Slide 1: Investor Presentation Q1 2024
Investor Presentation Q1 2024 ©2024 – ALL RIGHTS RESERVED
Slide 2: Safe Harbor Disclosure
SAFE HARBOR DISCLOSURE T h i s p r e s e n t a t i o n c o n t a i n s f o r w a r d - l o o k i n g s t a t e m e n t s w i t h i n t h e m e a n i n g o f t h e U.S . P r i v a t e S e c u r i t i e s L i t i g a t i o n R e f o r m A c t o f 1 9 9 5 . T h e w o r d s “a n t i c i p a t e ,” “e x
Slide 3: 25x paid accounts and ARR growth since IPO
+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 4: ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024
ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 4 ©2024. ALL RIGHTS RESERVED.
Slide 5: Company Overview
Who is Arlo? COMPANY OVERVIEW ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 5 ©2024. ALL RIGHTS RESERVED.
Slide 6: 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 I NVESTOR PRESENTATI ON: FEBRUARY 2024 6 ©2024. ALL RIGHTS RESERVED.
Slide 7: 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 8: 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 9: Time to reach $100M ARR
(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-arr. ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 9 to reach $100M ARR measured from launch of Arlo Smart in Q2 2018. Accessed May 6, 2022. (2) Arlo
Slide 10: Retail and direct paid accounts 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 (1) Retail and direct paid accounts does not include those from B2B or s
Slide 11: Our services stand out among consumer subscriptions
Our services standout Paid Account Monthly Churn Rate(1) among comparable 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 12: 2024 Connected Home Security Camera Company of the Year
2024 Connected Home Security Camera Company of the Year ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 h t t p s : / / i o t b r e a k t h r o12 ugh.com/2024-winners/ ©2024. ALL RIGHTS RESERVED.
Slide 13: Arlo Ranked #14
Arlo Ranked #14 R a n k e d 5 t h in I o T c a t e g o r y a n d s h a r e s t h e T o p 5 w it h I n t e l C o r p o r a t io n , N o k ia , V e r iz o n , a n d M ic r o s o f t A z u r e I o T AR A R LLO O IIN NVVEESSTTO ORR PPRREESSEENNTTAATTI O I ONN: :F E FBER BURA URAY R Y2 022042 4 https://w
Slide 14: Operating Results: Q4 & Full Year 2023
Q4 & Full Year 2023 OPERATING RESULTS ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 14 ©2024. ALL RIGHTS RESERVED.
Slide 15: Growth year over year
Services Products 14% 51% 53% Growth $135.1 Growth Growth year over year over 2,813 year over year year year $79.2 $130.0 $210.1 2,486 $200 $79.0 $137..8 1,862 $118.5 $80.2 $55.9 $51.0 $38.3 Q4’22 Q3’23 Q4’23 Q4’22 Q3’23 Q4’23 Q4’22 Q3’23 Q4’23 REVENUE SUBSCRIBER GROWTH ARR (in millions) (in million
Slide 16: Paid Accounts and ARR driving service revenue and margin growth
Rapid growth in Paid Accounts and ARR are driving Service Revenue growth and Gross Margin expansion Service Revenue Service Gross Margin $55.9 75.2% 74.4% (in millions) (in millions) 73.5% 74.1% $51.0 $50.3 69.7% $43.9 $38.3 66.7% $35.4 65.8% $32.8 65.4% $29.9 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’
Slide 17: Gross margin expansion and expense management accelerate profitability
Gross margin expansion Non-GAAP Operating Profit/(Loss) (in millions) $9.9 and disciplined expense management are $8.4 accelerating profitability. $5.4 $1.2 $1.0 $1.0 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 $(3.9) $(4.2) 1. The most directly comparable GAAP financial measures are presented i
Slide 18: Operating leverage and free cash flow improve
Operating leverage and free cash flow improves with subscription model and growth in paid accounts Non-GAAP Operating Income (In millions) Free Cash Flow (in millions) 7.3% 7.2% +11% +6.3% +$20m 5.6% +$83m 5.1% $35 $8 $25 ($12) $10 ($48) ($4) (1.2%) ($6) (9.8%) (3.3%) (10.4%) Q4 2022 Q4 2023 FY 2022
Slide 19: Cash, DSO and inventory turns
$136.5 7.6 $126.0 6.4 5.5 $113.7 50 49 44 Q4’22 Q3’23 Q4’23 Q4’22 Q3’23 Q4’23 Q4’22 Q3’23 Q4’23 CASH & SHORT-TERM INVESTMENTS DSO INVENTORY TURNS (in millions) (days) (turns) ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 19 ©2024. ALL RIGHTS RESERVED.
Slide 20: Driving Innovation: Growth Through
Growth Through DRIVING INNOVATION ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 20 ©2024. ALL RIGHTS RESERVED.
Slide 21: 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 22: Our cloud-based platform makes our solutions secure and scalable
1800hrs + 7.8bn + 55pb + 91bn 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 platform makes o
Slide 23: ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024
ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 23 ©2024. ALL RIGHTS RESERVED.
Slide 24: Press reviews of the Arlo Security app
“The companion Arlo Security app is the most impressive security-based app I've ever used.” - How To Geek, Jan 2024 “Motion alerts arrived instantly and were correctly identified.” - PC Magazine, Jan 2024 “I always enjoy the ease and flexibility [Arlo Secure] brings to operating the camera.” - TechH
Slide 25: Arlo Secure 5
Arlo Secure 5 POWERING THE NEXT GENERATION OF SMART SECURIT Y EXPERIENCES ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 25 ©2024. ALL RIGHTS RESERVED.
Slide 26: Arlo Secure dashboard, feed, automation and emergency response
Arlo Secure includes a user customizable Dashboard, a Feed that aggregates all device events, a powerful smart home Automation engine, and the most sophisticated, feature-rich Emergency Response experience in the industry. ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 26 ©2024. ALL RIGHTS RESERVED.
Slide 27: Arlo Secure 5.0 detection, recognition and Security Assistant
Arlo Secure 5.0 expands our robust Video & Audio Detection models, introduces a powerful Recognition engine, adds a proactive Security Assistant, and provides an advanced platform for future capabilities such as Contextual Awareness. ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 27 ©2024. ALL RIGHTS R
Slide 28: User-defined micromodels for personal AI experiences
Arlo Secure 5 features user-defined micromodels for unlimited, personal AI powered experiences • A truly multimodal AI engine that combines text prompts, images, events, and other metadata to create a custom, user specific solution • User micromodels are completely private with no data, prompts, or
Slide 29: New Arlo Secure free tier with advertising
New Arlo Secure 5 free tier with advertising rolling out in Q4 2024 Adds features and capabilities to the base Arlo Secure experience in return for integrated advertising relevant to the end user. Enables monetization of Arlo’s entire active user population with a potential for up to 750 million imp
Slide 30: Guidance & LRP: Looking Ahead
Looking Ahead GUIDANCE & LRP ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 30 ©2024. ALL RIGHTS RESERVED.
Slide 31: What makes us different and why we'll win
What makes us Differentiators Why It Matters different and why Every person, every day, dedicated we’ll win in the Singular focus on security 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 32: Growth drivers
Growth drivers. We’re poised for significant growth through subscriber, market, service, and platform expansion. Subscriber Growth Service Enhancements Adjacent Markets Accelerate & build upon household Expand functionality, features, and Develop opportunities in adjacent acquisition in our current
Slide 33: Q1 2024 and Full Year 2024 Guidance
Q1 2024 Guidance Full Year 2024 Guidance $ 1 1 7 - $ 1 2 7 Mi l l i o n $ 51 0 - $ 54 5 Mi l l i o n Total Revenue Total Revenue $0.05 - $0.1 1 $0.35 - $0.45 Non-GAAP Earnings Per Share Non-GAAP Earnings Per Share ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 33 ©2024. ALL RIGHTS RESERVED.
Slide 34: 25x paid accounts and ARR growth since IPO
+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 35: Original and New Long-Range Plan
Original Long-Range Plan New Long-Range Plan MARCH 2022 TARGETS FOR ≤ 2027 NEW TARGETS FOR ≤ 2030 5 Mi l l i o n 1 0 Mi l l i o n Paid Accounts Paid Accounts $ 3 0 0 Mi l l i o n $ 7 0 0 Mi l l i o n In ARR In ARR ≥1 0 % >2 5% In Operating Margin In Operating Margin (NON-GAAP) (NON-GAAP) ARLO I NVES
Slide 36: Arlo
arlo ©2024 - ALL RIGHTS RESERVED
Slide 37: Appendix: GAAP to non-GAAP Reconciliations
Appendix GAAP to non-GAAP Reconciliations
Slide 38: Reconciliations of GAAP Measures to Non-GAAP Measures
Reconciliations of GAAP Measures to Non-GAAP Measures Gross Profit, In Thousands, except percentage data ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 38 ©2024. ALL RIGHTS RESERVED.
Slide 39: Reconciliations of GAAP Measures to Non-GAAP Measures
Reconciliations of GAAP Measures to Non-GAAP Measures Operating Income (Loss), In Thousands, except percentage data ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 39 ©2024. ALL RIGHTS RESERVED.
Slide 40: 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 ARLO I NVESTOR PRESENTATI ON: FEBRUARY 2024 40 ©2024. ALL RIGHTS RESERVED.