Slide 1: Investor Presentation Q1 2024
Investor Presentation Q1 2024 ©2024 – ALL RIGHTS RESERVED
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: We bring peace of mind to people everywhere
We bring peace of mind to people everywhere by connecting and protecting what they care about most. Arlo protects your everything. ARLO INVESTOR PRESENTATION: MAY 2024 3 ©2024. ALL RIGHTS RESERVED.
Slide 4: Security is more important than ever before
Security is more A home burglary occurs every 30 important than seconds in the United States1 ever before. Homes without a security system are 300% more likely to be burglarized2 Everyone has a right to feel safe in their own home. We’re exclusively dedicated to ensuring everyone has access to secur
Slide 5: A rapidly growing security market
A rapidly growing security market. 14 % Smart Home Security 19 % Video Surveillance Systems Consumers everywhere expect smart, convenient, Market CAGR1 Sub-Segment CAGR2 and affordable security solutions with advanced 2024-2029 2020-2030 video monitoring at their core. As security shifts towards mas
Slide 6: Security is the focus of the smart home
Security is the focus of % of Households Planning to Buy in the Next 12 Months the smart home. Video Doorbell 28% Smart Security Camera 24% Smart Door Locks 21% Consumers are focused on security as the most important important dimension of the smart home. Of the leading leading future smart home pur
Slide 7: Our transformation to a service-focused business has driven strong growth
Our transformation to a service-focused business has driven strong growth. Paid Account Growth Annual Recurring Revenue (ARR) (in millions) (in millions) $227 $210 $200 $194 3.24 $183 2.81 2.49 $138 2.29 $125 2.04 $117 1.86 $101 1.67 1.48 1.27 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1
Slide 8: Our services stand out among comparable consumer-based subscriptions
Our services standout Paid Account Monthly Churn Rate among comparable 1. consumer-based 1.1% subscriptions. 3.1% 4.0% Our paid account monthly churn is among the best compared to consumer subscription peers. 4.6% 4.7% 6.8% 7.4% 8.7% Security ranks 1st in subscriptions least likely to be canceled. 1
Slide 9: Diving into retail & direct paid accounts shows outstanding performance
Diving into retail & direct LTV/CAC Ratio paid accounts(1) shows the 7x outstanding performance of 6x our services business 5x 3x $11.3 $700 3x Retail ARPU(2) Retail LTV(4) 2x 89% $100 Retail Gross Margin(3) Retail CAC(5) 2x All measurements are as of Jan 1, 2024. (1) Retail and direct paid accounts
Slide 10: Financial Results Q1 2024
Q1 2024 Financial Results ARLO INVESTOR PRESENTATION: MAY 2024 10 ©2024. ALL RIGHTS RESERVED.
Slide 11: Investment highlights
Investment highlights. 1 2 3 A highly predictable Services business Continued operating services subscription model unit economics leverage and working model that drives creates long-term capital enhancement consistent growth profitability. with growth in paid in revenue. accounts. ARLO INVESTOR PRE
Slide 12: Rapid growth in Paid Accounts and ARR driving Service Revenue growth
Rapid growth in Paid Accounts and ARR are driving Service Revenue growth and Gross Margin expansion. Services Revenue Service Gross Margin (non-GAAP) (In millions) 60.0 $56.7 55.9 50.3 51.0 76.7% 45.0 75.2% 43.9 74.1% 74.4% 73.5% 38.3 35.4 69.7% 32.8 30.0 29.9 66.7% 65.8% 65.4% 15.0 0.0 Q1'22 Q2'22
Slide 13: Gross margin expansion and disciplined expense management accelerating profitability
Gross margin expansion and disciplined expense management is accelerating profitability and cash generation. Non-GAAP Operating Income Free Cash Flow (In millions) +617% (In millions) +107% YoY YoY $9.9 $19.5 $8.6 $8.4 $5.4 $11.5 $9.4 $7.5 $6.9 $1.2 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1'23 Q2'23 Q3'23 Q4
Slide 14: Growth Through Driving Innovation
Growth Through DRIVING INNOVATION ARLO INVESTOR PRESENTATION: MAY 2024 14 ©2024. ALL RIGHTS RESERVED.
Slide 15: A decade of innovation focused on safety
A decade of innovation focused on safety 2014 2018 2019 2022 2023 Arlo Launch Smart AI v1 Smart AI v2 Safe Service ATS Plans The first wire-free camera with World’s first Artificial First AI based package Personal safety service First subscription to combine cloud storage that created a Intelligence
Slide 16: Our cloud-based platform makes our solutions secure and scalable
+ + 1800hrs + (1) (1) 7.8bn 55pb (1) 91 m package notifications 45bn people notifications of video uploaded per minute API calls per day across video stored and 4bn vehicle notifications platform and customers protected in the cloud more than AI-based smart notifications in 2023 Our cloud-based plat
Slide 17: What makes us different and why we'll win
What makes us Differentiators Why It Matters different and why Singular focus on security Every person, every day, dedicated we’ll win in the to our mission smart security Industry-leading video Video is the key to security market. capture and hardware and home automation Data usage and privacy Data
Slide 18: Growth drivers
Growth drivers. We’re poised for significant growth through subscriber, subscriber, market, service, and platform expansion. Subscriber Growth Service Enhancements Adjacent Markets Accelerate & build upon household acquisition Expand functionality, features, and benefits Develop opportunities in adj
Slide 19: 25x since IPO and 2.2x since LRP start
+5.1% 2.81M $210M +12.3% 25x since 16x since since IPO IPO and IPO and and +7.7% 2.2x since 2.1x since since LRP LRP start LRP start start 1.27M $101M -2.6% 113K $13M -7.1% IPO LRP Now IPO LRP Now IPO LRP Now Aug 2018 Mar 2022 Dec 2023 Aug 2018 Mar 2022 Dec 2023 FY 2018 FY 2021 FY 2023 PAID ACCOUNTS
Slide 20: FY24 is projected to deliver strong growth in both Revenue and EPS
FY24 is projected Q2 2024 Guidance Full Year 2024 Guidance to deliver strong growth in both $120 - 130M $510 - 545M Revenue and EPS. Total Revenue Total Revenue $0.06 - $0.12 $0.35 - 0.45 Earnings Per Share Earnings Per Share (Non-GAAP) (Non-GAAP) ARLO INVESTOR PRESENTATION: MAY 2024 20 ©2024. ALL R
Slide 21: Business trajectory ahead of long-range plan expectations
Business trajectory Original Long-Range Plan March 2022 Targets for < 2027 New Long-Range Plan New Targets for <2030 ahead of long-range plan expectations 5 Million 10 Million resulting in adjusted Paid accounts Paid accounts outlook for future growth. $300 Million $700 Million in ARR in ARR >10% >2
Slide 22: Appendix: GAAP to non-GAAP Reconciliations
Appendix GAAP to non-GAAP Reconciliations
Slide 23: Reconciliations of GAAP Measures to Non-GAAP Measures: Gross Profit
Reconciliations of GAAP Measures to Non-GAAP Measures. Gross Profit, In Thousands, except percentage data. ARLO INVESTOR PRESENTATION: MAY 2024 23 ©2024. ALL RIGHTS RESERVED.
Slide 24: Reconciliations of GAAP Measures to Non-GAAP Measures: Operating Income
Reconciliations of GAAP Measures to Non-GAAP Measures. Operating Income (Loss), In Thousands, except percentage data. ARLO INVESTOR PRESENTATION: MAY 2024 24 ©2024. ALL RIGHTS RESERVED.
Slide 25: Reconciliations of GAAP Measures to Non-GAAP Measures: Free Cash Flow
Reconciliations of GAAP Measures to Non-GAAP Measures. Free Cash Flow (Usage), In Thousands, except percentage data. ARLO INVESTOR PRESENTATION: MAY 2024 25 ©2024. ALL RIGHTS RESERVED.