Slide 1: Q3 2023 Investor Presentation
Q3 2023 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 2023, 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 2023, 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
1390+ hours 256+ million 7.8+ billion 55+ petabytes 103+ million of video uploaded videos uploaded API calls per day of videos stored AI-based per minute per day across platform and protected smart notifications More than and customers More than in the cloud per day Youtube Youtube Arlo’s core is a
Slide 9: Strong growth in Paid Accounts
The shift to our new service- +49% YOY Growth 2,486 first business model is driving 2,289 strong growth in Paid Accounts 2,044 1,862 1,673 1,478 1,272 1,067 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Paid Accounts (in Thousands) Copyright 2023, Arlo Technologies Inc. All rights reserved. Paid a
Slide 10: New pricing strategy driving expansion in Annual Recurring Revenue
Our new pricing strategy is +59% YOY Growth $200.0 driving expansion in our $193.6 Annual Recurring Revenue $182.6 $137.8 $125.4 $116.6 $101.3 $90.1 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Annual Recurring Revenue ($ in Millions) ARR represents the amount of paid service revenue that we expe
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 2023, 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: Paid account monthly churn amongst the best compared to peers
7% Our paid account monthly churn is 6.9% amongst the best compared to 6% consumer subscription peers 6.0% 5% 4% 3% 3.2% 2.4% 2% 1.5% 1% 1.2% 1.2% Arlo - New business model only, September 2023 Data Sources: Spotify - Dougshapiro Article “To Everything, Churn, Churn, Churn”. Hulu and Netflix – Hulu
Slide 13: Retail and direct paid accounts show outstanding services performance
Diving into retail and direct paid accounts(1) shows the outstanding performance of our services business $11.5 $700 Retail ARPU(2) Retail LTV(4) 7x 88% $100 Retail Gross Margin(3) Retail CAC(5) (1) Retail and direct paid accounts does not include those from B2B or strategic accounts (2) Average mon
Slide 14: Our designs and innovations are recognized as best-in-class
Our designs and innovations are recognized as best-in-class Copyright 2023, Arlo Technologies Inc. All rights reserved.
Slide 15: Q3 2023 PR Product Awards
Q3 2023 PR PRODUCT AWARDS Arlo Pro 5S 2K Arlo Pro 5S 2K Arlo Essential Spotlight Camera Pro 5S 2K (WIRED) (TechHive) (CNN Underscored) (Pocket-lint) Arlo Pro 5S 2K Arlo Essential Wireless Video Doorbell Arlo Essential Wired Video Doorbell Arlo Essential Indoor Camera (Popular Mechanics) (Home Theate
Slide 16: Expansion into new categories has driven product diversification
IP Cameras Expansion into new categories has driven product diversification and growth for Arlo Services, Doorbell, 41% 42% Accessories, 34% Floodlight, Other 22% 2019 2020 2021 2022 Revenue Mix * Copyright 2023, Arlo Technologies Inc. All rights reserved. * Revenue mix by product category derived b
Slide 17: 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 2023, Arlo Technologies Inc. All rights reserved.
Slide 18: Arlo Secure professionally monitored security system
Arlo Secure™ is a professionally monitored security system with an innovative smart hub and ground-breaking multi-sensor Copyright 2023, Arlo Technologies Inc. All rights reserved.
Slide 19: Arlo Pro 5S professional grade smart security camera
Arlo Pro 5S is the first professional grade smart security camera and integrates with our Security System • Tri-band connectivity delivers dual band wi-fi plus Arlo SecureLink™ for continuous security and better connectivity. • Backed by next-gen Arlo Secure App that features one-tap emergency respo
Slide 20: Arlo's new Total Security
This needs to really be a sales page for the subscription. The design on the left looks like a bundle selection Arlo’s new Total Security page. Subscription includes The page should scream the amazing hardware and professional value produced by the offer, lean into the subscription nature etc. monit
Slide 21: Rapid growth in Strategic Accounts driving revenue diversification
Other 84% Strategic Accounts Rapid growth in Strategic Accounts is driving meaningful 60% revenue diversification and 84% 46% Direct to Consumer * predictability 63% 45% 31% Retail/E-comm 2019 2020 2021 2022 Channel Mix Copyright 2023, Arlo Technologies Inc. All rights reserved. * Paid Service reven
Slide 22: We reach customers through the largest consumer channels
We reach our customers through the largest consumer channels in the world Copyright 2023, Arlo Technologies Inc. All rights reserved.
Slide 23: Arlo SmartCloud platform enables SaaS and B2B Strategic Accounts
The Arlo SmartCloud™ platform enables SaaS and B2B Strategic Accounts that create GTM partnerships Copyright 2023, Arlo Technologies Inc. All rights reserved.
Slide 24: Investment in Arlo.com driving profitable transactions
Our investment in Arlo.com is driving highly profitable transactions and direct user engagement for Arlo Copyright 2023, Arlo Technologies Inc. All rights reserved.
Slide 25: Financials
arlo“ | Financials
Slide 26: Highly predictable services subscription model drives revenue growth
1 Highly predictable services subscription model drives consistent revenue growth Strong and consistent financial execution in the 2 Services business model unit economics face of economic volatility creates long-term profitability 3 Continued operating leverage and working capital enhancement with
Slide 27: Paid Accounts and ARR driving Service Revenue and Gross Margin growth
Rapid growth in Paid Accounts and ARR are driving Service Revenue growth and Gross Margin expansion $51.0 $50.3 75.2% 74.1% 73.5% $43.9 69.7% $38.3 66.7% 65.8% $35.4 65.4% $32.8 63.2% $29.9 $28.5 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Service
Slide 28: Gross margin expansion accelerating profitability
Gross margin expansion and disciplined expense management is accelerating profitability $8.4 $5.4 $3.5 $1.0 $1.2 $1.0 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 $(3.9) $(4.2) Non-GAAP Operating Profit/(Loss) ($ in Millions) Copyright 2023, Arlo Technologies Inc. All rights reserved. The most di
Slide 29: Operating leverage and free cash flow improve with subscription model
Operating leverage and free cash flow improves with subscription model and growth in paid accounts Non-GAAP Operating Income (Loss) Free Cash Flow 10 p.p. margin 5 p.p. margin 17 p.p. margin 10 p.p. margin improvement improvement improvement improvement Copyright 2023, Arlo Technologies Inc. All rig
Slide 30: Appendix – GAAP to non-GAAP Reconciliations
Appendix – GAAP to non-GAAP Reconciliations
Slide 31: 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 December 31, April 3, July 3, October 2, December 31, April 2, July 2, October 1, 2021 2022 2022 2022 2022 2023 2023 2023 GAAP gross profit: Products $ 13,920 $ 14,048 $ 12,362
Slide 32: 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 December 31, April 3, July 3, October 2, December 31, April 2, July 2, October 1, 2021 2022 2022 2022 2022 2023 2023 2023 GAAP operating loss $ (7,230) $ (8,672) $ (
Slide 33: Reconciliations of GAAP Measures to Non-GAAP Measures
Reconciliations of GAAP Measures to Non-GAAP Measures Free Cash Flow (Usage), In Thousands, except percentage data Three Months Ended December 31, April 3, July 3, October 2, December 31, April 2, July 2, October 1, 2021 2022 2022 2022 2022 2023 2023 2023 Net cash provided by (used in) operating act
Slide 34: arlo“
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