Arlo Technologies, Inc. · NYSE:ARLO
Arlo Technologies — Q4 2022 Earnings Presentation
28 slides from Arlo Technologies's earnings presentation, Mar 7, 2023
Slide 1: Q4 2022 Investor Presentation
Q4 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 2023, Arlo Technologies Inc. All rights reserved.
Slide 4: A home burglary occurs 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 E m e rg e n c y R e s p o n s e 2 4 / 7 P r o M o n it o r in g S m a rt H o m e One-tap request for help Live security experts Advanced smart home support P e r s o n D e t
Slide 8: Arlo's core is a global services platform delivering AI and security
256+ million videos uploaded per day More than Youtube 1390+ hours 103+ 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 7.8+ billion 55+ petabytes A
Slide 9: Service-first business model driving strong growth in Paid Accounts
The shift to our new service-first +75% YOY Growth 1,862 business model is driving strong 1,673 growth in Paid Accounts 1,478 1,272 1,067 877 695 549 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Paid Accounts (in Thousands) Paid Accounts measured as any account where a subscription to a paid serv
Slide 10: Rapid growth in Paid Accounts driving Annual Recurring Revenue
+53% Rapid growth in our Paid Accounts YOY is driving meaningful expansion in $137.8 our Annual Recurring Revenue $125.4 $116.6 $101.3 $90.1 $80.4 $69.8 $58.2 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Annual Recurring Revenue ($ in Millions) ARR represents the amount of paid service revenue th
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
Our paid account monthly churn is amongst the best compared to consumer subscription peers 6% 6.0% 5% 4.7% 4% 3.5% 3% 3.2% 3.1% 2% 1.5% 1% 1.1% 1.1% Arlo - New business model only, December 2022 Data Sources: Spotify - Dougshapiro Article “To Everything, Churn, Churn, Churn”. Netflix & Hulu - Antenn
Slide 13: 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 14: 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% 20 19 20 20 20 21 20 22 Revenue Mix * Copyright 2023, Arlo Technologies Inc. All rights reserved. * Revenue mix by product category deriv
Slide 15: 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 16: 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 2023, Arlo Technologies Inc. All rights reserved.
Slide 17: Arlo Pro 5S is the first 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 18: 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 20 19 20 20 20 21 20 22 Channel Mix Copyright 2023, Arlo Technologies Inc. All rights reserved. * Paid Service r
Slide 19: We reach our 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 20: 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 21: 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 2023, Arlo Technologies Inc. All rights reserved.
Slide 22: Financials
arlo“ | Financials
Slide 23: 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 $38.3 69.7% $35.4 66.7% 65.8% 65.4% $32.8 63.2% $29.9 $28.5 $27.0 $25.3 59.5% 58.9% 57.9% $22.8 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Service
Slide 24: Crossed over to non-GAAP operating profit in Q4'21
With gross profit expansion and disciplined expense management, we crossed over to non-GAAP $4.6 operating profit in Q4’21 $3.5 $1.3 $1.0 $1.0 Excluding Brand Awareness Expenses Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22’22 $(3.1) $(3.9) $(4.3) $(4.2) $(7.3) Non-GAAP Operating Profit/(Loss) ($
Slide 25: Appendix – GAAP to non-GAAP Reconciliations
Appendix – GAAP to non-GAAP Reconciliations
Slide 26: Reconciliations of GAAP Measures to Non-GAAP Measures
Reconciliations of GAAP Measures to Non-GAAP Measures Gross Profit, In Thousands, except percentage data T h r e e M o n th s E n d e d D ecem ber 31, M arch 28, Ju n e 2 7 , O c to b e r 3 , D ecem ber 31, Ju ly 3 , O c to b e r 2 , D ecem ber 31, A p r il 3, 2022 2020 2021 2021 2021 2021 2022 2022
Slide 27: Reconciliations of GAAP Measures to Non-GAAP Measures
Reconciliations of GAAP Measures to Non-GAAP Measures Operating Income (Loss), In Thousands, except percentage data T h r e e M o n th s E n d e d D ecem ber 31, M arch 28, Ju n e 2 7 , O c to b e r 3 , D ecem ber 31, Ju ly 3 , O c to b e r 2 , D ecem ber 31, A p r il 3, 2022 2020 2021 2021 2021 202
Slide 28: Arlo
arlo“