||
Granted (in dollars per share) | 0 | ||
Exercised (in dollars per share) | 6.81 | ||
Forfeited / cancelled (in dollars per share) | 16 | ||
Expired (in dollars per share) | 15.57 | ||
Ending balance (in dollars per share) | 10.24 | $ 10.55 | |
Weighted average exercise price, Vested and expected to vest (in dollars per share) | 10.24 | ||
Weighted average exercise price, Exercisable Options (in dollars per share) | $ 10.24 | ||
Weighted average remaining term (in years) | 3 years 9 months 25 days | ||
Outstanding shares, Aggregate intrinsic value | $ 0 | ||
Vested and expected to vest, Weighted average remaining contractual term (in years) | 3 years 9 months 25 days | ||
Vested and expected to vest, Aggregate intrinsic value | $ 0 | ||
Exercisable Options, Weighted average remaining contractual term (in years) | 3 years 9 months 25 days | ||
Exercisable Options, Aggregate intrinsic value | $ 0 | ||
Intrinsic value of options exercised | 900 | $ 2,200 | $ 200 |
Fair value of options vested | $ 2,300 | $ 2,600 | $ 1,000 |
Employee Benefit Plans - Sche_2
Employee Benefit Plans - Schedule of RSU, PSU and MPSU Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Weighted Average Grant Date Fair Value Per Share | |||
Weighted average remaining contractual term (in years) | 1 year 5 months 15 days | ||
Outstanding shares, Aggregate intrinsic value | $ 33,299 | ||
RSUs | |||
Number of Shares | |||
Beginning balance (in shares) | 10,080 | ||
Granted (in shares) | 6,811 | ||
Vested (in shares) | (5,316) | ||
Forfeited / Cancelled (in shares) | (2,088) | ||
Ending balance (in shares) | 9,487 | 10,080 | |
Weighted Average Grant Date Fair Value Per Share | |||
Beginning Balance (in dollars per share) | $ 5.73 | ||
Granted (in dollars per share) | 7.23 | $ 7.32 | $ 3.03 |
Vested (in dollars per share) | 6.39 | ||
Forfeited (in dollars per share) | 6.11 | ||
Ending Balance (in dollars per share) | $ 6.36 | $ 5.73 | |
PSU | |||
Number of Shares | |||
Beginning balance (in shares) | 2,106 | ||
Granted (in shares) | 2,952 | ||
Vested (in shares) | (631) | ||
Forfeited / Cancelled (in shares) | (386) | ||
Ending balance (in shares) | 4,041 | 2,106 | |
Weighted Average Grant Date Fair Value Per Share | |||
Beginning Balance (in dollars per share) | $ 5.39 | ||
Granted (in dollars per share) | 6.52 | $ 6.74 | $ 3.43 |
Vested (in dollars per share) | 4.27 | ||
Forfeited (in dollars per share) | 7.18 | ||
Ending Balance (in dollars per share) | $ 6.22 | $ 5.39 | |
Weighted average remaining contractual term (in years) | 1 year 1 month 13 days | ||
Outstanding shares, Aggregate intrinsic value | $ 14,184 |
Employee Benefit Plans - Arlo R
Employee Benefit Plans - Arlo RSU, PSU, MPSU Estimated Volatility Assumption (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total intrinsic value of RSUs vested (the release date fair value) | $ 41.4 | $ 36.4 | $ 13 |
Total fair value of RSUs vested (the grant date fair value) | $ 34 | $ 31.3 | $ 22.2 |
RSU granted weighted-average fair value per share (in dollars per share) | $ 7.23 | $ 7.32 | $ 3.03 |
PSU | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total intrinsic value of RSUs vested (the release date fair value) | $ 4.8 | $ 1.4 | $ 0 |
Total fair value of RSUs vested (the grant date fair value) | $ 2.7 | $ 0.6 | $ 0 |
RSU granted weighted-average fair value per share (in dollars per share) | $ 6.52 | $ 6.74 | $ 3.43 |
Employee Benefit Plans - Sche_3
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 | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 48,476 | $ 38,030 | $ 35,247 |
Cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 4,841 | 3,917 | 2,961 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 12,317 | 10,865 | 9,055 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 6,290 | 5,392 | 4,106 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 25,028 | $ 17,856 | $ 19,125 |
Employee Benefit Plans - 401(k)
Employee Benefit Plans - 401(k) Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Benefit and Share-Based Payment Arrangement, Noncash Expense [Abstract] | |||
Employer matching contribution, percent of employees' gross pay (as a percentage) | 50% | ||
Maximum matching contribution by employer | $ 2 | ||
Cost recognized | $ 1,100 | $ 1,100 | $ 900 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (60,374) | $ (59,370) | $ (104,551) |
International | 4,723 | 4,018 | 3,925 |
Loss before income taxes | $ (55,651) | $ (55,352) | $ (100,626) |
Income Taxes - Summary of Inc_2
Income Taxes - Summary of Income Tax Provision/Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
U.S. Federal | $ 166 | $ 0 | $ 0 |
State | 87 | 21 | 84 |
Foreign | 601 | 989 | 438 |
Current income tax expense (benefit) | 854 | 1,010 | 522 |
Deferred: | |||
U.S. Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Foreign | 121 | (333) | 103 |
Deferred income tax expense (benefit) | 121 | (333) | 103 |
Provision for income taxes | $ 975 | $ 677 | $ 625 |
Income Taxes - Summary of Effec
Income Taxes - Summary of Effective Income Tax Rate Reconciliation, Percent (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Tax benefit at U.S. federal income tax rate | 21% | 21% | 21% |
State tax benefit, net of federal benefit | 1.90% | 2.90% | 4.40% |
Impact of international operations | 1.30% | 1.30% | 0.80% |
U.S. taxes on foreign entities | 0% | (3.90%) | 2.50% |
Stock-based compensation | (7.30%) | (3.00%) | (4.20%) |
U.S. federal tax credits | 3.70% | 1.60% | 1.60% |
Change in valuation allowance | (21.80%) | (20.30%) | (26.40%) |
Non-deductible transaction costs | (0.10%) | (0.60%) | (0.10%) |
Other | (0.50%) | (0.20%) | (0.20%) |
Provision for income taxes | (1.80%) | (1.20%) | (0.60%) |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred Tax Assets: | ||||
Accruals and allowances | $ 11,330 | $ 10,369 | ||
Net operating loss carryforwards | 22,622 | 26,236 | ||
Stock-based compensation | 3,527 | 3,956 | ||
Lease liabilities | 5,706 | 6,170 | ||
Deferred revenue | 409 | 1,763 | ||
Tax credit carryforwards | 11,510 | 8,100 | ||
Depreciation and amortization | 3,307 | 3,989 | ||
Capitalized research and development expenses | 40,016 | 26,186 | ||
Total deferred tax assets | 98,427 | 86,769 | ||
Deferred Tax Liabilities: | ||||
Operating lease right-of-use assets | (3,174) | (3,462) | ||
Total deferred tax liabilities | (3,174) | (3,462) | ||
Valuation Allowance | (93,869) | (81,742) | $ (70,496) | $ (43,917) |
Net deferred tax assets | $ 1,384 | $ 1,565 |
Income Taxes - Schedule of Valu
Income Taxes - Schedule of Valuation Allowance for Deferred Income Tax Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred Tax Assets, Valuation Allowance [Roll Forward] | |||
Balance at the beginning of the period | $ 81,742 | $ 70,496 | $ 43,917 |
Additions | 16,798 | 11,246 | 26,579 |
Deductions | (4,671) | 0 | 0 |
Balance at the end of the period | $ 93,869 | $ 81,742 | $ 70,496 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||||
Valuation Allowance | $ 93,869 | $ 81,742 | $ 70,496 | $ 43,917 |
Unrecognized tax benefits | $ 2,763 | $ 1,736 | $ 1,355 | $ 704 |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
California | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforwards | $ 28,924 |
U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforwards | 8,642 |
U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforwards | 82,547 |
Other states | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforwards | $ 32,366 |
Income Taxes - Tax Credit Carry
Income Taxes - Tax Credit Carryforwards (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
U.S. federal | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | $ 6,502 |
California | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | 6,396 |
Foreign | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | $ 2,302 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Gross Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits beginning balance | $ 1,736 | $ 1,355 | $ 704 |
Additions for tax positions taken during the current year | 765 | 444 | 503 |
Additions (reductions) for tax positions taken during a prior year | 275 | 148 | |
Additions (reductions) for tax positions taken during a prior year | (58) | ||
Reductions as a result of a lapse of the applicable statute of limitations | (13) | (5) | 0 |
Unrecognized tax benefits ending balance | $ 2,763 | $ 1,736 | $ 1,355 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net loss | $ (56,626) | $ (56,029) | $ (101,251) |
Denominator: | |||
Weighted average common shares - basic (in shares) | 87,173 | 82,688 | 78,084 |
Potentially dilutive common shares (in shares) | 0 | 0 | 0 |
Weighted average common shares - dilutive (in shares) | 87,173 | 82,688 | 78,084 |
Basic net loss per share (in dollars per share) | $ (0.65) | $ (0.68) | $ (1.30) |
Diluted net loss per share (in dollars per share) | $ (0.65) | $ (0.68) | $ (1.30) |
Anti-dilutive employee stock-based awards, excluded (in shares) | 5,451 | 5,041 | 5,623 |
Segment and Geographic Inform_3
Segment and Geographic Information - Narrative (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Number of operating segments | 1 |
Segment and Geographic Inform_4
Segment and Geographic Information - Schedule of Net Revenue by Geographic Areas (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | |||
Total revenue | $ 490,414 | $ 435,137 | $ 357,154 |
United States | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 268,435 | 265,844 | 259,023 |
Spain | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 135,896 | 83,779 | 5,385 |
Ireland | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 44,287 | 40,877 | 49,437 |
Other Countries | |||
Segment Reporting Information [Line Items] | |||
Total revenue | $ 41,796 | $ 44,637 | $ 43,309 |
Segment and Geographic Inform_5
Segment and Geographic Information - Schedule of Long-Lived Asset by Geographic Areas (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Long-Lived Assets [Line Items] | ||
Total | $ 20,145 | $ 24,409 |
United States | ||
Long-Lived Assets [Line Items] | ||
Total | 17,762 | 19,587 |
Other Countries | ||
Long-Lived Assets [Line Items] | ||
Total | $ 2,383 | $ 4,822 |