Slide 1: Q2 2022 Investor Presentation
Q2 2022 Investor Presentation
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words are
Slide 3: Arlo is a service business with recurring customer relationships
Arlo is a service business with recurring customer relationships driving significant value at scale Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 4: A home burglary occurs in the United States every 30 seconds
A home Burglaries at Homes without burglary occurs home in the U.S. a security system every 30 seconds cause over are 300% more in the United $3 Billion in loss likely to be States(1) every year(1) burglarized(2) Fires affect Water leaks Annually, over 1,000 homes per impact 14,000 3 million older d
Slide 5: $53 Billion Global Home Security Market
Smart Camera Market(2) Global Home Security Market(1) Video Doorbell Market(3) ~$5 Billion $53 Billion $1.8 Billion (growing to $11.8 Billion by 2027) (growing to $2.8 Billion by 2025) (growing to $78 Billion by 2025) (1) MarketsandMarkets. https://www.reportlinker.com/p05495954/Home-Security-System
Slide 6: Arlo pioneered DIY Smart Security which consumers now prefer
Arlo pioneered DIY Smart Security which consumers now prefer over professionally installed solutions Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 7: Arlo Secure is the most advanced security service available
Arlo Secure is the most advanced security service available… up to 65% of our customers subscribe within 6 months of purchase Emergency Response 24/7 Pro Monitoring Smart Home One-tap request for help Live security experts Advanced smart home support Person Detection Rich Notifications Activity Zone
Slide 8: Arlo's core is a global services platform
219+ million videos uploaded per day More than Youtube 1300+ hours 75+ million of video uploaded AI-based per minute smart notifications More than per day Youtube Arlo’s core is a global services platform delivering high performance AI and security capabilities at scale 3.9+ billion 30+ petabytes AP
Slide 9: The shift to our new service-first business model is accelerating Paid Account additions
+113% YOY Growth 1,478 After crossing The shift to our500,000 accounts in new service-first March, businesswemodel plan to isdouble that Paid accelerating 1,272 number Accountand reach 1 Million Paid additions Accounts by March 2022 1,067 877 695 549 435 356 298 255 230 211 187 162 144 125 102 Q2'18
Slide 10: Rapid growth in Paid Accounts is driving expansion in Annual Recurring Revenue
+67% YOY $116.6 Rapid growth in our Paid Accounts is driving meaningful expansion in $101.3 our Annual Recurring Revenue $90.1 $80.4 $69.8 $58.2 $46.6 $39.6 $32.9 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Annual Recurring Revenue ($’ Millions) *ARR represents the amount of paid service r
Slide 11: Number of years to reach $100m in ARR
(2) Number of years to reach $100m in ARR (1) 1-5 years 6-10 years 11-15 years 16+ years Copyright 2022, Arlo Technologies Inc. All rights reserved. (1) Path to $100m of Top 140 SaaS Unicorn Businesses: “How Quickly Does a Startup Have to Grow?”" April 9, 2020, kimchihill.com/2020/04/09/path-to-100m
Slide 12: Our paid account quarterly churn is amongst the best compared to consumer subscription peers
Our paid account quarterly churn is amongst the 5% best compared to consumer subscription peers 4.9% 4.8% New business model only, Q4 ‘21 4% 4.1% 4.0% 3.5% 3% 2.5% 2.8% 2.4% 2% 1% Data Sources Hulu & Netflix - Hubspot study “How Netflix Maintains Low Churn & High Customer Retention” Study. Spotify -
Slide 13: Diving into retail and direct paid accounts shows outstanding performance
Diving into retail and direct paid accounts(1) shows the outstanding performance of our services business $9.35 81% 1.2% Retail ARPU(2) Retail Gross Margin(3) Retail Monthly Churn(4) (1) Retail and direct paid accounts does not include those from B2B or strategic accounts (2) Average monthly revenue
Slide 14: Growth Drivers: Accelerate annual recurring revenue
Growth Drivers Accelerate annual recurring revenue Drive Drive Brand Brand Expand Product Invest In Routes Awareness Awareness Portfolio To Market Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 15: Our designs and innovations are recognized as best-in-class
Our designs and innovations are recognized as best-in-class Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 16: Awareness campaign to fill the funnel with strong LTV/CAC
$550 LTV ** Arlo will execute an awareness campaign starting in Q3’ 22 to fill the funnel for new paid accounts with strong LTV/CAC $0 NET CAC* * NET CAC for Q4 FY21 calculated at $0 since non-GAAP Product Gross Margin exceeds Non-GAAP Sales & Marketing. ** LTV calculated for Q4 FY21 as follows i) Q
Slide 17: Arlo's "Protect Your Everything" campaign
Arlo’s “Protect Your Everything” campaign launched in August to drive awareness and incremental Paid Accounts entering 2023 Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 18: Growth Drivers: Product Expansion
Growth Drivers Accelerate annual recurring revenue Drive Brand Expand Product Product Invest In Routes Awareness Expansion Portfolio To Market Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 19: Expansion into new categories has driven product diversification and growth
IP Cameras Expansion into new categories has driven product diversification and growth for Arlo 46% 36% Services, Doorbell, Floodlight, Other 22% 2019 2020 2021 Revenue Mix * Copyright 2022, Arlo Technologies Inc. All rights reserved. * Revenue mix by product category derived by applying gross shipm
Slide 20: Arlo Safe is a new service for personal and family safety
Arlo Safe™ is a new service that enables personal and family safety while on the go Copyright 2022, Arlo Technologies Inc. All rights reserved. Launching later this year…
Slide 21: Arlo Secure is a professionally monitored security system
Arlo Secure™ is a professionally monitored security system with an innovative smart hub and ground-breaking multi-sensor Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 22: Growth Drivers: Omni-Channel Investment
Growth Drivers Accelerate annual recurring revenue Drive Brand Expand Product Invest Omni-Channel In Routes Awareness Portfolio Investment To Market Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 23: Rapid growth in DTC & Strategic Accounts is driving revenue diversification
Other 84% Strategic Accounts 84% Rapid growth in DTC & Strategic 60% Direct to Consumer * Accounts is driving meaningful 60% revenue diversification and 43% 46% predictability Retail/E-comm 2019 2020 2021 Channel Mix Copyright 2022, Arlo Technologies Inc. All rights reserved. * Paid Service revenue
Slide 24: We reach our customers through the largest consumer channels
We reach our customers through the largest consumer channels in the world Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 25: The Arlo SmartCloud platform enables SaaS and B2B Strategic Accounts
The Arlo SmartCloud™ platform enables SaaS and B2B Strategic Accounts that create GTM partnerships Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 26: Our investment in Arlo.com is driving profitable transactions
Our investment in Arlo.com is driving highly profitable transactions and direct user engagement for Arlo Copyright 2022, Arlo Technologies Inc. All rights reserved.
Slide 27: Financials
arlo“ | Financials
Slide 28: Rapid growth in Paid Accounts and ARR driving Service Revenue and Gross Margin
Rapid growth in Paid Accounts and ARR are driving Service Revenue growth and Gross Margin expansion $32.8 65.4% 65.8% $29.9 63.2% $28.5 58.9% 58.9% 59.5% $27.0 57.9% $25.3 $22.8 $21.6 48.7% $19.0 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Service
Slide 29: Rapid growth in ARR and diversification driving revenue growth
Rapid growth in ARR and business diversification are driving meaningful revenue growth and gross profit expansion +28% YOY $142.9 $35.1 $34.5 +21% YOY $32.7 $124.8 $119.0 $114.8 $110.2 $111.1 $27.5 $26.7 $25.7 $25.1 $98.6 $22.7 $82.6 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 20 Q4 20 Q1 21
Slide 30: Crossed over to non-GAAP operating profit in Q4 '21
With gross profit expansion and disciplined expense management, we crossed over to non- GAAP operating profit in Q4 ‘21 $3.5 $1.0 $1.0 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 ($3.1) ($4.3) ($6.5) ($7.3) ($8.5) Non-GAAP Operating Profit/(Loss) ($24.9) Copyright 2022, Arlo Technologies I
Slide 31: Appendix – GAAP to non-GAAP Reconciliations
Appendix – GAAP to non-GAAP Reconciliations
Slide 32: Reconciliations of GAAP Measures to Non-GAAP Measures
Reconciliations of GAAP Measures to Non-GAAP Measures Gross Profit, In Thousands, except percentage data Three Months Ended September December 31, March 29, June 27, October 3, December 31, April 3, July 3, 27, 2020 2020 2021 2021 2021 2021 2022 2022 GAAP gross profit: Products $ 12,164 $ 11,847 $ 1
Slide 33: Reconciliations of GAAP Measures to Non-GAAP Measures
Reconciliations of GAAP Measures to Non-GAAP Measures Operating Income (Loss), In Thousands, except percentage data Three Months Ended September December June 28, 27, 31, March 28, June 27, October 3, December July 3, 2020 2020 2020 2021 2021 2021 31, 2021 April 3, 2022 2022 GAAP operating income (l
Slide 34: Arlo
arlo“