Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 01, 2019 | Jun. 29, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Arlo Technologies, Inc. | ||
Entity Central Index Key | 1,736,946 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | Q4 | ||
Amendment Flag | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Entity Voluntary Filers | No | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Common Stock, Shares Outstanding | 74,255,189 | ||
Entity Public Float | $ 0 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 151,290,000 | $ 108,000 |
Short-term investments | 49,737,000 | 0 |
Accounts receivable, net | 166,045,000 | 157,680,000 |
Inventories | 124,791,000 | 82,952,000 |
Receivables from NETGEAR, net | 12,184,000 | 0 |
Prepaid expenses and other current assets | 11,427,000 | 3,018,000 |
Total current assets | 515,474,000 | 243,758,000 |
Property and equipment, net | 49,428,000 | 3,883,000 |
Intangibles, net | 2,823,000 | 4,348,000 |
Goodwill | 15,638,000 | 15,638,000 |
Restricted cash | 4,134,000 | 0 |
Other non-current assets | 8,449,000 | 2,193,000 |
Total assets | 595,946,000 | 269,820,000 |
Current liabilities: | ||
Accounts payable | 82,542,000 | 20,711,000 |
Deferred revenue | 26,678,000 | 34,072,000 |
Accrued liabilities | 172,036,000 | 76,097,000 |
Income tax payable | 734,000 | 0 |
Total current liabilities | 281,990,000 | 130,880,000 |
Non-current deferred revenue | 23,313,000 | 13,332,000 |
Non-current financing lease obligation | 19,978,000 | 0 |
Non-current income taxes payable | 22,000 | 189,000 |
Other non-current liabilities | 1,141,000 | 0 |
Total liabilities | 326,444,000 | 144,401,000 |
Commitments and contingencies | ||
Stockholders’ Equity: | ||
Preferred stock: $0.001 par value; 50,000,000 shares authorized; none issued or outstanding | 0 | |
Common stock: $0.001 par value; 500,000,000 shares authorized; shares issued and outstanding: 74,247,250 as of December 31, 2018 and none as of December 31, 2017 | 74,000 | |
Additional paid-in capital | 315,277,000 | |
Accumulated other comprehensive income (loss) | 0 | |
Net parent investment | 125,419,000 | |
Accumulated deficit | (45,849,000) | |
Total stockholders’ equity | 269,502,000 | 125,419,000 |
Total liabilities and stockholders’ equity | $ 595,946,000 | $ 269,820,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) | Dec. 31, 2018$ / sharesshares |
Statement of Financial Position [Abstract] | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 |
Preferred stock, authorized (in shares) | 50,000,000 |
Preferred stock, issued (in shares) | 0 |
Preferred stock, outstanding (in shares) | 0 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 |
Common stock, authorized (in shares) | 500,000,000 |
Common stock, issued (in shares) | 74,247,250 |
Common stock, outstanding (in shares) | 74,247,250 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | |||
Revenue | $ 464,918 | $ 370,658 | $ 184,604 |
Cost of revenue | 372,843 | 279,424 | 146,570 |
Gross profit | 92,075 | 91,234 | 38,034 |
Operating expenses: | |||
Research and development | 58,794 | 34,683 | 24,438 |
Sales and marketing | 52,593 | 34,340 | 18,455 |
General and administrative | 28,209 | 15,096 | 8,289 |
Separation expense | 27,252 | 1,384 | 0 |
Total operating expenses | 166,848 | 85,503 | 51,182 |
Income (loss) from operations | (74,773) | 5,731 | (13,148) |
Interest income | 1,239 | 0 | 0 |
Other income (expense), net | (1,177) | 1,946 | (512) |
Income (loss) before income taxes | (74,711) | 7,677 | (13,660) |
Provision for income taxes | 772 | 1,128 | 83 |
Net income (loss) | $ (75,483) | $ 6,549 | $ (13,743) |
Net income (loss) per share: | |||
Basic (in dollars per share) | $ (1.12) | $ 0.11 | $ (0.22) |
Diluted (in dollars per share) | $ (1.12) | $ 0.11 | $ (0.22) |
Weighted average shares used to compute net income (loss) per share: | |||
Basic (in shares) | 67,231 | 62,250 | 62,250 |
Diluted (in shares) | 67,231 | 62,250 | 62,250 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (75,483) | $ 6,549 | $ (13,743) |
Other comprehensive income (loss), before and after tax: | |||
Unrealized gain on derivative instruments | 2 | 0 | 0 |
Unrealized loss on available-for-sale securities | (2) | 0 | 0 |
Comprehensive income (loss) | $ (75,483) | $ 6,549 | $ (13,743) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Net Parent Investment | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | NETGEAR | NETGEARAdditional Paid-In Capital |
Beginning balance at Dec. 31, 2015 | $ 41,533 | $ 41,533 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (13,743) | (13,743) | ||||||
Net transfer from Parent | 43,864 | 43,864 | ||||||
Stock-based compensation expense | 1,520 | $ 1,520 | ||||||
Ending balance at Dec. 31, 2016 | 73,174 | 73,174 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 6,549 | 6,549 | ||||||
Net transfer from Parent | 43,245 | 43,245 | ||||||
Stock-based compensation expense | 2,451 | 2,451 | ||||||
Ending balance at Dec. 31, 2017 | 125,419 | 125,419 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative impact from adoption of ASC 606, net of tax | (3,061) | (3,061) | ||||||
Net income (loss) | $ (29,634) | (29,634) | ||||||
Ending balance (in shares) at Aug. 02, 2018 | 62,500,000 | |||||||
Beginning balance at Dec. 31, 2017 | $ 125,419 | 125,419 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (75,483) | |||||||
Net transfer from Parent | 43,549 | 43,549 | ||||||
Stock-based compensation expense | 6,074 | $ 6,074 | 2,757 | 2,757 | ||||
Issuance of common stock from initial public offering, net of offering costs (in shares) | 11,747,000 | |||||||
Issuance of common stock from initial public offering | 174,737 | $ 12 | 174,725 | |||||
Initial public offering costs paid | (1,404) | (1,404) | $ (3,148) | $ (3,148) | ||||
Conversion of Net parent investment into common stock (in shares) | 62,500,000 | |||||||
Conversion of Net parent investment into common stock | 62 | $ 62 | 139,030 | (139,030) | ||||
Change in unrealized gains and losses on available-for-sale securities, net of tax | (2) | $ (2) | ||||||
Change in unrealized gains and losses on derivatives, net of tax | $ 2 | 2 | ||||||
Ending balance (in shares) at Dec. 31, 2018 | 74,247,250 | 74,247,000 | ||||||
Ending balance at Dec. 31, 2018 | $ 269,502 | $ 74 | 315,277 | 0 | 0 | $ (45,849) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (45,849) | |||||||
Ending balance (in shares) at Dec. 31, 2018 | 74,247,250 | 74,247,000 | ||||||
Ending balance at Dec. 31, 2018 | $ 269,502 | $ 74 | $ 315,277 | $ 0 | $ 0 | $ (45,849) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (75,483) | $ 6,549 | $ (13,743) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||
Depreciation and amortization | 5,307 | 3,740 | 2,128 |
Stock-based compensation | 8,831 | 2,451 | 1,520 |
Deferred income taxes | (1,108) | (388) | (665) |
Premium amortization/discount accretion on investments, net | (120) | 0 | 0 |
Changes in assets and liabilities: | |||
Accounts receivable, net | (118,651) | (75,838) | (46,338) |
Receivables from NETGEAR, net | (10,274) | 0 | 0 |
Inventories | (42,322) | (35,235) | (22,095) |
Prepaid expenses and other assets | (6,318) | 62 | (2,526) |
Accounts payable | 87,307 | (350) | 11,509 |
Deferred revenue | 11,253 | 24,011 | 14,176 |
Accrued liabilities | 123,214 | 35,990 | 22,859 |
Income taxes payable | 678 | 23 | 105 |
Net cash used in operating activities | (17,686) | (38,985) | (33,070) |
Cash flows from investing activities: | |||
Purchases of property and equipment | (21,666) | (3,578) | (1,482) |
Purchases of short-term investments | (54,619) | 0 | 0 |
Proceeds from maturities of short-term investments | 5,000 | 0 | 0 |
Payments made in connection with business acquisition, net of cash acquired | 0 | (737) | (8,807) |
Net cash used in investing activities | (71,285) | (4,315) | (10,289) |
Cash flows from financing activities: | |||
Proceeds from initial public offering, net of offering costs | 173,395 | 0 | 0 |
Net investment from parent | 70,892 | 43,188 | 43,579 |
Net cash provided by financing activities | 244,287 | 43,188 | 43,579 |
Net increase (decrease) in cash and cash equivalents and restricted cash | 155,316 | (112) | 220 |
Cash and cash equivalents and restricted cash, at beginning of period | 108 | 220 | 0 |
Cash and cash equivalents and restricted cash, at beginning of period | 155,424 | 108 | 220 |
Non-cash investing and financing activities: | |||
Purchases and transfers of property and equipment | 16,003 | 81 | 500 |
Estimated fair value of a facility under build-to-suit lease including tenant improvements | 28,357 | 0 | 0 |
Cash paid for income taxes | $ 89 | $ 0 | $ 0 |
The Company and Basis of Presen
The Company and Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Basis of Presentation | The Company and Basis of Presentation The Company Arlo Technologies, Inc. (“Arlo” or the “Company”) combines an intelligent cloud infrastructure and mobile app with a variety of smart connected devices that transform the way people experience the connected lifestyle. Its cloud-based platform creates a seamless, end-to-end connected lifestyle solution that provides users visibility, insight and a powerful means to help protect and connect with the people and things that matter most to them. Arlo enables users to monitor their environments and engage in real-time with their families and businesses from any location with a Wi-Fi or a cellular network internet connection. The Company conducts business across three geographic regions-Americas; Europe, Middle-East and Africa (“EMEA”); and Asia Pacific (“APAC”)-and primarily generates revenue by selling devices through retail channels, wholesale distribution and wireless carrier channels and paid subscription services through in-app purchases. On February 6, 2018, NETGEAR Inc. (“NETGEAR”) announced that its board of directors had unanimously approved the pursuit of a separation of its Arlo business from NETGEAR (the “Separation”) to be effected through an initial public offering (the “IPO”) of newly issued shares of the common stock of Arlo, then a wholly owned subsidiary of NETGEAR. Following a series of restructuring steps prior to the completion of the IPO of Arlo common stock, the Arlo business was transferred from NETGEAR to Arlo (collectively, the “Contribution”). On August 2, 2018, NETGEAR and Arlo announced the pricing of the IPO of 10,215,000 shares of Arlo’s common stock at a price to the public of $16.00 per share. On August 3, 2018, Arlo’s shares began trading on the New York Stock Exchange under the ticker symbol “ARLO.” On August 7, 2018, the Company completed its IPO of 11,747,250 shares of common stock (including 1,532,250 shares of common stock pursuant to the underwriters’ option to purchase additional shares, which was exercised in full on August 3, 2018), at $16.00 per share, before underwriting discounts and commissions and estimated offering costs. Cash proceeds from the IPO were $173.4 million , net of the portion of the offering cost paid by Arlo, which portion was $1.4 million . The total offering cost was $4.6 million , of which $3.2 million was paid by NETGEAR. Prior to the completion of the IPO, the Company was a wholly owned subsidiary of NETGEAR and upon the closing of the IPO (including the issuance of additional shares of common stock pursuant to the underwriters’ option to purchase additional shares, which was exercised in full) on August 7, 2018, NETGEAR owned approximately 84.2% of the shares of Arlo’s outstanding common stock. In addition, in connection with the Separation and IPO: • On August 2, 2018, the Company amended and restated its Certificate of Incorporation to change the authorized capital stock to 500,000,000 shares of common stock and 50,000,000 shares of preferred stock, all with a par value of $0.001 per share. • On August 2, 2018, the Company issued 62,499,000 shares of its common stock to the Company’s sole stockholder of record, NETGEAR (after which NETGEAR held 62,500,000 shares of common stock of the Company, which represented all of the then issued and outstanding common stock of the Company). This issuance is reflected in the share and per share amounts for the years ended December 31, 2017 and 2016, respectively. • On August 1, 2018, the Company reserved 9,000,000 shares of the Company’s common stock for issuance under the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) and the Company’s 2018 Employee Stock Purchase Plan (the “2018 ESPP”). On December 31, 2018, in connection with the Distribution, which is defined below, the Company also reserved a number of shares sufficient to cover the number of Arlo awards to be issued in respect of NETGEAR’s equity awards. • The Company appointed executive officers and other key roles effective upon the completion of the IPO on August 7, 2018. Effective as of August 2, 2018, the Company also entered into executive confirmatory letters and change in control severance agreements with each of its key executives as well as granted its initial option grants to the Company’s key executives. For further details regarding executive compensation, please refer to the Prospectus (as defined below) in the section titled “Executive Compensation.” On November 29, 2018, NETGEAR announced that its board of directors had approved a special stock dividend (the “Distribution”) to NETGEAR stockholders of the 62,500,000 shares of Arlo common stock owned by NETGEAR, representing approximately 84.2% of the outstanding shares of Arlo common stock. The Distribution was made on December 31, 2018 (the “Distribution Date”) to all NETGEAR stockholders of record as of the close of business on December 17, 2018 (the “Record Date”). In the Distribution, each NETGEAR stockholder of record on the Record Date received 1.980295 shares of Arlo common stock for every share of NETGEAR common stock held on the Record Date, subject to cash in lieu of fractional shares. The Distribution was intended to qualify as generally tax free to NETGEAR stockholders for U.S. federal income tax purposes. On December 31, 2018, in connection with the Distribution, per the terms of the employee matters agreement between Arlo and NETGEAR, certain outstanding awards granted to Arlo employees and NETGEAR employees under NETGEAR’s equity incentive plans were adjusted into Arlo awards under Arlo’s equity incentive plans. Refer to Note 13. Employee Benefit Plans , for details of the adjustment. Basis of Presentation The combined financial statements of Arlo that cover periods ending or as of dates prior to the completion of the IPO have been derived and carved out from the consolidated financial statements and accounting records of NETGEAR as if Arlo had operated on a standalone basis within the periods presented. In connection with the Separation and IPO, certain assets and liabilities presented have been transferred to Arlo at carry-over (historical cost) basis. Balances contributed by NETGEAR on or before the completion of the IPO were based on the master separation agreement between the Company and NETGEAR and related documents governing the Contribution. NETGEAR’s initial net assets contributed were approximately $80.9 million excluding the Accounts receivable of $111.1 million and Accounts payable of $25.5 million balances as of July 1, 2018. In addition, NETGEAR contributed approximately $70.0 million in cash in the period leading up to the separation. The net adjustment to the Company’s historical records was reflected as a net investment from parent. Following the completion of the IPO, the consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All periods presented have been accounted for in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The Company has evaluated all subsequent events through the date the financial statements were issued. Cash Management Arlo was historically funded as part of NETGEAR’s treasury program. Cash and cash equivalents were primarily centrally managed through bank accounts legally owned by NETGEAR. Accordingly, prior to the completion of the IPO, cash and cash equivalents held by NETGEAR at the corporate level were not attributable to Arlo for the periods presented. Only cash amounts legally owned by entities dedicated to the Arlo business are reflected in the consolidated balance sheets. Following the completion of IPO, the Company has maintained a separate cash management and financing function for its operation. Transfers of cash, both to and from NETGEAR’s treasury program, are reflected as a component of Net parent investment in the consolidated balance sheets and as a financing activity on the accompanying consolidated statements of cash flows. Net Parent Investment As the functional departments that make up Arlo were not historically held by a single legal entity, total Net parent investment is shown in lieu of equity in the consolidated financial statements. Balances between Arlo and NETGEAR that were not historically cash settled are included in Net parent investment as of the completion of the IPO on August 7, 2018. Balances between Arlo and NETGEAR that were historically cash settled are included in Prepaid expenses and other current assets and Accrued liabilities on the consolidated balance sheets. Net parent investment represents NETGEAR’s interest in the recorded assets of Arlo and represents the cumulative investment by NETGEAR in Arlo through the dates presented, inclusive of operating results. Allocated Expenses The operating results of Arlo have historically been disclosed as a reportable segment within the consolidated financial statements of NETGEAR enabling identification of directly attributable transactional information, functional departments, and headcount. Through July 1, 2018, Revenue and Cost of revenue, with the exception of channel sales incentives, were derived from transactional information specific to Arlo products and services. Directly attributable operating expenses were derived from activities relating to Arlo functional departments and headcount. Arlo employees also historically participated in NETGEAR’s stock-based incentive plans, in the form of restricted stock units (“RSUs”), stock options, and purchase rights issued pursuant to NETGEAR’s employee stock purchase plan. Stock-based compensation expense has been either directly reported by or allocated to Arlo based on the awards and terms previously granted to NETGEAR’s employees. The combined statements of operations of the Company as presented reflect the directly attributable transactional information specific to Arlo and certain additional allocated costs through July 1, 2018. The allocated costs for corporate functions included, but were not limited to, allocations of general corporate expenses from NETGEAR including expenses related to corporate services, such as executive management, information technology, legal, finance and accounting, human resources, tax, treasury, research and development, sales and marketing, shared facilities and other shared services. These costs were allocated based on revenue, headcount, or other measures the Company has determined as reasonable. Following July 1, 2018, the consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated. Transactions between the Company and NETGEAR are included in these consolidated financial statements for all periods presented. The amount of these allocations from NETGEAR reflected within operating expenses in the consolidated statements of operations was $30.6 million from January 1, 2018 to July 1, 2018, which included $9.4 million for research and development, $10.0 million for sales and marketing, and $11.2 million for general and administrative expense. For the year ended December 31, 2017, allocations amounted to $40.0 million , which included $11.8 million for research and development, $13.1 million for sales and marketing, and $15.1 million for general and administrative expense. For the year ended December 31, 2016, allocations amounted to $20.6 million , which included $5.9 million for research and development, $6.4 million for sales and marketing and $8.3 million for general and administrative expense. The management of Arlo believes the assumptions underlying the consolidated financial statements, including the assumptions regarding the allocated expenses, reasonably reflect the utilization of services provided, or the benefit received by, Arlo during the periods presented. Nevertheless, the consolidated financial statements may not be indicative of Arlo’s future performance and do not necessarily reflect Arlo’s results of operations, financial position, and cash flows had Arlo been a standalone company during the periods presented. Income Taxes During the periods presented in the consolidated financial statements, the operations of Arlo are included in the consolidated U.S. federal and certain state and local and foreign income tax returns filed by NETGEAR, where applicable. Income tax expense and other income tax related information contained in the consolidated financial statements are presented on a separate return basis as if Arlo had filed its own tax returns. The income taxes of Arlo as presented in the consolidated financial statements may not be indicative of the income tax liabilities as of December 31, 2018 that Arlo will incur in the future. Additionally, certain tax attributes such as net operating losses or credit carryforwards have historically been presented on a separate return basis. As a result of the spin-off of Arlo from NETGEAR on December 31, 2018, all net operating losses, with the exception of acquired net operating losses, and tax credit carryforwards determined under the separate return approach that were utilized by NETGEAR or will be retained by NETGEAR were eliminated on December 31, 2018, with an offsetting reduction to our valuation allowance. In jurisdictions where Arlo has been included in the tax returns filed by NETGEAR, any income tax receivables resulting from the related income tax provisions have been reflected in Net parent investment on the consolidated balance sheets. Further, the consolidated financial statements may not be indicative of Arlo’s liability for income taxes under the tax matters agreement entered into with NETGEAR in connection with the IPO, under which, for taxable periods (or portions thereof) beginning after July 2, 2018, Arlo is responsible for and has agreed to indemnify NETGEAR for (i) all income taxes imposed with respect to any consolidated, combined, or unitary tax return of NETGEAR or any of its subsidiaries that includes Arlo or any of its subsidiaries to the extent such taxes are attributable to Arlo or any of its subsidiaries, as determined under the tax matters agreement and (ii) all taxes imposed with respect to any of Arlo’s subsidiaries’ consolidated, combined, unitary, or separate tax returns. Fiscal periods The Company’s fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. The Company reports its results on a fiscal quarter basis rather than on a calendar quarter basis. Under the fiscal quarter basis, each of the first three fiscal quarters ends on the Sunday closest to the calendar quarter end, with the fourth quarter ending on December 31. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Management bases its estimates on various assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The actual results that the Company experiences may differ materially from management’s estimates and assumptions. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Cash and cash equivalents The Company considers all highly liquid investments with an original maturity or a remaining maturity at the time of purchase of three months or less to be cash equivalents. The Company deposits cash and cash equivalents with high credit quality financial institutions. Restricted cash The Company maintains certain cash balances restricted as to withdrawal or use. The restricted cash is comprised primarily of cash used as a collateral for a letter of credit associated with the Company’s lease agreement for its headquarters in San Jose, California. The Company deposits restricted cash with high credit quality financial institutions. The following table totals cash and cash equivalents and restricted cash as reported on the consolidated balance sheet as of December 31, 2018 and 2017, and the sum is presented on the consolidated statements of cash flows: As of December 31, December 31, (In thousands) Cash and cash equivalents $ 151,290 $ 108 Restricted cash 4,134 — Total as presented on the consolidated statements of cash flows $ 155,424 $ 108 Short-term investments Short-term investments are comprised of marketable securities that consist of government securities with an original maturity or a remaining maturity at the time of purchase of greater than three months and no more than 12 months. The marketable securities are held in the Company’s name with a high quality financial institution, which acts as the Company’s custodian and investment manager. These marketable securities are classified as available-for-sale securities in accordance with the provisions of the authoritative guidance for investments and are carried at fair value with unrealized gains and losses reported as a separate component of stockholders’ equity. Fair value measurements The carrying amounts of the Company’s financial instruments, including cash equivalents, restricted cash, short-term investments, accounts receivable, receivables from NETGEAR, net, and accounts payable approximate their fair values due to their short maturities. Foreign currency forward contracts are recorded at fair value based on observable market data. The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Derivative financial instruments The Company and all its subsidiaries designate the U.S. dollar as the functional currency. Changes in exchange rates between the Company’s functional currency and other currencies in which the Company transacts business will cause fluctuations in cash flow expectations and cash flow realized or settled. During the third quarter of fiscal year 2018, the Company entered into foreign currency forward contracts in Australian dollars, British pounds, euros, and Canadian dollars to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses and certain assets and liabilities. The company does not use derivative financial instruments for speculative purposes. Foreign currency forward contracts generally mature within six months of inception. Under its foreign currency risk management strategy, the Company utilizes derivative instruments to reduce the impact of currency exchange rate movements on the Company’s operating results by offsetting gains and losses on the forward contracts with increases or decreases in foreign currency transactions. The Company accounts for its derivative instruments as either assets or liabilities and records them at fair value. Derivatives that are not defined as hedges in the authoritative guidance for derivatives and hedging must be adjusted to fair value through earnings. The Company may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, materiality, accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange rates. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with the authoritative guidance for derivatives and hedging. Cash flow hedges To help manage the exposure of operating margins to fluctuations in foreign currency exchange rates, the Company hedges a portion of its anticipated foreign currency revenue, costs of revenue and certain operating expenses. These hedges are designated at the inception of the hedge relationship as cash flow hedges. The effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss) (“AOCI”) in stockholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in current earnings. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur within the designated hedge period or if not recognized within 60 days following the end of the hedge period. Deferred gains and losses in AOCI with such derivative instruments are reclassified immediately into earnings through Other income (expense), net. Any subsequent changes in fair value of such derivative instruments also are reflected in current earnings unless they are re-designated as hedges of other transactions. Non-designated hedges The Company enters into non-designated hedges under the authoritative guidance for derivatives and hedging to manage the exposure of non-functional currency monetary assets and liabilities held on its financial statements to fluctuations in foreign currency exchange rates, as well as to reduce volatility in other income and expense. The non-designated hedges are generally expected to offset the changes in value of its net non-functional currency asset and liability position resulting from foreign exchange rate fluctuations. Foreign currency denominated accounts receivable and payable are hedged with non-designated hedges when the related anticipated foreign revenue and expenses are recognized in the Company’s financial statements. Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of principally investments, derivative financial instruments, and accounts receivable. The Company believes that there is minimal credit risk associated with the investment of its cash and cash equivalents, restricted cash, and short-term investments, due to the restrictions placed on the type of investment that can be entered into under the Company’s investment policy. The Company’s short-term investments consist of investment-grade securities, and the Company’s cash and investments are held and managed by high credit quality financial institutions. The Company is exposed to credit loss in the event of nonperformance by counterparties to the foreign currency forward contracts used to mitigate the effect of foreign currency exchange rate changes. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any counterparty. The Company’s foreign currency forward contracts do not contain any credit-risk-related contingent features. In addition, the derivative contracts typically mature in less than six months and the Company continuously evaluates the credit standing of its counterparty financial institutions. The counterparties to these arrangements are large highly rated financial institutions and the Company does not consider non-performance a material risk. The Company believes the counterparties for its outstanding contracts are large, financially sound institutions and thus, the Company does not anticipate nonperformance by these counterparties. The Company’s customers are primarily retailers and wholesale distributors who sell or distribute the products to a large group of end-users. The Company regularly performs credit evaluations of the Company’s customers’ financial condition and considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks and current economic conditions that may affect customers’ ability to pay. The Company does not require collateral from its customers. Historically, a substantial portion of the Company’s revenue has been derived from a limited number of retailers and wholesale distribution partners. As of December 31, 2018 , two customers accounted for 36.4% and 18.0% of the Company’s total accounts receivable, net, respectively. As of December 31, 2017 , two customers accounted for 45.6% and 11.3% of the Company’s total accounts receivable, net, respectively. No other customer accounted for 10% or greater of the Company’s total accounts receivable, net. Allowance for doubtful accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The allowance for doubtful accounts is reviewed periodically and adjusted if necessary based on the Company’s assessments of its customers’ ability to pay. If the financial condition of the Company’s customers should deteriorate or if actual defaults are higher than the Company’s historical experience, additional allowances may be required, which could have an adverse impact on operating expenses. Inventories Inventories consist of finished goods which are valued at the lower of cost or net realizable value, with cost being determined using the first-in, first-out method. The Company writes down its inventories based on estimated excess and obsolete inventories determined primarily based on demand forecasts, but takes into account market conditions, product development plans, product life expectancy and other factors. At the point of loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase of the newly established cost basis. While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is risk that additional charges may be necessary if current forecasts are greater than actual demand. Property and equipment, net Property and equipment are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Asset Category: Range of Useful Lives Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of remaining lease term or 5 years Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying value of the asset is reviewed on a regular basis for the existence of facts, both internal and external, that may suggest impairment. There was no impairment loss of property and equipment for the years ended December 31, 2018 and charges related to the impairment of property and equipment were insignificant in 2017. Goodwill Goodwill pertained to the acquisitions of Avaak, Inc. (“Avaak”) and Placemeter, Inc. (“Placemeter”). Goodwill represents the purchase price over estimated fair value of net assets of businesses acquired in a business combination. The Company performs an annual impairment assessment of goodwill at the reporting unit level on the first day of the fourth fiscal quarter. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. Should certain events or indicators of impairment occur between annual impairment tests, the Company will perform the impairment test as those events or indicators occur. Examples of such events or circumstances include a significant decline in the Company’s expected future cash flows, a sustained, significant decline in the Company’s stock price and market capitalization, a significant adverse change in the business climate and slower growth rates. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying amount. The qualitative assessment considers macroeconomic conditions, industry and market considerations, cost factors, overall company financial performance, events affecting the reporting units, and changes in the Company’s stock price. If the reporting unit does not pass the qualitative assessment, the Company estimates its fair value and compares the fair value with the carrying amount of its reporting unit, including goodwill. If the fair value is greater than the carrying amount of its reporting unit, no impairment is recorded. Goodwill is also tested for impairment by performing a quantitative assessment, which is used to identify both the existence of impairment and the amount of impairment loss. The quantitative assessment compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value is less than the carrying amount, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The impairment charge, if any would be recorded to earnings in the consolidated statements of operations. A quantitative assessment of goodwill was performed on the first day of the fourth quarter of fiscal 2018, or October 1, 2018. The Company identified that it has one reporting unit for the purpose of goodwill impairment testing and the reporting unit is at the same level as its operating segment and reportable segment. The Company utilized its market capitalization as a proxy for fair value of the business and compared it to the carrying amount as of October 1, 2018. Based on the results of the quantitative assessment, the respective fair value was substantially in excess of the carrying amount by $772 million , or 253% . The Company updated its quantitative test as of December 31, 2018 at which time the fair value of the business was substantially in excess of the carrying amount by $471 million , or 175% . A qualitative assessment of goodwill was performed on the first day of the fourth quarter of fiscal 2017 or October 2, 2017. The Company assessed economic conditions and industry and market considerations, in addition to the overall financial performance of the Company. Based on the results of the qualitative assessment, the respective fair value was substantially in excess of the carrying amount. The Company determined that it was more likely than not that the fair value was greater than its carrying amount and therefore performing the next step of impairment testing was unnecessary. No goodwill impairment was recognized for the years ended December 31, 2018 and 2017. The Company does not believe it is likely that there will be a material change in the estimates or assumptions the Company uses to test for impairment loss on goodwill. However, if the actual result is not consistent with the Company’s estimates or assumptions, the Company may be exposed to an impairment charge that could be material. Refer to Note 16, Subsequent Events , for additional considerations for goodwill after year end. Intangibles, net Intangibles, net pertained to the acquisitions of Avaak and Placemeter. Purchased intangibles with finite lives are amortized using the straight-line method over the estimated economic useful life, which range from three to five years. Finite-lived intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Examples of such events or circumstances include: a significant decrease in the market price of the asset, a significant decline in the Company’s expected future cash flows, significant changes or planned changes in its use of the assets, and a significant adverse change in the business climate. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of the asset exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying amount of the asset is reviewed on a regular basis for the existence of facts, both internal and external, that may suggest impairment. During the years ended December 31, 2018 and 2017, there were no events or changes in circumstances that indicated the carrying amount of the Company’s finite-lived assets may not be recoverable from their undiscounted cash flows. Consequently, the Company did not perform an impairment test and did not record any impairments to intangibles for the years ended December 31, 2018 and 2017. Revenue recognition under ASC 606 Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The majority of revenue comes from sales of hardware products to customers (retailers, distributors, and service providers). Revenue is recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery, dependent upon the terms of the underlying contract. The amount recognized reflects the consideration the Company expects to be entitled to in exchange for the transferred goods. The Company sells subscription paid services to its end user customers where it provides customers access to its cloud services. Revenue for subscription sales is generally recognized on a ratable basis over the contract term, beginning on the date that the service is made available to the customers at the time of registration. The subscription contracts are generally 30 days or 12 months in length, billed in advance. All such service or support sales are typically recognized using an output measure of progress by looking at the time elapsed, as the contracts generally provide the customer equal benefit throughout the contract period. In addition to selling paid subscriptions, the Company also sells services bundled with hardware products and accounts for these sales in line with the multiple performance obligations guidance. Revenue from all sales types is recognized at transaction price, which is the amount the Company expects to be entitled to in exchange for transferring goods or providing services. Transaction price is calculated as selling price net of variable consideration which may include estimates for future returns, sales incentives, and price protection related to current period product revenue. The Company’s standard obligation to its direct customers generally provides for a full refund in the event that such product is not merchantable or is found to be damaged or defective. In determining estimates for future returns, management analyzes historical data, channel inventory levels, current economic trends, and changes in customer demand for the Company’s products. Sales incentives and price protection are determined based on a combination of the actual amounts committed and through estimating future expenditure based upon historical customary business practice. Typically variable consideration does not need to be constrained as estimates are based on predictive historical data or future commitments that are planned and controlled by the Company. However, the Company continues to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. Contracts with multiple performance obligations Some of the Company’s contracts with customers contain multiple promised goods or services. Such contracts include hardware products with bundled services, various subscription services, and support. For these contracts, the Company accounts for the promises separately as individual performance obligations if they are distinct. Performance obligations are determined to be considered distinct if they are both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. The embedded software in most of the hardware products is not considered distinct and therefore the combined hardware and incidental software are treated as one performance obligation and recognized at the point in time when control of product transfers to the customer. Services that are included with certain hardware products are considered distinct and therefore the hardware and service are treated as separate performance obligations. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are generally determined based on the prices charged to customers or using an adjusted market assessment. Standalone selling price of the hardware is directly observable from add-on camera and base station sales. Standalone selling price of the premium services are directly observable from sales direct to end users while the service is estimated using an adjusted market approach. Revenue is then recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware is recognized at the time control of the product transfers to the customer. The transaction price allocated to the service is recognized over the specified service period or over the estimated useful life of the hardware, beginning when the customer is expected to activate their account. Useful life of the hardware is determined by industry norms, technical and financial relevance, frequency of new model releases, and user history. Warranties Sales of hardware products regularly include warranties to end customers that cover bug fixes, minor updates such that the product continues to function according to published specifications in a dynamic environment, and phone support. These standard warranties are assurance type warranties and do not offer any services in addition to the assurance that the product will continue working as specified for one or more years. Therefore, warranties are not considered separate performance obligations in the arrangement. Instead, the expected cost of warranties is accrued as an expense in accordance with authoritative guidance. Sales incentives The Company accrues for sales incentives as a marketing expense if it receives an identifiable benefit in exchange and can reasonably estimate the fair value of the identifiable benefit received; otherwise, it is recorded as a reduction to revenues. As a consequence, the Company records a substantial portion of its channel marketing costs as a reduction of revenue. The Company records estimated reductions to revenue for sales incentives when the related revenue is recognized or ahead of customer or end customer commitment if customary business practice creates an implied expectation that such activities will occur in the future. Shipping and handling costs The Company includes shipping and handling fees billed to customers in Revenue. Shipping and handling costs associated with inbound freight are included in Cost of revenue. In cases where the Company gives a freight allowance to the customer for their own inbound freight costs, such costs are appropriately recorded as a reduction in Revenue. Shipping and handling costs associated with outbound freight are included in Sales and marketing expenses. The Company has elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs associated with outbound freight totaled $3.7 million , $2.8 million and $1.5 million for the year ended December 31, 2018 , 2017 and 2016, respectively. Contract costs Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in sales and marketing and general and administrative expenses. If the incremental costs of obtaining a contract, which consist of sales commissions, relate to a service recognized over a period longer than one year, costs are deferred and amortized in line with the related services over the period of benefit. Deferred commissions are classified as non-current based on the original amortization period of over one year. As of December 31, 2018 , deferred commissions were not significant. Contract balances The Company records accounts receivable when it has an unconditional right to consideration. Contract liabilities are recorded when cash payments are received or due in advance of performance. Contract liabilities consist of advance payments and deferred revenue, where the Company has unsatisfied performance obligations. Contract liabilities are classified as Deferred revenue on the consolidated balance sheets. Payment terms vary by customer. The time between invoicing and when payment is due is not significant. For certain products or services and customer types, payment is required before the products or services are delivered to the customer. Refer to Note 3, Revenue Recognition, for detailed disclosures regarding changes in contract balances for the year ended December 31, 2018 . Revenue recognition under ASC 605 Revenue from product sales is generally recognized at the time the product is shipped, provided that persuasive evidence of an arrangement exists, title and risk of loss has transferred to the customer, the selling price is fixed or determinable and collection of the related receivable is reasonably assured. Currently, for some of the Company’s customers, title passes to the customer upon delivery to the port or country of destination, upon their receipt of the product, or upon the customer’s resale of the product. At the end of each fiscal quarter, the Company estimates and defers revenue related to product where title has not transferred. The revenue continues to be deferred until such time that title passes to the customer. The Company assesses collectability based on a number of factors, including general economic and market conditions, past transaction history with the customer, and the creditworthiness of the customer. If the Company determines that collection is not reasonably assured, then revenue is deferred until receipt of the payment from the customer. A large majority of the Company’s product offerings consist of multiple elements. The Company’s multiple-element product offerings include hardware with services, which are considered separate units of accounting. In general, the hardware is delivered up front, while the services are delivered over the stated service period, or the estimated useful life. The services are delivered over the service period whether included in a multiple-element offering or not. The Company allocates revenue to the deliverables based upon their relative selling price. Revenue allocated to each unit of accounting is then recognized when persuasive evidence of an arrangement exists, title and risk of loss has transferred to the customer, the selling price is fixed or determinable and collection of the related receivable is reasonably assured. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of fair value of the deliverable, or when VSOE of fair value is unavailable, its best estimate of selling price (“ESP”), as the Company has determined it is unable to establish third-party evidence of selling price for the deliverables. In determining VSOE, the Company requires that a substantial majority of the selling prices for a deliverable sold on a stand-alone basis fall within a reasonably narrow pricing range, generally evidenced by approximately 80% of such historical stand-alone transactions falling within +/-15% of the median price. The Company determines ESP for a deliverable by considering multiple factors, including, but not limited to, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The objective of ESP is to determine the price at which the Company would transact a sale if the deliverable were sold on a stand-alone basis. The determination of ESP is made through consultation with and formal approval by the Company’s management, taking into consideration the go-to-market strategy. Certain distributors and retailers generally have the right to return product for stock rotation purposes. Upon shipment of the product, the Company reduces revenue for an estimate of potential future product warranty and stock rotation returns related to the current period product revenue. Management analyzes historical returns, channel inventory levels, current economic trends and changes in customer demand for the Company’s products when evaluating the adequacy of the allowance for sales returns, namely warranty and stock rotation returns. Revenue on shipments is also reduced for estimated price protection and sales incentives deemed to be contra-revenue under the authoritative guidance for revenue recognition. The Company accrues for sales incentives as a marketing expense if it receives an identifiable benefit in exchange and can reasonably estimate the fair value of the identifiable benefit received; otherwise, it is recorded as a reduction to revenues. As a consequence, the Company records a substantial portion of its channel marketing costs as a reduction of revenue. The Company records estimated reductions to revenues for sales incentives at the later of when the related revenue is recognized or when the program is offered to the customer or end consumer. Research and development Costs incurred in the research and development of new products are expensed as incurred. Advertising costs Advertising costs are expensed as incurred. Total advertising and promotional expenses were $10.8 million , $10.8 million and $6.2 million for the years ended December 31, 2018 , 2017 and 2016, respectively. Stock-based compensation The Company’s employees have historically participated in NETGEAR’s stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the Company’s employees as well as an allocation of NETGEAR’s co |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Adoption of ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASC 606”) and applied this guidance to those contracts which were not completed at the date of adoption using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods (“ASC 605”). The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to Net parent investment effective January 1, 2018. The majority of sales revenue continues to be recognized when control of the product transfers to a customer upon shipment or delivery. The primary impact of adopting ASC 606 relates to the establishment of liability estimates for channel rebates and discounts upon revenue recognition on the basis of customary business practice. Under ASC 606, the Company is required to account for rebates and discounts ahead of commitment date if customary business practice creates an implied expectation that such activities will occur in the future. The Company utilizes channel rebates and discounts to stimulate end user demand. Consequently, this change in guidance results in an adjustment to the statement of financial position to accelerate the recording of liabilities for yet to be committed channel marketing rebates and discounts upon adoption. Further, under ASC 606, deferred revenue balances are to be booked at an amount that reflects only the amounts expected to be received for future obligations. As such, an adjustment was made to allocate variable consideration to deferred revenue. Additionally, the balance sheet presentation of certain reserve balances previously shown net within Accounts receivable are now presented as refund liabilities within Accrued liabilities and deferrals for undelivered shipments with destination shipping terms are now removed from receivables and deferred revenue. The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated balance sheet for the fiscal year beginning January 1, 2018 as an adjustment to the opening balances: As of Adjustments As of December 31, January 1, (In thousands) Assets: Accounts receivable, net $ 157,680 $ 827 $ 158,507 Inventories $ 82,952 $ (377 ) $ 82,575 Other non-current assets $ 2,193 $ 244 $ 2,437 Liabilities: Accounts payable $ 20,711 $ (48 ) $ 20,663 Deferred revenue $ 34,072 $ (9,326 ) $ 24,746 Accrued liabilities $ 76,097 $ 13,370 $ 89,467 Non-current deferred revenue $ 13,332 $ (241 ) $ 13,091 Equity: Net parent investment $ 125,419 $ (3,061 ) $ 122,358 The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated balance sheet as of December 31, 2018 : As reported Adjustments Balance without adoption of ASC 606 (In thousands) Assets Accounts receivable, net $ 166,045 $ (16,123 ) $ 149,922 Inventories $ 124,791 $ 115 $ 124,906 Other non-current assets $ 8,449 $ — $ 8,449 Liabilities: Accounts payable $ 82,542 $ (227 ) $ 82,315 Deferred revenue $ 26,678 $ 976 $ 27,654 Accrued liabilities $ 172,036 $ (29,627 ) $ 142,409 Non-current deferred revenue $ 23,313 $ 3,176 $ 26,489 Stockholders ’ Equity: Accumulated deficit $ (45,849 ) $ 9,694 $ (36,155 ) The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated statement of operations for the year ended December 31, 2018 : As reported Adjustments Balance without adoption of ASC 606 (In thousands) Revenue $ 464,918 $ 6,958 $ 471,876 Cost of revenue $ 372,843 $ 262 $ 373,105 Gross profit $ 92,075 $ 6,696 $ 98,771 Provision for income taxes $ 772 $ 63 $ 835 Net loss $ (75,483 ) $ 6,633 $ (68,850 ) Transaction Price Allocated to the Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. Non-cancellable backlog includes goods and services for which customer purchase orders have been accepted and that are scheduled or in the process of being scheduled for shipment. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2018 : 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 47,024 $ 15,412 $ 8,323 $ 70,759 The majority of the performance obligation over one year pertains to revenue deferral from prepaid services offering. Contract Balances The following table reflects the changes in contract balances for the year ended December 31, 2018 : Balance Sheet Location December 31, 2018 January 1, 2018 (1) $ change % change (In thousands) Accounts receivable, net Accounts receivable, net $ 166,045 $ 158,507 $ 7,538 4.8 % Contract liabilities - current Deferred revenue $ 26,678 $ 24,746 $ 1,932 7.8 % Contract liabilities - non-current Non-current deferred revenue $ 23,313 $ 13,091 $ 10,222 78.1 % _________________________ (1) Includes the adjustments made to those contracts which were not completed at the date of ASC 606 adoption using the modified retrospective method. For the year ended December 31, 2018 , contract liabilities increased primarily as a result of increased sales of products with multiple performance obligations, where cash payments are received or due in advance of satisfying the service-related performance obligations. For the year ended December 31, 2018 , $50.9 million of revenue was deferred due to unsatisfied performance obligations, primarily relating to over time service revenue, and $38.8 million of revenue was recognized for the satisfaction of performance obligations over time. $24.7 million of this recognized revenue was included in the contract liability balance at the beginning of the period. There were no significant changes in estimates during the period that would affect the contract balances. Disaggregation of Revenue The Company conducts business across three geographic regions: Americas, EMEA, and APAC. Sales and usage-based taxes are excluded from revenue. Refer to Note 14, Segment and Geographic Information , for revenue by geography. |
Business Acquisition
Business Acquisition | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Business Acquisition | Business Acquisition Placemeter, Inc. On November 30, 2016 , the Company acquired Placemeter, a computer vision analytics company, for total purchase consideration of $9.6 million . The Company believes that Placemeter’s engineering talent added substantial value to the Arlo smart security team, and that Placemeter’s proprietary computer vision algorithms helped to build leading video analytics solutions for the Arlo platform. The Company paid $8.8 million of the aggregate purchase price in the fourth fiscal quarter of 2016 and paid the remaining $0.8 million in the first fiscal quarter of 2017. The acquisition qualified as a business combination and was accounted for using the acquisition method of accounting. The allocation of the purchase price was as follows (in thousands): Cash and cash equivalents $ 8 Accounts receivable 11 Prepaid expenses and other current assets 130 Property and equipment 83 Intangibles 6,000 Goodwill 3,742 Accounts payable (40 ) Accrued liabilities (74 ) Deferred tax liabilities (308 ) Total purchase price $ 9,552 The $3.7 million of goodwill recorded on the acquisition of Placemeter is not deductible for U.S. federal or U.S. state income tax purposes. The goodwill recognized is primarily attributable to expected synergies resulting from the acquisition. In connection with the acquisition, the Company recorded $0.3 million of deferred tax liabilities net of deferred tax assets. The deferred tax liabilities were recorded for the book basis of intangible assets for which the Company has no tax basis. The deferred tax liabilities are reduced by the tax benefit of the net operating losses as of the date of the acquisition after consideration of limitations on their use under U.S. Internal Revenue Code section 382. The Company designated $5.5 million of the acquired intangibles as software technology and a further $0.2 million of the acquired intangibles as a video library database. The valuations were derived using the replacement cost method, with consideration given to the estimated time, investment and resources required to recreate the acquired intangibles. A discount rate of 15.0% was used in the valuation of each intangible. The acquired intangibles are being amortized over an estimated useful life of four years . The Company designated $0.3 million of the acquired intangibles as non-compete agreements. The value was calculated based on the present value of the future estimated cash flows derived from projections of future operations attributable to the non-compete agreements and discounted at 20.0% . The acquired agreements are being amortized over an estimated useful life of three years . Pro forma financial information The unaudited pro forma financial information in the table below summarizes the combined results of the Company’s operations and those of Placemeter for the periods shown as though the acquisition of Placemeter occurred as of January 1, 2016. The pro forma financial information for the periods presented includes the accounting effects of the business combination, including adjustments to acquisition-related costs, integration expenses and related tax effects of these adjustments, where applicable. This pro forma financial data is for informational purposes only, is subject to a number of estimates, assumptions and other uncertainties, and may not be indicative of the results of operations that would have been achieved if the acquisition had taken place at January 1, 2016. The unaudited pro forma financial information is as follows (in thousands): Year Ended December 31, 2016 Revenue $ 184,744 Net loss (18,258 ) |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | Balance Sheet Components Available-for-sale short-term investments As of December 31, 2018 Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. treasuries $ 49,739 $ 2 $ (4 ) $ 49,737 The Company’s short-term investments are classified as available-for-sale and consist of government securities with an original maturity or remaining maturity at the time of purchase of greater than three months and no more than twelve months. Accordingly, none of the available-for-sale securities have unrealized losses greater than twelve months. As of December 31, 2017 , the Company had no short-term investments. Accounts receivable, net As of December 31, December 31, (In thousands) Gross accounts receivable $ 166,172 $ 164,157 Allowance for doubtful accounts (127 ) (207 ) Allowance for sales returns (1) — (5,868 ) Allowance for price protection (1) — (402 ) Total allowances (127 ) (6,477 ) Total accounts receivable, net $ 166,045 $ 157,680 _________________________ (1) Upon adoption of ASC 606, allowances for sales returns and price protection were reclassified to current liabilities as these reserve balances are considered refund liabilities. Refer to Note 3. Revenue Recognition , for additional information on the adoption impact. Property and equipment, net The consolidated balance sheets include the property and equipment specifically identifiable to Arlo’s business and acquired by Arlo. The components of property and equipment are as follows: As of December 31, December 31, (In thousands) Machinery and equipment $ 11,415 $ 6,067 Software 10,624 180 Computer equipment 4,342 50 Leasehold improvements 3,007 530 Furniture and fixtures 2,698 443 Construction in progress (1) 28,357 — Total property and equipment, gross 60,443 7,270 Accumulated depreciation (11,015 ) (3,387 ) Total property and equipment, net $ 49,428 $ 3,883 _________________________ (1) The Company has a build-to-suit lease arrangement for its headquarters lease in San Jose, California. Refer to Note 12, Commitments and Contingencies , for details of this lease. The construction is expected to be completed in March 2019. Depreciation expense pertaining to property and equipment was $3.8 million , $1.8 million and $0.7 million for the years ended December 31, 2018 , 2017 and 2016, respectively. During the fiscal 2018, prior to the completion of the IPO, allocated depreciation expense from NETGEAR was $1.2 million . Allocated depreciation expense from NETGEAR was $2.0 million and $1.4 million for the years ended December 31, 2017 and 2016, respectively. The consolidated statements of operations include both the depreciation expense directly identifiable as Arlo’s and allocated depreciation expense from NETGEAR for the periods presented prior to the completion of the IPO. Refer to Note 1, The Company and Basis of Presentation , for detailed disclosures regarding the methodology used for corporate expense allocation. Intangibles, net As of December 31, 2018 As of December 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 9,800 $ (7,165 ) $ 2,635 $ 9,800 $ (5,790 ) $ 4,010 Trademarks and trade names 1,400 (1,400 ) — 1,400 (1,400 ) — Other 800 (612 ) 188 800 (462 ) 338 Total intangibles, net $ 12,000 $ (9,177 ) $ 2,823 $ 12,000 $ (7,652 ) $ 4,348 As of December 31, 2018 and 2017, the remaining weighted-average estimated useful life of intangibles was two years and three years, respectively. Amortization of intangibles was $1.5 million , $1.9 million and $1.4 million for the years ended December 31, 2018 , 2017 and 2016, respectively. No impairment charges were recorded for all periods presented. As of December 31, 2018 , estimated amortization expense related to finite-lived intangibles for the remaining years was as follows (in thousands): 2019 $ 1,517 2020 1,306 Total estimated amortization expense $ 2,823 Goodwill In the year ended December 31, 2016, the Company acquired Placemeter. Refer to Note 4, Business Acquisition , for detailed disclosures. There was no change in the carrying amount of goodwill during the years ended December 31, 2018 and 2017. The goodwill as of December 31, 2018 , 2017 and 2016 was as follows (in thousands): As of December 31, 2016 $ 15,638 As of December 31, 2017 $ 15,638 As of December 31, 2018 $ 15,638 Refer to Note 16, Subsequent Events , for additional considerations for goodwill after year end. Other non-current assets As of December 31, December 31, 2017 (In thousands) Non-current deferred income taxes $ 1,108 $ 865 Deposits 4,084 — Other 3,257 1,328 Total other non-current assets $ 8,449 $ 2,193 Accrued liabilities As of December 31, December 31, (In thousands) Sales and marketing $ 75,863 31,613 Sales returns 49,247 — Warranty obligation 3,712 31,756 Accrued employee compensation 11,897 3,184 Freight 3,913 3,862 Current financing lease obligation 1,632 — Other 25,772 5,682 Total accrued liabilities $ 172,036 $ 76,097 Upon adoption of ASC 606 on January 1, 2018, warranty reserve balances totaling $28.7 million were reclassified to sales returns as these liabilities are payable to the Company’s customers and settled in cash or by credit on account. Under ASC 606, these amounts are to be accounted for as sales with right of return. The Company has a build-to-suit lease arrangement for its headquarters lease in San Jose, California. $20.0 million was included in Non-current financing lease obligation and $1.6 million in Current financing lease obligation on the Company’s consolidated financial statements as of December 31, 2018 . Refer to Note 12, Commitments and Contingencies , for details of this lease. The construction is expected to be completed in March 2019. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following tables summarize assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 : As of December 31, 2018 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) (In thousands) Assets: Cash equivalents: U.S. treasuries (<90 days) $ 438 $ 438 $ — Available-for-sale securities: U.S. treasuries (1) 49,737 49,737 — Foreign currency forward contracts (2) 322 — 322 Total assets measured at fair value $ 50,497 $ 50,175 $ 322 Liabilities: Foreign currency forward contracts (3) $ 71 $ — $ 71 Total liabilities measured at fair value $ 71 $ — $ 71 _________________________ (1) Included in Short-term investments on the Company’s consolidated balance sheets. (2) Included in Prepaid expenses and other current assets on the Company’s consolidated balance sheets. (3) Included in Accrued liabilities on the Company’s consolidated balance sheets. The Company’s investments in cash equivalents and available-for-sale securities are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company enters into foreign currency forward contracts with only those counterparties that have long-term credit ratings of A-/A3 or higher. The Company’s foreign currency forward contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that take into account the contract terms as well as currency rates and counterparty credit rates. The Company verifies the reasonableness of these pricing models using observable market data for related inputs into such models. Additionally, the Company includes an adjustment for non-performance risk in the recognized measure of fair value of derivative instruments. As of December 31, 2018 , the adjustment for non-performance risk did not have a material impact on the fair value of the Company’s foreign currency forward contracts. The carrying value of non-financial assets and liabilities measured at fair value in the financial statements on a recurring basis, including accounts receivable and accounts payable, approximate fair value due to their short maturities. As of December 31, 2018 , the Company has no Level 3 fair value assets or liabilities. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments During the third quarter of fiscal year 2018, the Company entered into foreign currency forward contracts in Australian dollars, British pounds, euros, and Canadian dollar to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses and existing assets and liabilities. Fair value of derivative instruments The fair values of the Company’s derivative instruments and the line items on the consolidated balance sheets to which they were recorded as of December 31, 2018 are summarized as follows: Derivative Assets Balance Sheet Location December 31, 2018 Balance Sheet Location December 31, 2018 (In thousands) (In thousands) Derivative assets not designated as hedging instruments Prepaid expenses and other current assets $ 293 Other accrued liabilities $ 46 Derivative assets designated as hedging instruments Prepaid expenses and other current assets 29 Other accrued liabilities 25 Total $ 322 $ 71 Refer to Note 6, Fair Value Measurements, for detailed disclosures regarding fair value measurements in accordance with the authoritative guidance for fair value measurements and disclosures. Gross amounts offsetting of derivative instruments The Company has entered into master netting arrangements which allow net settlements under certain conditions. Although netting is permitted, it is currently the Company’s policy and practice to record all derivative assets and liabilities on a gross basis in the consolidated balance sheets. The following tables set forth the offsetting of derivative assets and liabilities as of December 31, 2018 : As of December 31, 2018 Gross Amounts Not Offset in the Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Of Assets Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 100 $ — $ 100 $ — $ — $ 100 Wells Fargo Bank 222 — 222 (68 ) — 154 Total $ 322 $ — $ 322 $ (68 ) $ — $ 254 As of December 31, 2018 Gross Amounts Not Offset in the Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) JP Morgan $ 3 $ — $ 3 $ — $ — $ 3 Wells Fargo Bank 68 — 68 (68 ) — — Total $ 71 $ — $ 71 $ (68 ) $ — $ 3 Cash flow hedges The Company typically hedges portions of its anticipated foreign currency exposure which generally are less than six months. The Company entered into eight forward contracts per quarter with an average size of $3.0 million USD equivalent related to its cash flow hedging program. The effects of the Company’s cash flow hedges on the consolidated statements of operations for the year ended December 31, 2018 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Year Ended December 31, 2018 Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 464,918 $ 372,843 $ 58,794 $ 52,593 $ 28,209 Gains (losses) on cash flow hedge $ 315 $ — $ (2 ) $ (28 ) $ (11 ) The Company expects to reclassify to earnings all of the amounts recorded in AOCI associated with its cash flow hedges over the next twelve months. For information on the unrealized gains or losses on derivatives reclassified out of AOCI into the consolidated statements of operations, refer to Note 8, Accumulated Other Comprehensive Income (Loss). Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur within the designated hedge period or if not recognized within 60 days following the end of the hedge period. The Company did not recognize any material net gains or losses related to the loss of hedge designation as there were no discontinued cash flow hedges during the year ended December 31, 2018 . Non-designated hedges The Company adjusts its non-designated hedges monthly and enters into about five non-designated derivative per quarter with an average size of $3.5 million USD equivalent. The hedges range typically from one to three months in duration. The effects of the Company’s non-designated hedge included in Other income (expense), net on the consolidated statements of operations for the year ended December 31, 2018 are as follows: Derivatives Not Designated as Hedging Instruments Location of Gains (Losses) Recognized in Income on Derivative December 31, 2018 (In thousands) Foreign currency forward contracts Other income (expense), net $ 589 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) (Notes) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table sets forth the changes in accumulated other comprehensive income (loss) (“AOCI”) by component for the year ended December 31, 2018 : Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2017 $ — $ — $ — $ — Other comprehensive income (loss) before reclassifications (2 ) 276 — 274 Less: Amount reclassified from accumulated other comprehensive income (loss) — 274 — 274 Net current period other comprehensive income (loss) (2 ) 2 — — Balance as of December 31, 2018 $ (2 ) $ 2 $ — $ — The following tables provide details about significant amounts reclassified out of each component of AOCI for the year ended December 31, 2018 : Gains (Losses) Recognized in OCI - Effective Portion Gains (Losses) Reclassified from OCI to Income - Effective Portion Affected Line Item in the Statements of Operations (In thousands) Gains (losses) on cash flow hedge: Foreign currency contracts $ 276 $ 315 Revenue Foreign currency contracts — — Cost of revenue Foreign currency contracts — (2 ) Research and development Foreign currency contracts — (28 ) Sales and marketing Foreign currency contracts — (11 ) General and administrative $ 276 $ 274 Total * _________________________ * There is no tax impact on all hedging gains and losses from derivative contracts due to the Company’s full valuation allowance of its deferred tax assets. |
Other Income (Expense), Net (No
Other Income (Expense), Net (Notes) | 12 Months Ended |
Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Other Income (Expense), Net | Other Income (Expense), Net Other income (expense), net consisted of the following: Year Ended December 31, 2018 2017 2016 (In thousands) Foreign currency transaction gain (loss), net $ (1,819 ) $ 1,946 $ (512 ) Foreign currency contract gain 589 — — Other 53 — — Total $ (1,177 ) $ 1,946 $ (512 ) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income before income taxes and the provision for income taxes consisted of the following: Year Ended December 31, 2018 2017 2016 (In thousands) United States $ (79,581 ) $ 3,318 $ (15,432 ) International 4,870 4,359 1,772 Total $ (74,711 ) $ 7,677 $ (13,660 ) Year Ended December 31, 2018 2017 2016 (In thousands) Current: U.S. Federal $ — $ — $ — State 16 260 22 Foreign 1,425 1,255 727 1,441 1,515 749 Deferred: U.S. Federal — (66 ) (129 ) State — — (180 ) Foreign (669 ) (321 ) (357 ) (669 ) (387 ) (666 ) Total $ 772 $ 1,128 $ 83 Net deferred tax assets consisted of the following: Year Ended December 31, 2018 2017 (In thousands) Deferred Tax Assets: Accruals and allowances $ 17,974 $ 7,339 Net operating loss carryforwards 2,946 3,478 Stock-based compensation 1,927 931 Deferred rent 373 — Deferred revenue 2,573 1,688 Tax credit carryforwards — 3,504 Depreciation and amortization 567 — Total deferred tax assets 26,360 16,940 Deferred Tax Liabilities: Depreciation and amortization (775 ) (464 ) Total deferred tax liabilities (775 ) (464 ) Valuation Allowance (24,477 ) (15,611 ) Net deferred tax assets $ 1,108 $ 865 Realization of the Company’s deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of its lack of U.S. earnings history, the net U.S. federal and state deferred tax assets have been fully offset by a valuation allowance. As of December 31, 2018 and 2017, the valuation allowance was $24.5 million and $15.6 million , respectively. Accordingly, the valuation allowance increased by $8.9 million during 2018 mainly caused by the increase in accruals and allowance with an offset in the decrease of tax credit carryforwards. The deferred tax asset related to tax credit carryforwards was decreased to zero in 2018 as a result of transferring the attributes to NETGEAR per the tax matters agreement. A full valuation allowance has been applied against the U.S. federal and state net deferred tax assets as it is management’s judgment that it is more likely than not that the remaining deferred tax assets will not be realized in the future as of December 31, 2018. No valuation allowance has been recorded against the net foreign deferred tax assets as it is management’s judgment that it is more likely than not that the net deferred tax assets will be realized in the future. The effective tax rate differs from the applicable U.S. statutory federal income tax rate as follows: Year Ended December 31, 2018 2017 2016 Tax at federal statutory rate 21.0 % 35.0 % 35.0 % State, net of federal benefit 5.9 % (8.7 )% 2.1 % Impact of international operations 0.4 % (6.2 )% 9.3 % Stock-based compensation (0.1 )% (5.0 )% — % Tax credits 1.5 % (6.8 )% 2.9 % Valuation allowance (27.0 )% (105.1 )% (51.4 )% Impact of the Tax Act — % 115.6 % — % Non-deductible transaction costs (2.6 )% — % — % Others (0.1 )% (4.1 )% 1.5 % Provision for income taxes (1.0 )% 14.7 % (0.6 )% The decrease in tax expense for the year ended December 31, 2018 compared to the prior year was primarily caused by the deemed repatriation of foreign earnings in 2017 following the 2017 U.S. Tax Act. The negative 1.0% effective tax rate is a result of losses in the U.S. for which the Company is not recognizing a tax benefit due to its full U.S. federal and state valuation allowance. The increase in tax expense for the year ended December 31, 2017 compared to the prior year, primarily resulted from improved earnings in foreign jurisdictions. Additionally, on December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act resulted in an increase in U.S. federal and state income tax expense, of which the U.S. federal tax was offset by the utilization of net operating losses and foreign tax credits that were previously subject to a valuation allowance. As of December 31, 2018, the Company had federal net operating losses of $14.0 million . The federal net operating loss carryforwards will begin to expire in 2031. Further, all of the losses are subject to annual usage limitations under Internal Revenue Code Section 382. The deferred tax asset related to this attribute is at $2.9 million . As of December 31, 2018, the Company did not record a deferred tax liability for withholding taxes and state income taxes expected to be incurred on foreign subsidiaries’ earnings that are not considered as permanently reinvested overseas as the deferred tax liability based on six months of earnings is immaterial. . A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows: Federal, State, and Foreign Tax (In thousands) Balance as of December 31, 2016 $ 676 Additions based on tax positions related to the current year 361 Additions for tax positions of prior years 30 Reductions for tax positions of prior years (45 ) Balance as of December 31, 2017 $ 1,022 Additions based on tax positions related to the current year 338 Adjustments to Net parent investments (1,338 ) Balance as of December 31, 2018 $ 22 As of December 31, 2018 , the total amount of UTB, including interest and penalties, was immaterial. The UTB ending balance mainly comprised of transfer price reserves in the foreign jurisdiction. The Company recognizes interest and penalties accrued related to unrecognized tax benefits as part of the income tax provision. The net UTB is included as a component of Non-current income taxes payable on the consolidated balance sheets. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. The weighted average number of shares outstanding for the basic and diluted net income (loss) per share for the periods prior to the completion of the IPO is based on the number of shares of Arlo common stock outstanding on August 2, 2018, the effective date of the registration statement relating to the IPO (the “IPO Registration Statement”). On that date, the Company issued 62,499,000 shares of common stock to the Company’s sole stockholder of record, NETGEAR (after which NETGEAR held 62,500,000 shares of common stock, which represented all of the then issued and outstanding common stock). Potentially dilutive common shares, such as common shares issuable upon exercise of stock options and vesting of restricted stock awards are typically reflected in the computation of diluted net income (loss) per share by application of the treasury stock method. For certain periods presented, due to the net losses reported, these potentially dilutive securities were excluded from the computation of diluted net loss per share, since their effect would be anti-dilutive. Net income (loss) per share for the years ended December 31, 2018 , 2017 and 2016 were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Numerator: Net income (loss) $ (75,483 ) $ 6,549 $ (13,743 ) Denominator: Weighted average common shares - basic 67,231 62,250 62,250 Potentially dilutive common shares — — — Stock option and RSU conversion (1) — — — Weighted average common shares - dilutive 67,231 62,250 62,250 Basic net income (loss) per share $ (1.12 ) $ 0.11 $ (0.22 ) Diluted net income (loss) per share $ (1.12 ) $ 0.11 $ (0.22 ) Anti-dilutive employee stock-based awards, excluded 1,109 — — _________________________ (1) On December 31, 2018, 6.8 million of stock options and RSUs were added to the Company’s equity awards as issued and outstanding resulting from the adjustment of NETGEAR’s equity awards that were granted to both NETGEAR and Arlo employees and non-employee directors, a portion of which were converted as Arlo awards. The dilutive effect of these converted stock options and RSUs is reflected above per share by application of the treasury stock method and none are potentially dilutive. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company entered into several office lease agreements under non-cancelable operating leases with various expiration dates through October 2028 . The terms of certain of the Company’s facility leases provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid. For the years ended December 31, 2017 and 2016 and six months ended July 1, 2018, rent expense reflected allocations from NETGEAR and may not be indicative of the Company’s results. Rent expense was $1.4 million after the Separation through December 31, 2018. Build-to-Suit Lease The Company entered into a 10.5 -year lease for its corporate headquarters located in San Jose, California with an expiration date ending in June 2029 . During the third quarter of fiscal year 2018, the Company commenced construction of tenant improvements that are expected to be complete in March 2019. Annual base rent under the terms of the lease is $2.6 million and will increase throughout the lease term. According to ASC 840, Leases, the Company is deemed to be the owner, for accounting purposes, during the construction phase of the building (mainly for construction of tenant improvements) under build-to-suit lease arrangement because of the Company’s involvement with the construction, the exposure to any potential cost overruns or other commitments including indemnification under the arrangements. Consequently, the fair value of the building including tenant improvements, which was $28.4 million , was included in Property and equipment, net, and recorded based on fair value of the building and actual construction costs incurred through December 31, 2018 . A corresponding liability, under the finance method, of $20.0 million was included in Non-current financing lease obligation and $1.6 million was included in Accrued liabilities on the Company’s consolidated financial statements as of December 31, 2018 . Refer to Note 2, Summary of Significant Accounting Polices , for further details of the adoption of ASU 2016-02. As of December 31, 2018 , future minimum lease payments under non-cancelable operating leases and build-to-suit lease arrangements, for each of the next five years and thereafter were as follows (in thousands): 2019 $ 4,634 2020 5,813 2021 5,678 2022 5,580 2023 4,903 Thereafter 19,252 Total $ 45,860 Letters of Credit In connection with the build-to-suit lease agreement for the headquarters located in San Jose, California, the Company executed a letter of credit with the landlord as the beneficiary. As of December 31, 2018 , the Company had approximately $3.6 million of unused letters of credit outstanding, of which $3.1 million pertains to the build-to-suit lease arrangement. Purchase Obligations The Company has entered into various inventory-related purchase agreements with suppliers. Generally, under these agreements, 50% of orders are cancelable by giving notice 46 to 60 days prior to the expected shipment date and 25% of orders are cancelable by giving notice 31 to 45 days prior to the expected shipment date. Orders are non-cancelable within 30 days prior to the expected shipment date. As of December 31, 2018 , the Company had approximately $36.8 million in non-cancelable purchase commitments with suppliers, respectively. The Company establishes a loss liability for all products it does not expect to sell for which it has committed purchases from suppliers. Such losses have not been material to date. From time to time the Company’s suppliers procure unique complex components on the Company’s behalf. If these components do not meet specified technical criteria or are defective, the Company should not be obligated to purchase the materials. Warranty Obligations Changes in the Company’s warranty liability, which is included in Accrued liabilities in the consolidated balance sheets, were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Balance at the beginning of the period $ 31,756 $ 15,949 $ 6,490 Reclassified to sales returns upon adoption of ASC 606 (1) (28,713 ) — — Provision for warranty obligation made during the period 1,477 51,709 22,912 Settlements made during the period (808 ) (35,902 ) (13,453 ) Balance at the end of the period $ 3,712 $ 31,756 $ 15,949 ________________________ (1) Upon adoption of ASC 606 on January 1, 2018, warranty reserve balances totaling $28.7 million were reclassified to sales returns as these liabilities are payable to the Company’s customers and settled in cash or by credit on account. Under ASC 606, these amounts are to be accounted for as sales with right of return. Litigation and Other Legal Matters The Company is involved in disputes, litigation, and other legal actions, including, but not limited to, the matters described below. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. In such cases, the Company accrues for the amount, or if a range, the Company accrues the low end of the range, only if there is not a better estimate than any other amount within the range, as a component of legal expense within litigation reserves, net. The Company monitors developments in these legal matters that could affect the estimate the Company had previously accrued. In relation to such matters, the Company currently believes that there are no existing claims or proceedings that are likely to have a material adverse effect on its financial position within the next twelve months, or the outcome of these matters is currently not determinable. There are many uncertainties associated with any litigation, and these actions or other third-party claims against the Company may cause the Company to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require the Company to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, the Company's business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from the Company's estimates, which could result in the need to adjust the liability and record additional expenses. Beginning on December 11, 2018, purported stockholders of Arlo Technologies, Inc. filed putative securities class action complaints in the Superior Court of California, County of Santa Clara, and in the U.S. District Court for the Northern District of California against the Company and certain of its executives and directors. Some of these actions also name as defendants the underwriters in the Company’s IPO and NETGEAR, Inc. The actions pending in state court are Aversa v. Arlo Technologies, Inc., et al. , No. 18CV339231, filed Dec. 11, 2018 (“ Aversa ”); Pham v. Arlo Technologies, Inc. et al. , No. 19CV340741, filed January 9, 2019 (“ Pham ”); Patel v. Arlo Technologies, Inc. , No. 19CV340758, filed January 10, 2019 (“ Patel ”); Perros v. NetGear, Inc. , No. 19CV342071, filed February 1, 2019 (“ Perros ”), and Vardanian v. Arlo Technologies, Inc. , No. 19CV342318, filed February 8, 2019. The action pending in federal court is Wong v. Arlo Technologies, Inc. et al. , Case No. 19-CV-00372, filed January 22, 2019 (“ Wong ”). The complaints generally allege that the Company failed to adequately disclose quality control problems and adverse sales trends ahead of its IPO, violating the Securities Act of 1933, as amended. The complaints seek unspecified monetary damages and other relief on behalf of investors who purchased Arlo common stock issued pursuant and/or traceable to the IPO offering documents. Case management conferences are scheduled for March 29, 2019 ( Aversa ), April 26, 2019 ( Pham , Patel, Perros ), and May 24, 2019 ( Vardanian ). The deadline for investors to seek appointment as lead plaintiff in Wong is March 25, 2019. In the state court lawsuits, the court has issued an order deeming the cases complex and temporarily staying discovery. The Company has not filed an answer in the state court or federal court lawsuits. Regardless of the merits or ultimate results of the above-described litigation matters, they could result in substantial costs, which would hurt the Company’s financial condition and results of operations and divert management’s attention and resources from our business. At this point, however, it is too early to reasonably estimate any financial impact to the Company resulting from these litigation matters. Indemnification of Directors and Officers The Company, as permitted under Delaware law and in accordance with its bylaws, has agreed to indemnify its officers and directors for certain events or occurrences, subject to certain conditions, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that will enable it to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company believes the fair value of each indemnification agreement will be minimal. The Company had no liabilities recorded for these agreements as of December 31, 2018 . Indemnifications Prior to the completion of the IPO, the Company historically participated in NETGEAR’s sales agreements. In its sales agreements, NETGEAR typically agrees to indemnify its direct customers, distributors and resellers (the “Indemnified Parties”) for any expenses or liability resulting from claimed infringements by NETGEAR’s products of patents, trademarks or copyrights of third parties that are asserted against the Indemnified Parties, subject to customary carve-outs. The terms of these indemnification agreements are generally perpetual after execution of the agreement. The maximum amount of potential future indemnification is generally unlimited. From time to time, the Company receives requests for indemnity and may choose to assume the defense of such litigation asserted against the Indemnified Parties. The Company had no liabilities recorded for these agreements as of December 31, 2018 . In connection with the Separation, and after July 1, 2018, certain sales agreements were transferred to the Company, and the Company has replaced certain shared contracts, which include similar indemnification terms. In addition, pursuant to the master separation agreement and certain other agreements entered into with NETGEAR in connection with the Separation and the IPO, NETGEAR has agreed to indemnify the Company for certain liabilities. The master separation agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of its business with the Company and financial responsibility for the obligations and liabilities of NETGEAR’s business with NETGEAR. Under the intellectual property rights cross-license agreement entered into between the Company and NETGEAR, each party, in its capacity as a licensee, indemnifies the other party, in its capacity as a licensor, and its directors, officers, agents, successors and subsidiaries against any losses suffered by such indemnified party as a result of the indemnifying party’s practice of the intellectual property licensed to such indemnifying party under the intellectual property rights cross-license agreement. Also, under the tax matters agreement entered into between the Company and NETGEAR, each party is liable for, and indemnifies the other party and its subsidiaries from and against any liability for, taxes that are allocated to the indemnifying party under the tax matters agreement. In addition, the Company has agreed in the tax matters agreement that each party will generally be responsible for any taxes and related amounts imposed on it or NETGEAR as a result of the failure of the Distribution, together with certain related transactions, to qualify as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) and certain other relevant provisions of the Code, to the extent that the failure to so qualify is attributable to actions, events or transactions relating to such party’s respective stock, assets or business, or a breach of the relevant representations or covenants made by that party in the tax matters agreement. The transition services agreement generally provides that the applicable service recipient indemnifies the applicable service provider for liabilities that such service provider incurs arising from the provision of services other than liabilities arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the transition services agreement, and that the applicable service provider indemnifies the applicable service recipient for liabilities that such service recipient incurs arising from such service provider’s gross negligence, bad faith or willful misconduct or material breach of the transition services agreement. Pursuant to the registration rights agreement, the Company has agreed to indemnify NETGEAR and its subsidiaries that hold registrable securities (and their directors, officers, agents and, if applicable, each other person who controls such holder under Section 15 of the Securities Act) registering shares pursuant to the registration rights agreement against certain losses, expenses and liabilities under the Securities Act, common law or otherwise. NETGEAR and its subsidiaries that hold registrable securities similarly indemnify the Company but such indemnification will be limited to an amount equal to the net proceeds received by such holder under the sale of registrable securities giving rise to the indemnification obligation. Refer to Note 1, The Company and Basis of Presentation , for details relating to the Company’s IPO and related transactions. Employment Agreements NETGEAR has signed various employment agreements with the Company’s key executives pursuant to which, if their employment is terminated without cause, such employees are entitled to receive their base salary (and commission or bonus, as applicable) for up to one year. Such employees will also continue to have equity awards vest for up to a one -year period following such termination without cause. If a termination without cause or resignation for good reason occurs within one year of a change in control, certain key employees are entitled to up to two years acceleration of any unvested portion of his or her equity awards. The Company had no liabilities recorded for these agreements as of December 31, 2018 . In connection with the completion of the IPO, the Company entered into executive confirmatory employment offer letters and change in control and severance agreements with each of the Company’s key executives, which superseded and replaced any employment arrangements that such executives had previously entered into with NETGEAR. Refer to Note 1, The Company and Basis of Presentation , for details relating to the Company’s IPO and related transactions. Environmental Regulation The Company is required to comply and is currently in compliance with the European Union (“EU”) and other Directives on the Restrictions of the use of Certain Hazardous Substances in Electrical and Electronic Equipment (“RoHS”), Waste Electrical and Electronic Equipment (“WEEE”) requirements, Energy Using Product (“EuP”) requirements, the REACH Regulation, Packaging Directive and the Battery Directive. The Company is subject to various federal, state, local, and foreign environmental laws and regulations, including those governing the use, discharge, and disposal of hazardous substances in the ordinary course of its manufacturing process. The Company believes that its current manufacturing and other operations comply in all material respects with applicable environmental laws and regulations; however, it is possible that future environmental legislation may be enacted or current environmental legislation may be interpreted to create an environmental liability with respect to its facilities, operations, or products. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefits and Share-based Compensation, Noncash [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company’s employees have historically participated in NETGEAR’s various stock-based plans, which are described below and represent the portion of NETGEAR’s stock-based plans in which Arlo employees participated as of December 31, 2018. The Company’s consolidated statements of operations reflect compensation expense for these stock-based plans associated with the portion of NETGEAR’s plans in which Arlo employees participated. On December 31, 2018, in connection with the Distribution, all outstanding NETGEAR equity awards (whether held by Arlo employees and non-employee directors or NETGEAR employees and non-employee directors) were equitably adjusted to reflect the impact of the Distribution. The adjustments to each type of award outstanding pursuant to the NETGEAR stock-based plans as of immediately prior to the Distribution was determined in accordance with the terms of the employee matters agreement between NETGEAR and Arlo, dated as of August 2, 2018 (the “employee matters agreement”). In connection with this adjustment, certain NETGEAR equity awards were adjusted into Arlo equity awards, as follows: • NETGEAR stock options granted prior to August 3, 2018 (the “cutoff date”) were converted into both an adjusted NETGEAR stock option and an Arlo stock option. The formulas applicable to the adjustment are set forth in the employee matters agreement and, in each case, the exercise price and number of shares subject to each option was adjusted to preserve the aggregate intrinsic value of the original NETGEAR stock option as measured immediately prior to and immediately following the Distribution, subject to rounding. Following the Distribution, the NETGEAR stock options and Arlo stock options are subject to substantially the same terms and vesting conditions that applied to the original NETGEAR stock option immediately prior to the Distribution. • NETGEAR restricted stock units granted prior to the cutoff date were converted into both an adjusted NETGEAR restricted stock unit covering the same number of shares of NETGEAR common stock subject to the award prior to the distribution and an Arlo restricted stock unit covering a number of shares of Arlo common stock equal to the number of shares of NETGEAR common stock subject to the award prior to the distribution multiplied by 1.980295 , subject to rounding, which is the number of shares of Arlo common stock that was distributed in respect of each share of NETGEAR common stock in the Distribution. The formulas applicable to the foregoing NETGEAR restricted stock unit adjustment are set forth in the employee matters agreement. Following the Distribution, the NETGEAR restricted stock units and Arlo restricted stock units are subject to substantially the same terms and vesting conditions that applied to the original NETGEAR restricted stock units immediately prior to the Distribution. • NETGEAR stock options and NETGEAR restricted stock units held by non-U.S. holders: NETGEAR, in its sole discretion, determined to treat certain NETGEAR stock options and NETGEAR restricted stock unit awards that were outstanding as of the effective time of the Distribution and held by current and former service providers of Arlo and NETGEAR in jurisdictions other than the United States in a manner inconsistent with the immediately preceding two paragraphs, which, in certain jurisdiction, resulted in the issuance of additional Arlo stock options and/or Arlo restricted stock units. We did not recognize any incremental expense in connection with the conversion of NETGEAR’ equity awards into Arlo awards since the impact is immaterial. 2018 Equity Incentive Plan On August 1, 2018, the Company reserved a total sum of (1) 7,500,000 shares of its common stock for issuance and (2) the number of shares of its common stock that may be issuable upon exercise or vesting of awards relating to NETGEAR common stock that may be converted into awards relating to the Company’s common stock upon the completion of the Distribution for issuance under the Company’s 2018 Plan and 1,500,000 shares of its common stock for issuance under the 2018 ESPP, as applicable. On December 31, 2018, upon the completion of the Distribution, the number of shares described in clause (2) was finally determined, and awards relating to NETGEAR common stock were adjusted into awards covering 6,822,787 shares of the Company’s common stock. Refer to Note 16. Subsequent Events , for further details regarding plan share increase. The 2018 Plan provides for the granting of stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares to eligible directors, employees and consultants. Award vesting periods for this plan are generally four years . Options may be granted for periods of up to 10 years or such shorter term as may be provided in the agreement and at prices no less than 100% of the fair market value of Arlo’s common stock on the date of grant. Options granted under the 2018 Plan generally vest over four years , the first tranche at the end of 12 months and the remaining shares underlying the option vesting monthly over the remaining three years . The Company calculates the fair value of stock option using the Black-Scholes option pricing model. The period over which RSUs granted under the 2018 Plan may fully vest is generally no less than three years. RSUs do not have the voting rights of Arlo’s common stock, and the shares underlying the RSUs are not considered issued and outstanding prior to settlement of the RSUs. The fair value of RSUs represents the closing stock price of the Company’s common stock on the grant date. The following table sets forth the 2018 Plan during the year ended December 31, 2018 and the available shares for future grants as of December 31, 2018 : Number of Shares (In thousands) Shares reserved as of August 2, 2018 7,500 Granted at IPO (1) (3,403 ) Granted during the period (137 ) Additional authorized shares in the Distribution 6,823 Converted in the Distribution (2) (6,823 ) Cancelled 9 Shares available for grants as of December 31, 2018 3,969 _________________________ (1) Including Arlo IPO Options of 2.8 million shares granted to the Company’s Named Executive Officers (“NEOs”) with performance-based vesting criteria (in addition to service-based vesting criteria for any of such IPO Options that are deemed to have been earned). As of December 31, 2018 , it had not yet been determined the extent to which (if at all) the performance-based vesting criteria had been satisfied except for Tranche 4 Performance Option. Therefore, this line item includes all such performance-based IPO Options granted during the year ended December 31, 2018 , reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied. Tranche 4 Performance Option’s measurement period was completed and none of the shares were expected to vest. The Company recorded an adjustment of $0.2 million reducing the stock-based compensation expense during the fourth fiscal quarter of 2018 as a result of the final determination of the performance metrics. (2) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. IPO Options On August 2, 2018, in connection with the completion of the IPO, to create incentives for continued long-term success and to closely align executive pay with the Company’s stockholders’ interests in the achievement of significant milestones, the Company granted to its NEOs options to purchase 2,781,249 shares of Arlo common stock (“IPO Options”). The fair value of IPO options granted under the 2018 plan were calculated using the Black-Scholes option pricing model. Each of the IPO Options will have a ten-year contractual term and an exercise price equal to the fair value of a share of Arlo common stock on the date of grant and will vest as follows: • The Tranche 1 Service Option will vest in equal monthly installments during the 24 -month period that begins on the two-year anniversary of the option grant date; • The Tranche 2 Performance Option will vest on the later of (i) the date (prior to the four -year anniversary of the grant date) of satisfaction of a cumulative registered users milestone and (ii) if the milestone has been satisfied prior to the applicable date, then (a) with respect to 25% of the Tranche 2 Performance Option, on the first anniversary of the option grant date, (b) with respect to 25% of the Tranche 2 Performance Option, on the second anniversary of the option grant date, and (c) with respect to the remaining 50% of the Tranche 2 Performance Option, in equal monthly installments during the 24-month period on the first day of each month beginning on September 1, 2020; • The Tranche 3 Performance Option will vest on the later of (i) the date (prior to the four -year anniversary of the grant date) of satisfaction of a paid recurring revenue milestone and (ii) if the milestone has been satisfied prior to the applicable date, then (a) with respect to 25% of the Tranche 3 Performance Option, on the first anniversary of the option grant date, (b) with respect to 25% of the Tranche 3 Performance Option, on the second anniversary of the option grant date, and (c) with respect to the remaining 50% of the Tranche 3 Performance Option, in equal monthly installments during the 24-month period on the first day of each month beginning on September 1, 2020; • The Tranche 4 Performance Option will vest on the one-year anniversary of the grant date based on the extent to which the revenue and non-GAAP gross profit milestones for the second half of fiscal 2018 are achieved; and • The Tranche 5 Performance Option will vest on the one-year anniversary of the grant date based on the extent to which the revenue and non-GAAP gross profit milestones for the second half of fiscal 2019 are achieved. Employee Stock Purchase Plan Under the 2018 ESPP, eligible employees may contribute up to 15% of compensation, subject to certain income limits, to purchase shares of Arlo’s common stock. The terms of the plan include a look-back feature that enables employees to purchase stock semi-annually at a price equal to 85% of the lesser of the fair market value at the beginning of the offering period or the purchase date. The duration of each offering period is generally six months. The Company will calculate the fair value of a share purchase option under the 2018 ESPP using the Black-Scholes option pricing model. As of December 31, 2018 , no shares had been purchased under the 2018 ESPP by Arlo employees, as the program was suspended until the completion of the Distribution. The Company’s employees have historically participated in NETGEAR’s ESPP. For the years ended December 31, 2018 , 2017 and 2016, the Company recognized ESPP compensation expense of $0.2 million for each period. For the years ended December 31, 2018 , 2017 and 2016, employees specifically identifiable to Arlo purchased approximately 37,000 , 19,000 and 16,000 shares of NETGEAR’s common stock at an average exercise price of $45.06 , $43.09 and $31.52 , respectively. ARLO Options The following table sets forth the weighted average assumptions used to estimate the fair value of Arlo’s stock options granted using Black-Scholes option pricing model during the year ended December 31, 2018 . Expected life (in years) 6.3 Risk-free interest rate 2.86 % Expected volatility 40.0 % Dividend yield — Because the Company’s common stock did not have sufficient history of being publicly traded at grant date, the estimated term of Arlo’s stock options granted was determined by a combination of using a simplified method, which is an average of the contractual term and vesting period of the stock options and using management best estimate of the expected term. The risk-free interest rate of stock options granted was based on the implied yield currently available on U.S. Treasury securities, with a remaining term commensurate with the estimated expected term. The estimated volatility assumption was calculated based on a compensation peer group analysis of stock price volatility on the grant date. Arlo’s stock option activity during the year ended of December 31, 2018 was as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (3) (In thousands) (In dollars) (In years) (In thousands) Outstanding as of August 2, 2018 — $ — Granted at IPO (1) 3,343 $ 16.00 Converted in the Distribution (2) 3,866 $ 8.69 Outstanding as of December 31, 2018 7,209 $ 12.08 7.84 $ 8,114 Vested and expected to vest as of December 31, 2018 7,209 $ 12.08 7.84 $ 8,114 Exercisable Options as of December 31, 2018 2,429 $ 7.10 5.02 $ 6,989 _________________________ (1) Including Arlo IPO Options of 2.8 million shares granted to the Company’s NEOs with performance-based vesting criteria (in addition to service-based vesting criteria for any of such IPO Options that are deemed to have been earned). As of December 31, 2018 , it had not yet been determined the extent to which (if at all) the performance-based vesting criteria had been satisfied except for Tranche 4 Performance Option. Therefore, this line item includes all such performance-based IPO Options granted during the year ended December 31, 2018 , reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied. Tranche 4 Performance Option’s measurement period was completed and none of the shares were expected to vest. The Company recorded an adjustment of $0.2 million reducing the stock-based compensation expense during the fourth fiscal quarter of 2018 as a result of the final determination of the performance metrics. (2) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. (3) Representing the total pre-tax intrinsic values (the difference between the Company’s closing stock price on the last trading day of 2018 and the exercise price, multiplied by the number of shares underlying the in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2018 . This amount changes based on the fair market value of the Company’s stock. Year Ended December 31, 2018 (In millions, except per share data) Total intrinsic value of options exercised $ — Total fair value of options vested $ — Weighted-average grant date fair value per share of options granted $ 7.02 The following table summarizes significant ranges of outstanding Arlo’s stock options as of December 31, 2018 . Options Outstanding (1) Options Exercisable (1) Range of Exercise Prices Shares Outstanding Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Per Share Shares Exercisable Weighted- Average Exercise Price Per Share (In thousands) (In years) (In dollars) (In thousands) (In dollars) $2.51 - $6.94 1,534 4.69 $ 6.52 1,466 $ 6.53 $6.96 - $8.76 1,566 6.55 $ 8.18 951 $ 7.95 $10.09 - $13.23 100 9.27 $ 11.97 12 $ 10.09 $14.39 - $14.39 666 9.07 $ 14.39 — $ — $16.00 - $16.00 3,343 9.59 $ 16.00 — $ — $2.51 - $16.00 7,209 7.84 $ 12.08 2,429 $ 7.10 _________________________ (1) Including and reflecting the adjustments on December 31, 2018, in connection with the Distribution from NETGEAR options. NETGEAR Options The following table sets forth the weighted average assumptions used to estimate the fair value of NETGEAR’s stock options granted and purchase rights granted under the NETGEAR’s ESPP to employees specifically identifiable to Arlo during the years ended December 31, 2018 , 2017 and 2016: Stock Options ESPP (1) 2018 2017 2016 2018 2017 2016 Expected life (in years) 4.4 4.4 4.4 0.5 0.5 0.5 Risk-free interest rate 2.32 % 1.66 % 1.28 % 1.81 % 0.93 % 0.43 % Expected volatility 30.9 % 31.6 % 35.4 % 37.1 % 29.7 % 38.3 % Dividend yield — — — — — — _________________________ (1) Arlo employees have completed their participation into NETGEAR’s ESPP by the end of the second quarter of fiscal 2018. As of December 31, 2018 , no shares had been purchased under the 2018 ESPP by Arlo employees, as the program was suspended until the completion of the Distribution. The estimated expected term of NETGEAR’s options granted to employees specifically identifiable to Arlo is under NETGEAR’s plans derived from historical data on employee exercise and post-vesting employment termination behavior. The risk-free interest rate of options granted and the purchase rights granted under the NETGEAR’s ESPP is based on the implied yield currently available on U.S. Treasury securities, with a remaining term commensurate with the estimated expected term. Expected volatility of NETGEAR’s options granted and the purchase rights granted under the NETGEAR’s ESPP is based on historical volatility over the most recent period commensurate with the estimated expected term. NETGEAR’s stock option activity for employees specifically identifiable to Arlo during the year ended December 31, 2018 was as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2017 78 $ 35.56 Granted 60 $ 70.15 Converted in the Distribution (1) 283 $ 26.53 Exercised (11 ) $ 20.30 Cancelled (6 ) $ 28.59 Cancelled in the Distribution (1) (276 ) $ 45.11 Transferred (2) 155 $ 36.71 Outstanding as of December 31, 2018 283 $ 26.53 6.82 $ 7,219 Vested and expected to vest as of December 31, 2018 283 $ 26.53 6.82 $ 7,219 Exercisable Options as of December 31, 2018 152 $ 21.27 5.36 $ 4,684 _________________________ (1) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. (2) Transferred options are attributable to employees that transferred from other NETGEAR’s divisions. Year Ended December 31, 2018 2017 2016 (In millions, except per share data) Total intrinsic value of options exercised $ 0.6 $ 0.5 $ 0.8 Total fair value of options vested $ 1.1 $ 0.2 $ 0.2 Weighted-average grant date fair value per share of NETGEAR’s stock options granted to employees specifically identifiable to Arlo $ 20.63 $ 12.25 $ 12.28 For the year ended December 31, 2018 , cash received from NETGEAR stock option exercises and ESPP purchases by employees specifically identifiable to Arlo was $0.4 million through the completion of the IPO. Cash received from NETGEAR stock option exercises and ESPP purchases by employees specifically identifiable to Arlo was $1.6 million and $1.9 million for the years ended December 31, 2017 and 2016, respectively. ARLO RSUs Arlo’s RSU activity during the year ended of December 31, 2018 was as follows: Range of Exercise Prices Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of August 2, 2018 — $ — Granted 197 $ 14.46 Converted in the Distribution (1) 2,957 $ 10.67 Vested (4 ) $ 10.44 Cancelled (9 ) $ 22.71 Outstanding as of December 31, 2018 3,141 $ 12.22 1.44 $ 31,349 _________________________ (1) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. Year Ended December 31, 2018 (In millions, except per share data) Total intrinsic value of RSUs vested (the release date fair value) $ 0.04 Total fair value of RSUs vested (the grant date fair value) $ 0.04 weighted-average fair value of RSUs granted $ 14.46 NETGEAR RSUs NETGEAR’s RSU activity for employees specifically identifiable to Arlo during the year ended December 31, 2018 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2017 132 $ 45.54 Granted 339 $ 67.24 Converted in the Distribution (1) 521 $ 30.91 Vested (119 ) $ 56.70 Cancelled (7 ) $ 59.85 Cancelled in the Distribution (1) (530 ) $ 59.27 Transferred (2) 185 $ 43.60 Outstanding as of December 31, 2018 521 $ 34.89 1.49 $ 27,111 _________________________ (1) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. (2) Transferred RSUs are attributable to employees that transferred from other NETGEAR’s divisions. Year Ended December 31, 2018 2017 2016 (In millions, except per share data) Total intrinsic value of RSUs vested (the release date fair value) $ 6.9 $ 2.7 $ 1.4 Total fair value of RSUs vested (the grant date fair value) $ 5.0 $ 2.0 $ 1.0 weighted-average fair value of RSUs granted $ 67.24 $ 52.89 $ 41.92 For the year ended December 31, 2018 , cash paid to administer the RSU withholdings relating to employees specifically identifiable to Arlo was $0.8 million through the completion of the IPO. Cash paid to administer the RSU withholdings relating to employees specifically identifiable to Arlo for the years ended December 31, 2017 and 2016 was $1.1 million and $0.6 million , respectively. Stock-Based Compensation Expense The Company recognizes these stock-based compensation expense generally on a straight-line basis over the requisite service period of the award. The following tables set forth stock-based compensation expense for employees specifically identifiable to Arlo and allocated charges deemed attributable to Arlo operations resulting from NETGEAR’s and Arlo’s RSUs and stock options, and the purchase rights under the NETGEAR’s ESPP included in the Company’s consolidated statements of operations during the years ended December 31, 2018 , 2017 and 2016: Year Ended December 31, 2018 2017 2016 Direct (1) Indirect Total Direct Indirect Total Direct Indirect Total (In thousands) Cost of revenue $ 608 $ 583 $ 1,191 $ 102 $ 599 $ 701 $ 61 $ 266 $ 327 Research and development 3,078 396 3,474 1,959 455 2,414 1,349 195 1,544 Sales and marketing 1,992 969 2,961 390 866 1,256 110 407 517 General and administrative 3,153 2,100 5,253 — 2,547 2,547 — 1,216 1,216 Total stock-based compensation $ 8,831 $ 4,048 $ 12,879 $ 2,451 $ 4,467 $ 6,918 $ 1,520 $ 2,084 $ 3,604 _________________________ (1) Reflecting expenses for those legacy NETGEAR stock-based plans that have converted to equivalent Arlo stock-based plans upon the spin-off transaction. As of December 31, 2018 , after the adjustments upon the Distribution, $17.8 million of unrecognized compensation cost related to Arlo’s stock options and PSOs was expected to be recognized over a weighted-average period of 3.5 years and $12.7 million of unrecognized compensation cost related to unvested Arlo’s RSUs was expected to be recognized over a weighted-average period of 2.6 years. As of December 31, 2018, after the adjustments upon the Distribution, $1.2 million of unrecognized compensation cost related to NETGEAR’s stock options for employees specifically identifiable to Arlo was expected to be recognized over a weighted-average period of 2.5 years and $14.3 million of unrecognized compensation cost related to unvested NETGEAR’s RSUs for employees specifically identifiable to Arlo was expected to be recognized over a weighted-average period of 2.7 years. 401(k) Plan The Company’s employees have historically participated in NETGEAR’s 401(k) Plan, which was adopted in April 2000. Under NETGEAR’s 401(k) Plan, employees may contribute up to 100% of salary subject to the legal maximum and NETGEAR matches 50% of contributions for employees that remain active with NETGEAR or its subsidiaries through the end of the fiscal year, up to a maximum of $6,000 in employee contributions. During the years ended December 31, 2018 , 2017 and 2016, the Company recognized $0.5 million , $0.2 million and $0.2 million , respectively, in expenses for employees specifically identifiable to Arlo related to NETGEAR 401(k) Plan match. In January 2019, the Company adopted Arlo 401(k) Plan to which employees may contribute up to 100% of salary subject to the legal maximum. In the fourth quarter of fiscal year 2018, the Company began matching 50% of contributions for employees that remain active with the Company through the end of the fiscal year, up to a maximum of $6,000 in employee contributions. |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information Segment Information The Company operates as one operating and reportable segment. The Company has identified its CEO as the Chief Operating Decision Maker (“CODM”). The CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Geographic Information The Company conducts business across three geographic regions: Americas, EMEA and APAC. Revenue consists of gross product shipments and service revenue, less allowances for estimated sales returns, price protection, end-user customer rebates and other channel sales incentives deemed to be a reduction of revenue per the authoritative guidance for revenue recognition, and net changes in deferred revenue. For reporting purposes, revenue by geography is generally based upon the ship-to location of the customer for device sales and device location for service sales. The following table shows revenue by geography for the periods indicated: Year Ended December 31, 2018 2017 2016 (In thousands) United States (“U.S.”) $ 359,936 $ 279,504 $ 142,129 Americas (excluding U.S.) 16,869 13,167 6,035 EMEA 65,462 58,795 27,457 APAC 22,651 19,192 8,983 Total revenue $ 464,918 $ 370,658 $ 184,604 The Company’s Property and equipment, net are located in the following geographic locations: As of December 31, December 31, (In thousands) United States (“U.S.”) $ 45,053 $ 2,053 Americas (excluding U.S.) 218 61 EMEA 567 1 China 3,040 1,702 APAC (excluding China) 550 66 Total property and equipment, net $ 49,428 $ 3,883 Significant Customers Three customers accounted for 24.4% , 17.5% , and 16.6% of revenue for the year ended December 31, 2018 . Three customers accounted for 28.3% , 16.4% , and 13.1% of revenue for the year ended December 31, 2017 . Three customers accounted for 31.5% , 15.0% , and 11.0% of revenue for the year ended December 31, 2016 . |
Related Party Transactions (Not
Related Party Transactions (Notes) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Prior to the completion of the Distribution on December 31, 2018, NETGEAR owned 62,500,000 shares of Arlo common stock and was considered a related party. In the Distribution, all shares of Arlo common stock held by NETGEAR were distributed to its stockholders and NETGEAR is no longer considered a related party. Prior to the completion of the IPO, related party transactions between Arlo and NETGEAR were settled in cash. The related party receivables are reflected in Prepaid expenses and other current assets, and the related party payables are reflected in Accrued liabilities on the combined balance sheets. On August 2, 2018, in connection with the IPO, the Company entered into a master separation agreement, a transition services agreement, an intellectual property rights cross-license agreement, a tax matters agreement, an employee matters agreement, and a registration rights agreement, in each case with NETGEAR, which effect the Separation, provide a framework for the Company’s relationship with NETGEAR after the Separation and provide for the allocation between NETGEAR and the Company of NETGEAR’s assets, employees, liabilities and obligations (including its investments, property and employee benefits assets and liabilities) attributable to periods prior to, at and after the Separation. See below for detailed descriptions of those agreements. Pursuant to these agreements, NETGEAR transferred substantially all of the assets and liabilities and operations of Arlo business to the Company. As a result, net receivables from NETGEAR was $12.2 million as of December 31, 2018 , mainly relating to transition services, billing and collection services which were provided by NETGEAR. Additionally, the Company received a contribution of cash of approximately $70.0 million from NETGEAR. Allocation of Corporate Expenses Prior to the completion of the IPO, NETGEAR provided certain corporate services to the Company, such as executive management, information technology, legal, finance and accounting, human resources, tax, treasury, research and development, sales and marketing, shared facilities and other shared services, as well as stock-based compensation expense attributable to Arlo’s employees and an allocation of stock-based compensation expense attributable to NETGEAR’s employees. These costs were allocated based on revenue, headcount, or other measures the Company has determined as reasonable through July 1, 2018. Following July 1, 2018, the Company assumed responsibility for the costs of these functions. The amount of these allocations from NETGEAR reflected within operating expenses in the consolidated statements of operations was $30.6 million from the January 1, 2018 to the date of the completion of the Company’s IPO, which included $9.4 million for research and development, $10.0 million for sales and marketing, and $11.2 million for general and administrative expense. For the year ended December 31, 2017 , allocations amounted to $40.0 million , which included $11.8 million for research and development, $13.1 million for sales and marketing, and $15.1 million for general and administrative expense. For the year ended December 31, 2016 , allocations amounted to $20.6 million , which included $5.9 million for research and development, $6.4 million for sales and marketing and $8.3 million for general and administrative expense. Related Party Arrangements Prior to the completion of the IPO, the Company entered into agreements with NETGEAR that govern Arlo’s separation from NETGEAR and various interim arrangements. These agreements have been in effect since the completion of the IPO and the Separation, and provide for, among other things, the transfer from NETGEAR to Arlo of assets and the assumption by Arlo of liabilities comprising the business through a master separation agreement between the Company and NETGEAR (the “master separation agreement”). The Company also entered into certain other agreements that provide a framework for the relationship with NETGEAR after the Separation, including: • a transition services agreement with NETGEAR, governing NETGEAR’s provision of various services to the Company, and the Company’s provision of various services to NETGEAR, on a transitional basis (the “transition services agreement”). During the year ended December 31, 2018 , $6.3 million transition services agreement-related costs were incurred, which included $0.4 million for research and development, $1.6 million for sales and marketing, and $4.3 million for general and administrative expense; • a tax matters agreement with NETGEAR that governs the respective rights, responsibilities and obligations of NETGEAR and Arlo after the completion of the IPO with respect to tax matters (including responsibility for taxes attributable to the Company and its subsidiaries, entitlement to refunds, allocation of tax attributes, preparation of tax returns, control of tax contests and other matters) (the “tax matters agreement”); • an employee matters agreement with NETGEAR that addresses employment, compensation and benefits matters, including the allocation and treatment of assets and liabilities relating to employees and compensation and benefit plans and programs in which the Company’s employees participate prior to the distribution, as well as other human resources, employment and employee benefit matters (the “employee matters agreement”); • an intellectual property rights cross-license agreement with NETGEAR, which governs the Company’s and NETGEAR’s rights, responsibilities and obligations to use NETGEAR and Arlo intellectual property, respectively (the “intellectual property rights cross-license agreement”); and • a registration rights agreement with NETGEAR, pursuant to which the Company granted NETGEAR and its affiliates certain registration rights with respect to Arlo’s common stock owned by them (the “registration rights agreement”). |
Subsequent Events (Notes)
Subsequent Events (Notes) | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On January 23, 2019, the Company registered an aggregate of up to 10,535,149 shares of the Company’s common stock on Registration Statement on Form S-8, including 9,792,677 shares issuable pursuant to the 2018 Plan (consisting of (i) 6,822,787 shares of the Company’s common stock issuable upon exercise or vesting of awards relating to NETGEAR common stock that converted into awards relating to the Company’s common stock upon the completion of the Distribution for issuance under the 2018 Plan plus (ii) 2,969,890 shares of the Company’s common stock that were automatically added to the shares authorized for issuance under the 2018 Plan on January 1, 2019 pursuant to an “evergreen” provision contained in the 2018 Plan) and 742,472 shares issuable pursuant to the Company’s 2018 ESPP that were automatically added to the shares authorized for issuance under the 2018 ESPP on January 1, 2019 pursuant to an “evergreen” provision contained in the 2018 ESPP. As of December 31, 2018, the Company concluded that goodwill was not impaired based on quantitative assessment. Refer to “Goodwill” in Note 2, Summary of Significant Accounting Policies . Following the date or our annual goodwill review and after December 31, 2018, the price for the Company’s common stock declined specifically after the Company announced its earnings release on February 5, 2019. The average closing price per share for the common stock for the eight trading days after such earnings release was $3.71 , a 223.3% decrease compared to the average closing price for the fourth quarter of fiscal year 2018. A sustained decline in common stock and the resulting impact to the Company’s market capitalization as well as a downward revision to the Company’s business outlook for fiscal year ending December 31, 2019 are qualitative factors to consider when evaluating whether events or changes in circumstances indicate it is a more likely than not a potential goodwill impairment exists. The Company concluded that the decline in the price of its common stock in February 2019 did represent a sustained decline and therefore was an indicator that the goodwill might be impaired. As a result, the Company performed a quantitative assessment as of February 7, 2019. The Company operates as one operating and reportable segment. To determine the fair value for the reporting unit, the Company utilized its common stock price and included a market participant acquisition premium (“MPAP”) assumption. A significant decrease in MPAP could result in a significantly lower fair value estimate. The concluded fair value exceeded the Company's carrying amount by approximately 29.8% . Decreasing the selected MPAP of 25% by 250 basis points would result in the concluded fair value exceeding the carrying amount by approximately 27.2% . As fair value was greater than carrying amount, goodwill was not impaired as of December 31, 2018 using the February 7, 2019 valuation. If there is a further decline in the Company’s stock price based on market conditions and deterioration of the Company’s business, the Company may have to record a charge to its earnings for the goodwill impairment of up to $15.6 million . |
Quarterly Unaudited Financial D
Quarterly Unaudited Financial Data (Notes) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Unaudited Financial Data | QUARTERLY UNAUDITED FINANCIAL DATA The following table presents unaudited quarterly financial information for the years ended December 31, 2018 and 2017. The fourth quarter of 2018 was the first full quarter post separation and represents the Company’s actual results as an independent public company. Results for the first three quarters of 2018 as well as all four quarters of 2017 include allocations from NETGEAR and may not be indicative of the Company’s results had it been a standalone entity during those periods. December 31, September 30, July 1, April 1, (In thousands, except per share amounts) Revenue (1) $ 122,158 $ 131,174 $ 110,948 $ 100,638 Gross profit $ 4,981 $ 29,747 $ 28,294 $ 29,053 Provision for (benefit from) income taxes $ (58 ) $ 223 $ 288 $ 319 Net loss $ (39,073 ) $ (13,225 ) $ (17,822 ) $ (5,363 ) Net loss per share—basic (2) $ (0.53 ) $ (0.19 ) $ (0.29 ) $ (0.09 ) Net loss per share—diluted (3) $ (0.53 ) $ (0.19 ) $ (0.29 ) $ (0.09 ) December 31, October 1, July 2, April 2, (In thousands, except per share amounts) Revenue (1) $ 124,774 $ 104,887 $ 79,194 $ 61,803 Gross profit $ 29,817 $ 28,352 $ 16,712 $ 16,353 Provision for income taxes $ 327 $ 445 $ 137 $ 219 Net income (loss) $ 2,663 $ 6,014 $ (2,152 ) $ 24 Net income (loss) per share—basic (2) $ 0.04 $ 0.10 $ (0.03 ) $ — Net income (loss) per share—diluted (3) $ 0.04 $ 0.10 $ (0.03 ) $ — _________________________ (1) On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASC 606”) and applied this guidance to those contracts which were not completed at the date of adoption using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods (“ASC 605”). The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of Net parent investment. (2) Net loss per share basic and diluted are computed independently for each quarters presented based on the weighted-average basic and fully diluted shares outstanding for each quarters. As a result, the sum of quarterly Net loss per share basic and diluted information may not equal annual Net loss per share basic and diluted. (3) On December 31, 2018, 6.8 million of stock options and RSUs were added to the Company’s equity awards as issued and outstanding resulting from the adjustment of NETGEAR’s equity awards that were granted to both NETGEAR and Arlo employees and non-employee directors, a portion of which were converted as Arlo awards. The dilutive effect of these converted stock options and RSUs is reflected above per share by application of the treasury stock method and none are potentially dilutive. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts (Notes) | 12 Months Ended |
Dec. 31, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | Schedule II—Valuation and Qualifying Accounts Balance as of the beginning of year Additions Deductions Balance as of the end of year (In thousands) Allowance for doubtful accounts: Year ended December 31, 2018 $ 207 $ — $ (80 ) $ 127 Year ended December 31, 2017 $ 206 $ 1 $ — $ 207 Year ended December 31, 2016 $ 206 $ — $ — $ 206 Allowance for deferred tax assets: Year ended December 31, 2018 $ 15,611 $ 13,760 $ (4,894 ) $ 24,477 Year ended December 31, 2017 $ 22,155 $ 10,896 $ (17,440 ) $ 15,611 Year ended December 31, 2016 $ 15,170 $ 10,386 $ (3,401 ) $ 22,155 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents and restricted cash | Cash and cash equivalents The Company considers all highly liquid investments with an original maturity or a remaining maturity at the time of purchase of three months or less to be cash equivalents. The Company deposits cash and cash equivalents with high credit quality financial institutions. Restricted cash The Company maintains certain cash balances restricted as to withdrawal or use. The restricted cash is comprised primarily of cash used as a collateral for a letter of credit associated with the Company’s lease agreement for its headquarters in San Jose, California. The Company deposits restricted cash with high credit quality financial institutions. |
Short-term investments | Short-term investments Short-term investments are comprised of marketable securities that consist of government securities with an original maturity or a remaining maturity at the time of purchase of greater than three months and no more than 12 months. The marketable securities are held in the Company’s name with a high quality financial institution, which acts as the Company’s custodian and investment manager. These marketable securities are classified as available-for-sale securities in accordance with the provisions of the authoritative guidance for investments and are carried at fair value with unrealized gains and losses reported as a separate component of stockholders’ equity. |
Fair value measurement | Fair value measurements The carrying amounts of the Company’s financial instruments, including cash equivalents, restricted cash, short-term investments, accounts receivable, receivables from NETGEAR, net, and accounts payable approximate their fair values due to their short maturities. Foreign currency forward contracts are recorded at fair value based on observable market data. The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). |
Financial instruments | Derivative financial instruments The Company and all its subsidiaries designate the U.S. dollar as the functional currency. Changes in exchange rates between the Company’s functional currency and other currencies in which the Company transacts business will cause fluctuations in cash flow expectations and cash flow realized or settled. During the third quarter of fiscal year 2018, the Company entered into foreign currency forward contracts in Australian dollars, British pounds, euros, and Canadian dollars to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses and certain assets and liabilities. The company does not use derivative financial instruments for speculative purposes. Foreign currency forward contracts generally mature within six months of inception. Under its foreign currency risk management strategy, the Company utilizes derivative instruments to reduce the impact of currency exchange rate movements on the Company’s operating results by offsetting gains and losses on the forward contracts with increases or decreases in foreign currency transactions. The Company accounts for its derivative instruments as either assets or liabilities and records them at fair value. Derivatives that are not defined as hedges in the authoritative guidance for derivatives and hedging must be adjusted to fair value through earnings. The Company may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, materiality, accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange rates. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with the authoritative guidance for derivatives and hedging. Cash flow hedges To help manage the exposure of operating margins to fluctuations in foreign currency exchange rates, the Company hedges a portion of its anticipated foreign currency revenue, costs of revenue and certain operating expenses. These hedges are designated at the inception of the hedge relationship as cash flow hedges. The effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss) (“AOCI”) in stockholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in current earnings. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur within the designated hedge period or if not recognized within 60 days following the end of the hedge period. Deferred gains and losses in AOCI with such derivative instruments are reclassified immediately into earnings through Other income (expense), net. Any subsequent changes in fair value of such derivative instruments also are reflected in current earnings unless they are re-designated as hedges of other transactions. Non-designated hedges The Company enters into non-designated hedges under the authoritative guidance for derivatives and hedging to manage the exposure of non-functional currency monetary assets and liabilities held on its financial statements to fluctuations in foreign currency exchange rates, as well as to reduce volatility in other income and expense. The non-designated hedges are generally expected to offset the changes in value of its net non-functional currency asset and liability position resulting from foreign exchange rate fluctuations. Foreign currency denominated accounts receivable and payable are hedged with non-designated hedges when the related anticipated foreign revenue and expenses are recognized in the Company’s financial statements. |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of principally investments, derivative financial instruments, and accounts receivable. The Company believes that there is minimal credit risk associated with the investment of its cash and cash equivalents, restricted cash, and short-term investments, due to the restrictions placed on the type of investment that can be entered into under the Company’s investment policy. The Company’s short-term investments consist of investment-grade securities, and the Company’s cash and investments are held and managed by high credit quality financial institutions. The Company is exposed to credit loss in the event of nonperformance by counterparties to the foreign currency forward contracts used to mitigate the effect of foreign currency exchange rate changes. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any counterparty. The Company’s foreign currency forward contracts do not contain any credit-risk-related contingent features. In addition, the derivative contracts typically mature in less than six months and the Company continuously evaluates the credit standing of its counterparty financial institutions. The counterparties to these arrangements are large highly rated financial institutions and the Company does not consider non-performance a material risk. The Company believes the counterparties for its outstanding contracts are large, financially sound institutions and thus, the Company does not anticipate nonperformance by these counterparties. The Company’s customers are primarily retailers and wholesale distributors who sell or distribute the products to a large group of end-users. The Company regularly performs credit evaluations of the Company’s customers’ financial condition and considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks and current economic conditions that may affect customers’ ability to pay. The Company does not require collateral from its customers. Historically, a substantial portion of the Company’s revenue has been derived from a limited number of retailers and wholesale distribution partners. |
Allowance for doubtful accounts | Allowance for doubtful accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The allowance for doubtful accounts is reviewed periodically and adjusted if necessary based on the Company’s assessments of its customers’ ability to pay. If the financial condition of the Company’s customers should deteriorate or if actual defaults are higher than the Company’s historical experience, additional allowances may be required, which could have an adverse impact on operating expenses. |
Inventories | Inventories Inventories consist of finished goods which are valued at the lower of cost or net realizable value, with cost being determined using the first-in, first-out method. The Company writes down its inventories based on estimated excess and obsolete inventories determined primarily based on demand forecasts, but takes into account market conditions, product development plans, product life expectancy and other factors. At the point of loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase of the newly established cost basis. While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is risk that additional charges may be necessary if current forecasts are greater than actual demand. |
Property and equipment, net | Property and equipment, net Property and equipment are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Asset Category: Range of Useful Lives Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of remaining lease term or 5 years Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying value of the asset is reviewed on a regular basis for the existence of facts, both internal and external, that may suggest impairment. |
Goodwill | Goodwill Goodwill pertained to the acquisitions of Avaak, Inc. (“Avaak”) and Placemeter, Inc. (“Placemeter”). Goodwill represents the purchase price over estimated fair value of net assets of businesses acquired in a business combination. The Company performs an annual impairment assessment of goodwill at the reporting unit level on the first day of the fourth fiscal quarter. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. Should certain events or indicators of impairment occur between annual impairment tests, the Company will perform the impairment test as those events or indicators occur. Examples of such events or circumstances include a significant decline in the Company’s expected future cash flows, a sustained, significant decline in the Company’s stock price and market capitalization, a significant adverse change in the business climate and slower growth rates. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying amount. The qualitative assessment considers macroeconomic conditions, industry and market considerations, cost factors, overall company financial performance, events affecting the reporting units, and changes in the Company’s stock price. If the reporting unit does not pass the qualitative assessment, the Company estimates its fair value and compares the fair value with the carrying amount of its reporting unit, including goodwill. If the fair value is greater than the carrying amount of its reporting unit, no impairment is recorded. Goodwill is also tested for impairment by performing a quantitative assessment, which is used to identify both the existence of impairment and the amount of impairment loss. The quantitative assessment compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value is less than the carrying amount, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The impairment charge, if any would be recorded to earnings in the consolidated statements of operations. |
Intangibles, net | Intangibles, net pertained to the acquisitions of Avaak and Placemeter. Purchased intangibles with finite lives are amortized using the straight-line method over the estimated economic useful life, which range from three to five years. Finite-lived intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Examples of such events or circumstances include: a significant decrease in the market price of the asset, a significant decline in the Company’s expected future cash flows, significant changes or planned changes in its use of the assets, and a significant adverse change in the business climate. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of the asset exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying amount of the asset is reviewed on a regular basis for the existence of facts, both internal and external, that may suggest impairment. |
Revenue Recognition | Revenue recognition under ASC 606 Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The majority of revenue comes from sales of hardware products to customers (retailers, distributors, and service providers). Revenue is recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery, dependent upon the terms of the underlying contract. The amount recognized reflects the consideration the Company expects to be entitled to in exchange for the transferred goods. The Company sells subscription paid services to its end user customers where it provides customers access to its cloud services. Revenue for subscription sales is generally recognized on a ratable basis over the contract term, beginning on the date that the service is made available to the customers at the time of registration. The subscription contracts are generally 30 days or 12 months in length, billed in advance. All such service or support sales are typically recognized using an output measure of progress by looking at the time elapsed, as the contracts generally provide the customer equal benefit throughout the contract period. In addition to selling paid subscriptions, the Company also sells services bundled with hardware products and accounts for these sales in line with the multiple performance obligations guidance. Revenue from all sales types is recognized at transaction price, which is the amount the Company expects to be entitled to in exchange for transferring goods or providing services. Transaction price is calculated as selling price net of variable consideration which may include estimates for future returns, sales incentives, and price protection related to current period product revenue. The Company’s standard obligation to its direct customers generally provides for a full refund in the event that such product is not merchantable or is found to be damaged or defective. In determining estimates for future returns, management analyzes historical data, channel inventory levels, current economic trends, and changes in customer demand for the Company’s products. Sales incentives and price protection are determined based on a combination of the actual amounts committed and through estimating future expenditure based upon historical customary business practice. Typically variable consideration does not need to be constrained as estimates are based on predictive historical data or future commitments that are planned and controlled by the Company. However, the Company continues to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. Contracts with multiple performance obligations Some of the Company’s contracts with customers contain multiple promised goods or services. Such contracts include hardware products with bundled services, various subscription services, and support. For these contracts, the Company accounts for the promises separately as individual performance obligations if they are distinct. Performance obligations are determined to be considered distinct if they are both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. The embedded software in most of the hardware products is not considered distinct and therefore the combined hardware and incidental software are treated as one performance obligation and recognized at the point in time when control of product transfers to the customer. Services that are included with certain hardware products are considered distinct and therefore the hardware and service are treated as separate performance obligations. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are generally determined based on the prices charged to customers or using an adjusted market assessment. Standalone selling price of the hardware is directly observable from add-on camera and base station sales. Standalone selling price of the premium services are directly observable from sales direct to end users while the service is estimated using an adjusted market approach. Revenue is then recognized for each distinct performance obligation as control is transferred to the customer. Revenue attributable to hardware is recognized at the time control of the product transfers to the customer. The transaction price allocated to the service is recognized over the specified service period or over the estimated useful life of the hardware, beginning when the customer is expected to activate their account. Useful life of the hardware is determined by industry norms, technical and financial relevance, frequency of new model releases, and user history. Warranties Sales of hardware products regularly include warranties to end customers that cover bug fixes, minor updates such that the product continues to function according to published specifications in a dynamic environment, and phone support. These standard warranties are assurance type warranties and do not offer any services in addition to the assurance that the product will continue working as specified for one or more years. Therefore, warranties are not considered separate performance obligations in the arrangement. Instead, the expected cost of warranties is accrued as an expense in accordance with authoritative guidance. Sales incentives The Company accrues for sales incentives as a marketing expense if it receives an identifiable benefit in exchange and can reasonably estimate the fair value of the identifiable benefit received; otherwise, it is recorded as a reduction to revenues. As a consequence, the Company records a substantial portion of its channel marketing costs as a reduction of revenue. The Company records estimated reductions to revenue for sales incentives when the related revenue is recognized or ahead of customer or end customer commitment if customary business practice creates an implied expectation that such activities will occur in the future. Shipping and handling costs The Company includes shipping and handling fees billed to customers in Revenue. Shipping and handling costs associated with inbound freight are included in Cost of revenue. In cases where the Company gives a freight allowance to the customer for their own inbound freight costs, such costs are appropriately recorded as a reduction in Revenue. Shipping and handling costs associated with outbound freight are included in Sales and marketing expenses. The Company has elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs associated with outbound freight totaled $3.7 million , $2.8 million and $1.5 million for the year ended December 31, 2018 , 2017 and 2016, respectively. Contract costs Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in sales and marketing and general and administrative expenses. If the incremental costs of obtaining a contract, which consist of sales commissions, relate to a service recognized over a period longer than one year, costs are deferred and amortized in line with the related services over the period of benefit. Deferred commissions are classified as non-current based on the original amortization period of over one year. As of December 31, 2018 , deferred commissions were not significant. Contract balances The Company records accounts receivable when it has an unconditional right to consideration. Contract liabilities are recorded when cash payments are received or due in advance of performance. Contract liabilities consist of advance payments and deferred revenue, where the Company has unsatisfied performance obligations. Contract liabilities are classified as Deferred revenue on the consolidated balance sheets. Payment terms vary by customer. The time between invoicing and when payment is due is not significant. For certain products or services and customer types, payment is required before the products or services are delivered to the customer. Refer to Note 3, Revenue Recognition, for detailed disclosures regarding changes in contract balances for the year ended December 31, 2018 . Transaction Price Allocated to the Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. Non-cancellable backlog includes goods and services for which customer purchase orders have been accepted and that are scheduled or in the process of being scheduled for shipment. |
Revenue recognition under ASC 605 | Revenue recognition under ASC 605 Revenue from product sales is generally recognized at the time the product is shipped, provided that persuasive evidence of an arrangement exists, title and risk of loss has transferred to the customer, the selling price is fixed or determinable and collection of the related receivable is reasonably assured. Currently, for some of the Company’s customers, title passes to the customer upon delivery to the port or country of destination, upon their receipt of the product, or upon the customer’s resale of the product. At the end of each fiscal quarter, the Company estimates and defers revenue related to product where title has not transferred. The revenue continues to be deferred until such time that title passes to the customer. The Company assesses collectability based on a number of factors, including general economic and market conditions, past transaction history with the customer, and the creditworthiness of the customer. If the Company determines that collection is not reasonably assured, then revenue is deferred until receipt of the payment from the customer. A large majority of the Company’s product offerings consist of multiple elements. The Company’s multiple-element product offerings include hardware with services, which are considered separate units of accounting. In general, the hardware is delivered up front, while the services are delivered over the stated service period, or the estimated useful life. The services are delivered over the service period whether included in a multiple-element offering or not. The Company allocates revenue to the deliverables based upon their relative selling price. Revenue allocated to each unit of accounting is then recognized when persuasive evidence of an arrangement exists, title and risk of loss has transferred to the customer, the selling price is fixed or determinable and collection of the related receivable is reasonably assured. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of fair value of the deliverable, or when VSOE of fair value is unavailable, its best estimate of selling price (“ESP”), as the Company has determined it is unable to establish third-party evidence of selling price for the deliverables. In determining VSOE, the Company requires that a substantial majority of the selling prices for a deliverable sold on a stand-alone basis fall within a reasonably narrow pricing range, generally evidenced by approximately 80% of such historical stand-alone transactions falling within +/-15% of the median price. The Company determines ESP for a deliverable by considering multiple factors, including, but not limited to, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices. The objective of ESP is to determine the price at which the Company would transact a sale if the deliverable were sold on a stand-alone basis. The determination of ESP is made through consultation with and formal approval by the Company’s management, taking into consideration the go-to-market strategy. Certain distributors and retailers generally have the right to return product for stock rotation purposes. Upon shipment of the product, the Company reduces revenue for an estimate of potential future product warranty and stock rotation returns related to the current period product revenue. Management analyzes historical returns, channel inventory levels, current economic trends and changes in customer demand for the Company’s products when evaluating the adequacy of the allowance for sales returns, namely warranty and stock rotation returns. Revenue on shipments is also reduced for estimated price protection and sales incentives deemed to be contra-revenue under the authoritative guidance for revenue recognition. The Company accrues for sales incentives as a marketing expense if it receives an identifiable benefit in exchange and can reasonably estimate the fair value of the identifiable benefit received; otherwise, it is recorded as a reduction to revenues. As a consequence, the Company records a substantial portion of its channel marketing costs as a reduction of revenue. The Company records estimated reductions to revenues for sales incentives at the later of when the related revenue is recognized or when the program is offered to the customer or end consumer. |
Research and development | Research and development Costs incurred in the research and development of new products are expensed as incurred. |
Advertising costs | Advertising costs Advertising costs are expensed as incurred. |
Stock-based compensation | Stock-based compensation The Company’s employees have historically participated in NETGEAR’s stock-based compensation plans. Stock-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the Company’s employees as well as an allocation of NETGEAR’s corporate and shared functional employee expenses. The Company measures stock-based compensation at the grant date based on the fair value of the award. The fair value of stock options and the shares offered under the employee stock purchase plan is estimated using the Black-Scholes option pricing model. Estimated compensation cost relating to RSUs is based on the closing fair market value of NETGEAR’s common stock on the date of grant. Equity awards granted by the Company under its own stock-based compensation plans on or after the completion of the IPO are comprised of performance-based stock options (the “PSOs”), stock options, and restricted stock units (“RSUs”). The Company uses the fair value method of accounting for its equity awards granted to employees and measures the cost of employee services received in exchange for the stock-based awards. The fair value of stock options and PSOs are estimated on the grant or offering date using the Black-Scholes option pricing model. The fair value of RSUs is measured on the grant date based on the closing fair market value of the Company’s common stock. The stock-based compensation cost is recognized ratably over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which is generally four years for stock options and four years for RSUs. For PSOs, stock-based compensation expense of individual performance milestone is recognized over the expected performance achievement period when the achievement becomes probable. |
Net income (loss) per share | Net income (loss) per share Basic net income (loss) per share is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. Potentially dilutive common shares include common shares issuable upon exercise of stock options and vesting of restricted stock awards, which are reflected in diluted net income (loss) per share by application of the treasury stock method. Potentially dilutive common shares are excluded from the computation of diluted net income (loss) per share when their effect is anti-dilutive. |
Segment Information | Segment Information The Company operates as one operating and reportable segment. The Company has identified its CEO as the Chief Operating Decision Maker (“CODM”). The CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. |
Comprehensive income (loss) | Comprehensive income (loss) Comprehensive income consists of net income (loss) and other gains and losses affecting stockholders’ equity that the Company excluded from net income (loss), including gains and losses related to fair value of short-term investments and the effective portion of cash flow hedges that were outstanding at the end of the year. |
Foreign currency translation and re-measurement | Foreign currency translation and re-measurement The Company’s functional currency is the U.S. dollar. Foreign currency transactions of international subsidiaries are re-measured into U.S. dollars at the end-of-period exchange rates for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Revenue is re-measured at average exchange rates in effect during each period. Expenses are re-measured at average exchange rates in effect during each period, except for expenses related to non-monetary assets and liabilities, which are re-measured at historical exchange rates. Gains and losses arising from foreign currency transactions are included in Other income (expense), net on the consolidated statements of operations. |
Income taxes | Income taxes The Company has adopted the separate return approach for the purpose of the Arlo financial statements, including the income tax provisions and the related deferred tax assets and liabilities. The historic operations of the Arlo business reflect a separate return approach for each jurisdiction in which Arlo had a presence and NETGEAR filed a tax return. The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. As a result of the spin-off of Arlo from NETGEAR on December 31, 2018, all net operating losses, with the exception of acquired net operating losses, and tax credit carryforwards determined under the separate return approach that were utilized by NETGEAR or will be retained by NETGEAR were eliminated on December 31, 2018, with an offsetting reduction to our valuation allowance. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records valuation allowances to reduce its deferred tax assets to the net amount that it believes is more likely than not to be realized. Its assessment considers the recognition of deferred tax assets on a jurisdictional basis. Accordingly, in assessing its future taxable income on a jurisdictional basis, the Company considers the effect of its transfer pricing policies on that income. The Company has placed a valuation allowance against U.S. federal and state deferred tax assets since the Company does not anticipate to realize the benefits of deferred tax assets. The Company recognizes tax benefits from uncertain tax positions only if it believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. As the Company expands internationally, it will face increased complexity in determining the appropriate tax jurisdictions for revenue and expense items which may differ from that of NETGEAR. The Company’s policy is to adjust these reserves when facts and circumstances change, such as the closing of a tax audit or refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on its financial condition and operating results. The provision for income taxes includes the effects of any accruals that the Company believes are appropriate, as well as the related net interest and penalties. As a result of the spin-off of Arlo from NETGEAR on December 31, 2018, all uncertain tax positions that remain the responsibility of NETGEAR as a result of the Tax Sharing Agreement have been eliminated from our December 31, 2018 balance sheet, with a corresponding increase to equity. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings. The recently enacted Tax Act significantly changed how the United States taxes corporations. |
Certain risks and uncertainties | Certain risks and uncertainties The Company’s products are concentrated in the connected lifestyle solution industries, which are characterized by rapid technological advances, changes in customer requirements and evolving regulatory requirements and industry standards. The success of the Company depends on management’s ability to anticipate and/or to respond quickly and adequately to such changes. Any significant delays in the development or introduction of products and services could materially adversely affect the Company’s business, results of operations and financial condition. The Company relies on a limited number of third parties to manufacture all of its products. If any of the Company’s third-party manufacturers cannot or will not manufacture its products in required volumes, on a cost-effective basis, in a timely manner or at all, the Company will have to secure additional manufacturing capacity. Any interruption or delay in manufacturing could materially adversely affect the Company’s business, results of operations and financial condition. |
Recent accounting pronouncements | Recent accounting pronouncements Emerging Growth Company Status As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, unless the Company otherwise irrevocably elects not to avail itself of this exemption. The Company did not make such an irrevocable election and has not delayed the adoption of any applicable accounting standards. Accounting Pronouncements Recently Adopted ASU 2014-09 In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASC 606”). The revenue recognition requirements in Accounting Standards Codification Topic 605 (“ASC 605”), Revenue Recognition, is superseded by ASC 606. ASC 606 requires the recognition of revenue when control of promised goods or services is transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new guidance should be applied either retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application (modified retrospective method). The guidance is required to be adopted in the first fiscal quarter of 2019 and early adoption is permitted. On January 1, 2018, the Company adopted ASC 606 and applied this guidance to those contracts which were not completed at the date of adoption using the modified retrospective method. Refer to Note 3, Revenue Recognition , for further details. ASU 2016-01 In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities" (Subtopic 825-10), which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This guidance clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The Company adopted the guidance effectively October 1, 2018, the beginning of its fourth fiscal quarter of 2018. The adoption did not have material impact on the Company’s consolidated financial position or cash flows. ASU 2016-16 In October 2016, the FASB issued ASU 2016-16, “Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory” (Topic 740), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This removes the exception to postpone recognition until the asset has been sold to an outside party. ASU 2016-16 is required to be adopted in the first fiscal quarter of 2019 with early adoption permitted. The Company elected to adopt the new standard on January 1, 2018 (when it became effective for public companies that are not emerging growth companies). The adoption did not have material impact on the Company’s consolidated financial position, results of operations, or cash flows. ASU 2016-18 In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows: Restricted Cash” (Topic 230), which requires entities to present the aggregate changes in cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, the statement of cash flows now presents restricted cash and restricted cash equivalents as a part of the beginning and ending balances of cash and cash equivalents. ASU 2016-18 is effective for the Company in the first fiscal quarter of 2019 and early adoption is permitted. The Company early adopted the new guidance effectively October 1, 2018, the beginning of its fourth fiscal quarter of 2018. The adoption did not have material impact on the Company’s consolidated financial position or cash flows. ASU 2017-12 In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities” (Topic 815), which expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance also makes certain targeted improvements to simplify the application of hedge accounting guidance, ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness and ease the reporting on hedge ineffectiveness. ASU 2017-12 is effective for the Company in the first fiscal quarter of 2019 and early adoption is permitted. In the third quarter of fiscal 2018, the Company established a hedge program to hedge foreign currency exchange rate risks. The Company early adopted the new guidance effectively July 2, 2018, the beginning of its third fiscal quarter of 2018. The adoption did not have material impact on the Company’s consolidated financial position, results of operations, or cash flows. ASU 2018-15 In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). ASU 2018-15 is effective for the Company beginning in the first fiscal quarter of 2022 and early adoption is permitted. The Company early adopted the new guidance effectively October 1, 2018, the beginning of its fourth fiscal quarter of 2018. The adoption did not have material impact on the Company’s consolidated financial position, results of operations, or cash flows. Accounting Pronouncements Not Yet Effective ASU 2016-02 In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), which requires lessees to recognize on the balance sheets a right-of-use (“ROU”) asset, representing its right to use the underlying asset for the lease term, and a corresponding lease liability for all leases with terms greater than 12 months. The liability will be equal to the net present value of minimum lease payments while the ROU asset will be based on the liability, subject to adjustment, such as for initial direct costs. In addition, ASU 2016-02 expands the disclosure requirements for lessees to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. Upon adoption, the Company will be required to record a lease asset and lease liability related to its operating leases. The new standard requires a modified retrospective transition through a cumulative-effect adjustment as of the beginning of the earliest period presented in the financial statements, although the FASB recently approved an option for transition relief to not restate or make required disclosures under the new standard in comparative periods in the period of adoption. ASU 2016-02 is effective for the Company in the first fiscal quarter of 2020 (or the first fiscal quarter of 2019 should the Company cease to be classified as an EGC), with early adoption permitted. The Company will adopt the new standard effective January 1, 2019 and elect to utilize the FASB’s recently approved option for transition relief and recognize a cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2019. The Company will not restate or make disclosures under the new standard for the comparative periods prior to the period of adoption. The Company’s assessment of the impact of the adoption of ASU 2016-02, based on its lease portfolio as of December 31, 2018, indicates that it will recognize ROU assets in the range of $12 million to $16 million and lease liabilities in the range of $13 million to $17 million as of January 1, 2019, excluding the build-to-suit lease arrangement under its San Jose corporate headquarters. The build-to-suit lease arrangement for the Company’s San Jose corporate headquarters was in progress as of January 1, 2019 and reevaluated to determine whether the Company continued to be the accounting owner. The Company concluded that it did not have control over the underlying asset and de-recognized it upon the adoption of ASU 2016-02. Once the construction is complete, and the lease has commenced, the Company will classify the lease in accordance with the classification guidance in ASU 2016-02 and reflect ROU assets of approximately $18.4 million and lease liabilities of approximately $18.4 million upon completion of construction of leasehold improvements. The cumulative net impact of de-recognizing the build-to-suit assets and liabilities upon adoption of ASU 2016-02 will amount to $0.3 million to be adjusted to the beginning retained earnings. The Company does not expect material impacts on its consolidated statements of operations and statements of cash flows. The Company has adequately prepared for the adoption process, including adding policies, procedures and controls, implementing lease accounting software, and evaluating necessary disclosures to comply with the standards requirements as of December 31, 2018. ASU 2016-13 In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. ASU 2016-13 is effective for the Company beginning in the first fiscal quarter of 2021 (or the first fiscal quarter of 2020 should the Company cease to be classified as an EGC), with early adoption permitted. The Company continues to assess the potential impact of the new guidance, but does not expect it to have a material impact on its financial position, results of operations, or cash flows. With the exception of the new standards discussed above, there have been no other new accounting pronouncements that have significance, or potential significance, to the Company’s financial position, results of operations, or cash flows. |
Litigation accounting policy | The Company is involved in disputes, litigation, and other legal actions, including, but not limited to, the matters described below. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. In such cases, the Company accrues for the amount, or if a range, the Company accrues the low end of the range, only if there is not a better estimate than any other amount within the range, as a component of legal expense within litigation reserves, net. The Company monitors developments in these legal matters that could affect the estimate the Company had previously accrued. In relation to such matters, the Company currently believes that there are no existing claims or proceedings that are likely to have a material adverse effect on its financial position within the next twelve months, or the outcome of these matters is currently not determinable. There are many uncertainties associated with any litigation, and these actions or other third-party claims against the Company may cause the Company to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require the Company to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, the Company's business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from the Company's estimates, which could result in the need to adjust the liability and record additional expenses. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Cash Equivalents and Restricted Cash | The following table totals cash and cash equivalents and restricted cash as reported on the consolidated balance sheet as of December 31, 2018 and 2017, and the sum is presented on the consolidated statements of cash flows: As of December 31, December 31, (In thousands) Cash and cash equivalents $ 151,290 $ 108 Restricted cash 4,134 — Total as presented on the consolidated statements of cash flows $ 155,424 $ 108 |
Summary of Property, Plant and Equipment Range of Useful Lives | Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Asset Category: Range of Useful Lives Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of remaining lease term or 5 years |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Impacts of Adopting ASC 606 | The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated balance sheet for the fiscal year beginning January 1, 2018 as an adjustment to the opening balances: As of Adjustments As of December 31, January 1, (In thousands) Assets: Accounts receivable, net $ 157,680 $ 827 $ 158,507 Inventories $ 82,952 $ (377 ) $ 82,575 Other non-current assets $ 2,193 $ 244 $ 2,437 Liabilities: Accounts payable $ 20,711 $ (48 ) $ 20,663 Deferred revenue $ 34,072 $ (9,326 ) $ 24,746 Accrued liabilities $ 76,097 $ 13,370 $ 89,467 Non-current deferred revenue $ 13,332 $ (241 ) $ 13,091 Equity: Net parent investment $ 125,419 $ (3,061 ) $ 122,358 The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated balance sheet as of December 31, 2018 : As reported Adjustments Balance without adoption of ASC 606 (In thousands) Assets Accounts receivable, net $ 166,045 $ (16,123 ) $ 149,922 Inventories $ 124,791 $ 115 $ 124,906 Other non-current assets $ 8,449 $ — $ 8,449 Liabilities: Accounts payable $ 82,542 $ (227 ) $ 82,315 Deferred revenue $ 26,678 $ 976 $ 27,654 Accrued liabilities $ 172,036 $ (29,627 ) $ 142,409 Non-current deferred revenue $ 23,313 $ 3,176 $ 26,489 Stockholders ’ Equity: Accumulated deficit $ (45,849 ) $ 9,694 $ (36,155 ) The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated statement of operations for the year ended December 31, 2018 : As reported Adjustments Balance without adoption of ASC 606 (In thousands) Revenue $ 464,918 $ 6,958 $ 471,876 Cost of revenue $ 372,843 $ 262 $ 373,105 Gross profit $ 92,075 $ 6,696 $ 98,771 Provision for income taxes $ 772 $ 63 $ 835 Net loss $ (75,483 ) $ 6,633 $ (68,850 ) |
Schedule of Remaining Performance Obligations | The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2018 : 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 47,024 $ 15,412 $ 8,323 $ 70,759 |
Schedule of Changes in Contract Balances | The following table reflects the changes in contract balances for the year ended December 31, 2018 : Balance Sheet Location December 31, 2018 January 1, 2018 (1) $ change % change (In thousands) Accounts receivable, net Accounts receivable, net $ 166,045 $ 158,507 $ 7,538 4.8 % Contract liabilities - current Deferred revenue $ 26,678 $ 24,746 $ 1,932 7.8 % Contract liabilities - non-current Non-current deferred revenue $ 23,313 $ 13,091 $ 10,222 78.1 % _________________________ (1) Includes the adjustments made to those contracts which were not completed at the date of ASC 606 adoption using the modified retrospective method. |
Business Acquisition (Tables)
Business Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Allocation of Purchase Price | The allocation of the purchase price was as follows (in thousands): Cash and cash equivalents $ 8 Accounts receivable 11 Prepaid expenses and other current assets 130 Property and equipment 83 Intangibles 6,000 Goodwill 3,742 Accounts payable (40 ) Accrued liabilities (74 ) Deferred tax liabilities (308 ) Total purchase price $ 9,552 |
Unaudited Pro Forma Information | The unaudited pro forma financial information is as follows (in thousands): Year Ended December 31, 2016 Revenue $ 184,744 Net loss (18,258 ) |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Available-for-sale short-term investments | Available-for-sale short-term investments As of December 31, 2018 Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. treasuries $ 49,739 $ 2 $ (4 ) $ 49,737 |
Schedule of Accounts Receivable, Net | Accounts receivable, net As of December 31, December 31, (In thousands) Gross accounts receivable $ 166,172 $ 164,157 Allowance for doubtful accounts (127 ) (207 ) Allowance for sales returns (1) — (5,868 ) Allowance for price protection (1) — (402 ) Total allowances (127 ) (6,477 ) Total accounts receivable, net $ 166,045 $ 157,680 _________________________ (1) Upon adoption of ASC 606, allowances for sales returns and price protection were reclassified to current liabilities as these reserve balances are considered refund liabilities. Refer to Note 3. Revenue Recognition , for additional information on the adoption impact. |
Schedule of Property and Equipment, Net | The components of property and equipment are as follows: As of December 31, December 31, (In thousands) Machinery and equipment $ 11,415 $ 6,067 Software 10,624 180 Computer equipment 4,342 50 Leasehold improvements 3,007 530 Furniture and fixtures 2,698 443 Construction in progress (1) 28,357 — Total property and equipment, gross 60,443 7,270 Accumulated depreciation (11,015 ) (3,387 ) Total property and equipment, net $ 49,428 $ 3,883 _________________________ (1) The Company has a build-to-suit lease arrangement for its headquarters lease in San Jose, California. Refer to Note 12, Commitments and Contingencies , for details of this lease. The construction is expected to be completed in March 2019. |
Schedule of Intangibles, Net | Intangibles, net As of December 31, 2018 As of December 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 9,800 $ (7,165 ) $ 2,635 $ 9,800 $ (5,790 ) $ 4,010 Trademarks and trade names 1,400 (1,400 ) — 1,400 (1,400 ) — Other 800 (612 ) 188 800 (462 ) 338 Total intangibles, net $ 12,000 $ (9,177 ) $ 2,823 $ 12,000 $ (7,652 ) $ 4,348 |
Schedule of Estimated Amortization Expense Related to Intangibles | As of December 31, 2018 , estimated amortization expense related to finite-lived intangibles for the remaining years was as follows (in thousands): 2019 $ 1,517 2020 1,306 Total estimated amortization expense $ 2,823 |
Schedule of Goodwill | There was no change in the carrying amount of goodwill during the years ended December 31, 2018 and 2017. The goodwill as of December 31, 2018 , 2017 and 2016 was as follows (in thousands): As of December 31, 2016 $ 15,638 As of December 31, 2017 $ 15,638 As of December 31, 2018 $ 15,638 |
Schedule of Other Non-Current Assets | Other non-current assets As of December 31, December 31, 2017 (In thousands) Non-current deferred income taxes $ 1,108 $ 865 Deposits 4,084 — Other 3,257 1,328 Total other non-current assets $ 8,449 $ 2,193 |
Schedule of Other Accrued Liabilities | Accrued liabilities As of December 31, December 31, (In thousands) Sales and marketing $ 75,863 31,613 Sales returns 49,247 — Warranty obligation 3,712 31,756 Accrued employee compensation 11,897 3,184 Freight 3,913 3,862 Current financing lease obligation 1,632 — Other 25,772 5,682 Total accrued liabilities $ 172,036 $ 76,097 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables summarize assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 : As of December 31, 2018 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) (In thousands) Assets: Cash equivalents: U.S. treasuries (<90 days) $ 438 $ 438 $ — Available-for-sale securities: U.S. treasuries (1) 49,737 49,737 — Foreign currency forward contracts (2) 322 — 322 Total assets measured at fair value $ 50,497 $ 50,175 $ 322 Liabilities: Foreign currency forward contracts (3) $ 71 $ — $ 71 Total liabilities measured at fair value $ 71 $ — $ 71 _________________________ (1) Included in Short-term investments on the Company’s consolidated balance sheets. (2) Included in Prepaid expenses and other current assets on the Company’s consolidated balance sheets. (3) Included in Accrued liabilities on the Company’s consolidated balance sheets. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of the Company's Derivative Instruments and the Line Items on the Consolidated Balance Sheets | The fair values of the Company’s derivative instruments and the line items on the consolidated balance sheets to which they were recorded as of December 31, 2018 are summarized as follows: Derivative Assets Balance Sheet Location December 31, 2018 Balance Sheet Location December 31, 2018 (In thousands) (In thousands) Derivative assets not designated as hedging instruments Prepaid expenses and other current assets $ 293 Other accrued liabilities $ 46 Derivative assets designated as hedging instruments Prepaid expenses and other current assets 29 Other accrued liabilities 25 Total $ 322 $ 71 |
Schedule of Offsetting of Derivative Assets | The following tables set forth the offsetting of derivative assets and liabilities as of December 31, 2018 : As of December 31, 2018 Gross Amounts Not Offset in the Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Of Assets Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 100 $ — $ 100 $ — $ — $ 100 Wells Fargo Bank 222 — 222 (68 ) — 154 Total $ 322 $ — $ 322 $ (68 ) $ — $ 254 |
Schedule of Offsetting of Derivative Liabilities | As of December 31, 2018 Gross Amounts Not Offset in the Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) JP Morgan $ 3 $ — $ 3 $ — $ — $ 3 Wells Fargo Bank 68 — 68 (68 ) — — Total $ 71 $ — $ 71 $ (68 ) $ — $ 3 |
Schedule of Effects and Locations of Gains or Losses Recognized in Income | The effects of the Company’s cash flow hedges on the consolidated statements of operations for the year ended December 31, 2018 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Year Ended December 31, 2018 Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 464,918 $ 372,843 $ 58,794 $ 52,593 $ 28,209 Gains (losses) on cash flow hedge $ 315 $ — $ (2 ) $ (28 ) $ (11 ) |
Schedule of Derivatives not Designated as Hedging Instruments | The effects of the Company’s non-designated hedge included in Other income (expense), net on the consolidated statements of operations for the year ended December 31, 2018 are as follows: Derivatives Not Designated as Hedging Instruments Location of Gains (Losses) Recognized in Income on Derivative December 31, 2018 (In thousands) Foreign currency forward contracts Other income (expense), net $ 589 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income | The following table sets forth the changes in accumulated other comprehensive income (loss) (“AOCI”) by component for the year ended December 31, 2018 : Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2017 $ — $ — $ — $ — Other comprehensive income (loss) before reclassifications (2 ) 276 — 274 Less: Amount reclassified from accumulated other comprehensive income (loss) — 274 — 274 Net current period other comprehensive income (loss) (2 ) 2 — — Balance as of December 31, 2018 $ (2 ) $ 2 $ — $ — |
Schedule of Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following tables provide details about significant amounts reclassified out of each component of AOCI for the year ended December 31, 2018 : Gains (Losses) Recognized in OCI - Effective Portion Gains (Losses) Reclassified from OCI to Income - Effective Portion Affected Line Item in the Statements of Operations (In thousands) Gains (losses) on cash flow hedge: Foreign currency contracts $ 276 $ 315 Revenue Foreign currency contracts — — Cost of revenue Foreign currency contracts — (2 ) Research and development Foreign currency contracts — (28 ) Sales and marketing Foreign currency contracts — (11 ) General and administrative $ 276 $ 274 Total * _________________________ * There is no tax impact on all hedging gains and losses from derivative contracts due to the Company’s full valuation allowance of its deferred tax assets. |
Other Income (Expense), Net (Ta
Other Income (Expense), Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Summary of Other Income (Expense), Net | Other income (expense), net consisted of the following: Year Ended December 31, 2018 2017 2016 (In thousands) Foreign currency transaction gain (loss), net $ (1,819 ) $ 1,946 $ (512 ) Foreign currency contract gain 589 — — Other 53 — — Total $ (1,177 ) $ 1,946 $ (512 ) |
Income Taxes Income Taxes (Tabl
Income Taxes Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax | Income before income taxes and the provision for income taxes consisted of the following: Year Ended December 31, 2018 2017 2016 (In thousands) United States $ (79,581 ) $ 3,318 $ (15,432 ) International 4,870 4,359 1,772 Total $ (74,711 ) $ 7,677 $ (13,660 ) |
Summary of Income Tax Expense (Benefit) | Year Ended December 31, 2018 2017 2016 (In thousands) Current: U.S. Federal $ — $ — $ — State 16 260 22 Foreign 1,425 1,255 727 1,441 1,515 749 Deferred: U.S. Federal — (66 ) (129 ) State — — (180 ) Foreign (669 ) (321 ) (357 ) (669 ) (387 ) (666 ) Total $ 772 $ 1,128 $ 83 |
Schedule of Deferred Tax Assets and Liabilities | Net deferred tax assets consisted of the following: Year Ended December 31, 2018 2017 (In thousands) Deferred Tax Assets: Accruals and allowances $ 17,974 $ 7,339 Net operating loss carryforwards 2,946 3,478 Stock-based compensation 1,927 931 Deferred rent 373 — Deferred revenue 2,573 1,688 Tax credit carryforwards — 3,504 Depreciation and amortization 567 — Total deferred tax assets 26,360 16,940 Deferred Tax Liabilities: Depreciation and amortization (775 ) (464 ) Total deferred tax liabilities (775 ) (464 ) Valuation Allowance (24,477 ) (15,611 ) Net deferred tax assets $ 1,108 $ 865 |
Schedule of Effective Income Tax Rate Reconciliation | The effective tax rate differs from the applicable U.S. statutory federal income tax rate as follows: Year Ended December 31, 2018 2017 2016 Tax at federal statutory rate 21.0 % 35.0 % 35.0 % State, net of federal benefit 5.9 % (8.7 )% 2.1 % Impact of international operations 0.4 % (6.2 )% 9.3 % Stock-based compensation (0.1 )% (5.0 )% — % Tax credits 1.5 % (6.8 )% 2.9 % Valuation allowance (27.0 )% (105.1 )% (51.4 )% Impact of the Tax Act — % 115.6 % — % Non-deductible transaction costs (2.6 )% — % — % Others (0.1 )% (4.1 )% 1.5 % Provision for income taxes (1.0 )% 14.7 % (0.6 )% |
Reconciliation of Gross Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows: Federal, State, and Foreign Tax (In thousands) Balance as of December 31, 2016 $ 676 Additions based on tax positions related to the current year 361 Additions for tax positions of prior years 30 Reductions for tax positions of prior years (45 ) Balance as of December 31, 2017 $ 1,022 Additions based on tax positions related to the current year 338 Adjustments to Net parent investments (1,338 ) Balance as of December 31, 2018 $ 22 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Net Income Per Share | Net income (loss) per share for the years ended December 31, 2018 , 2017 and 2016 were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Numerator: Net income (loss) $ (75,483 ) $ 6,549 $ (13,743 ) Denominator: Weighted average common shares - basic 67,231 62,250 62,250 Potentially dilutive common shares — — — Stock option and RSU conversion (1) — — — Weighted average common shares - dilutive 67,231 62,250 62,250 Basic net income (loss) per share $ (1.12 ) $ 0.11 $ (0.22 ) Diluted net income (loss) per share $ (1.12 ) $ 0.11 $ (0.22 ) Anti-dilutive employee stock-based awards, excluded 1,109 — — _________________________ (1) On December 31, 2018, 6.8 million of stock options and RSUs were added to the Company’s equity awards as issued and outstanding resulting from the adjustment of NETGEAR’s equity awards that were granted to both NETGEAR and Arlo employees and non-employee directors, a portion of which were converted as Arlo awards. The dilutive effect of these converted stock options and RSUs is reflected above per share by application of the treasury stock method and none are potentially dilutive. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | As of December 31, 2018 , future minimum lease payments under non-cancelable operating leases and build-to-suit lease arrangements, for each of the next five years and thereafter were as follows (in thousands): 2019 $ 4,634 2020 5,813 2021 5,678 2022 5,580 2023 4,903 Thereafter 19,252 Total $ 45,860 |
Schedule of Changes in Warranty Obligation | Warranty Obligations Changes in the Company’s warranty liability, which is included in Accrued liabilities in the consolidated balance sheets, were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Balance at the beginning of the period $ 31,756 $ 15,949 $ 6,490 Reclassified to sales returns upon adoption of ASC 606 (1) (28,713 ) — — Provision for warranty obligation made during the period 1,477 51,709 22,912 Settlements made during the period (808 ) (35,902 ) (13,453 ) Balance at the end of the period $ 3,712 $ 31,756 $ 15,949 ________________________ (1) Upon adoption of ASC 606 on January 1, 2018, warranty reserve balances totaling $28.7 million were reclassified to sales returns as these liabilities are payable to the Company’s customers and settled in cash or by credit on account. Under ASC 606, these amounts are to be accounted for as sales with right of return. |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefits and Share-based Compensation, Noncash [Abstract] | |
Schedule of Share-based Compensation Activity | The following table sets forth the 2018 Plan during the year ended December 31, 2018 and the available shares for future grants as of December 31, 2018 : Number of Shares (In thousands) Shares reserved as of August 2, 2018 7,500 Granted at IPO (1) (3,403 ) Granted during the period (137 ) Additional authorized shares in the Distribution 6,823 Converted in the Distribution (2) (6,823 ) Cancelled 9 Shares available for grants as of December 31, 2018 3,969 _________________________ (1) Including Arlo IPO Options of 2.8 million shares granted to the Company’s Named Executive Officers (“NEOs”) with performance-based vesting criteria (in addition to service-based vesting criteria for any of such IPO Options that are deemed to have been earned). As of December 31, 2018 , it had not yet been determined the extent to which (if at all) the performance-based vesting criteria had been satisfied except for Tranche 4 Performance Option. Therefore, this line item includes all such performance-based IPO Options granted during the year ended December 31, 2018 , reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied. Tranche 4 Performance Option’s measurement period was completed and none of the shares were expected to vest. The Company recorded an adjustment of $0.2 million reducing the stock-based compensation expense during the fourth fiscal quarter of 2018 as a result of the final determination of the performance metrics. (2) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. |
Schedule of Stock Option Activity | NETGEAR’s stock option activity for employees specifically identifiable to Arlo during the year ended December 31, 2018 was as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2017 78 $ 35.56 Granted 60 $ 70.15 Converted in the Distribution (1) 283 $ 26.53 Exercised (11 ) $ 20.30 Cancelled (6 ) $ 28.59 Cancelled in the Distribution (1) (276 ) $ 45.11 Transferred (2) 155 $ 36.71 Outstanding as of December 31, 2018 283 $ 26.53 6.82 $ 7,219 Vested and expected to vest as of December 31, 2018 283 $ 26.53 6.82 $ 7,219 Exercisable Options as of December 31, 2018 152 $ 21.27 5.36 $ 4,684 _________________________ (1) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. (2) Transferred options are attributable to employees that transferred from other NETGEAR’s divisions. Arlo’s stock option activity during the year ended of December 31, 2018 was as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (3) (In thousands) (In dollars) (In years) (In thousands) Outstanding as of August 2, 2018 — $ — Granted at IPO (1) 3,343 $ 16.00 Converted in the Distribution (2) 3,866 $ 8.69 Outstanding as of December 31, 2018 7,209 $ 12.08 7.84 $ 8,114 Vested and expected to vest as of December 31, 2018 7,209 $ 12.08 7.84 $ 8,114 Exercisable Options as of December 31, 2018 2,429 $ 7.10 5.02 $ 6,989 _________________________ (1) Including Arlo IPO Options of 2.8 million shares granted to the Company’s NEOs with performance-based vesting criteria (in addition to service-based vesting criteria for any of such IPO Options that are deemed to have been earned). As of December 31, 2018 , it had not yet been determined the extent to which (if at all) the performance-based vesting criteria had been satisfied except for Tranche 4 Performance Option. Therefore, this line item includes all such performance-based IPO Options granted during the year ended December 31, 2018 , reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied. Tranche 4 Performance Option’s measurement period was completed and none of the shares were expected to vest. The Company recorded an adjustment of $0.2 million reducing the stock-based compensation expense during the fourth fiscal quarter of 2018 as a result of the final determination of the performance metrics. (2) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. (3) Representing the total pre-tax intrinsic values (the difference between the Company’s closing stock price on the last trading day of 2018 and the exercise price, multiplied by the number of shares underlying the in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2018 . This amount changes based on the fair market value of the Company’s stock. |
Schedule of RSU Activity | NETGEAR’s RSU activity for employees specifically identifiable to Arlo during the year ended December 31, 2018 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2017 132 $ 45.54 Granted 339 $ 67.24 Converted in the Distribution (1) 521 $ 30.91 Vested (119 ) $ 56.70 Cancelled (7 ) $ 59.85 Cancelled in the Distribution (1) (530 ) $ 59.27 Transferred (2) 185 $ 43.60 Outstanding as of December 31, 2018 521 $ 34.89 1.49 $ 27,111 _________________________ (1) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. (2) Transferred RSUs are attributable to employees that transferred from other NETGEAR’s divisions. Arlo’s RSU activity during the year ended of December 31, 2018 was as follows: Range of Exercise Prices Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of August 2, 2018 — $ — Granted 197 $ 14.46 Converted in the Distribution (1) 2,957 $ 10.67 Vested (4 ) $ 10.44 Cancelled (9 ) $ 22.71 Outstanding as of December 31, 2018 3,141 $ 12.22 1.44 $ 31,349 _________________________ (1) On December 31, 2018, in connection with the Distribution, certain NETGEAR equity awards held by Arlo non-employee directors and employees and NETGEAR non-employee directors and employees were adjusted into equity awards with respect to Arlo common stock and NETGEAR common stock as described in more detail in the employee matters agreement. |
Share-based Compensation Arrangements by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest [Table Text Block] | Year Ended December 31, 2018 2017 2016 (In millions, except per share data) Total intrinsic value of options exercised $ 0.6 $ 0.5 $ 0.8 Total fair value of options vested $ 1.1 $ 0.2 $ 0.2 Weighted-average grant date fair value per share of NETGEAR’s stock options granted to employees specifically identifiable to Arlo $ 20.63 $ 12.25 $ 12.28 Year Ended December 31, 2018 (In millions, except per share data) Total intrinsic value of RSUs vested (the release date fair value) $ 0.04 Total fair value of RSUs vested (the grant date fair value) $ 0.04 weighted-average fair value of RSUs granted $ 14.46 Year Ended December 31, 2018 (In millions, except per share data) Total intrinsic value of options exercised $ — Total fair value of options vested $ — Weighted-average grant date fair value per share of options granted $ 7.02 Year Ended December 31, 2018 2017 2016 (In millions, except per share data) Total intrinsic value of RSUs vested (the release date fair value) $ 6.9 $ 2.7 $ 1.4 Total fair value of RSUs vested (the grant date fair value) $ 5.0 $ 2.0 $ 1.0 weighted-average fair value of RSUs granted $ 67.24 $ 52.89 $ 41.92 |
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block] | The following table summarizes significant ranges of outstanding Arlo’s stock options as of December 31, 2018 . Options Outstanding (1) Options Exercisable (1) Range of Exercise Prices Shares Outstanding Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Per Share Shares Exercisable Weighted- Average Exercise Price Per Share (In thousands) (In years) (In dollars) (In thousands) (In dollars) $2.51 - $6.94 1,534 4.69 $ 6.52 1,466 $ 6.53 $6.96 - $8.76 1,566 6.55 $ 8.18 951 $ 7.95 $10.09 - $13.23 100 9.27 $ 11.97 12 $ 10.09 $14.39 - $14.39 666 9.07 $ 14.39 — $ — $16.00 - $16.00 3,343 9.59 $ 16.00 — $ — $2.51 - $16.00 7,209 7.84 $ 12.08 2,429 $ 7.10 _________________________ (1) Including and reflecting the adjustments on December 31, 2018, in connection with the Distribution from NETGEAR options. |
Schedule of Weighted Average Assumptions | The following table sets forth the weighted average assumptions used to estimate the fair value of Arlo’s stock options granted using Black-Scholes option pricing model during the year ended December 31, 2018 . Expected life (in years) 6.3 Risk-free interest rate 2.86 % Expected volatility 40.0 % Dividend yield — NETGEAR Options The following table sets forth the weighted average assumptions used to estimate the fair value of NETGEAR’s stock options granted and purchase rights granted under the NETGEAR’s ESPP to employees specifically identifiable to Arlo during the years ended December 31, 2018 , 2017 and 2016: Stock Options ESPP (1) 2018 2017 2016 2018 2017 2016 Expected life (in years) 4.4 4.4 4.4 0.5 0.5 0.5 Risk-free interest rate 2.32 % 1.66 % 1.28 % 1.81 % 0.93 % 0.43 % Expected volatility 30.9 % 31.6 % 35.4 % 37.1 % 29.7 % 38.3 % Dividend yield — — — — — — _________________________ (1) Arlo employees have completed their participation into NETGEAR’s ESPP by the end of the second quarter of fiscal 2018. As of December 31, 2018 , no shares had been purchased under the 2018 ESPP by Arlo employees, as the program was suspended until the completion of the Distribution. |
Schedule of Total Stock-Based Compensation Expense Resulting from Stock Options, Restricted Stock Awards, and the Employee Stock Purchase Plan | The following tables set forth stock-based compensation expense for employees specifically identifiable to Arlo and allocated charges deemed attributable to Arlo operations resulting from NETGEAR’s and Arlo’s RSUs and stock options, and the purchase rights under the NETGEAR’s ESPP included in the Company’s consolidated statements of operations during the years ended December 31, 2018 , 2017 and 2016: Year Ended December 31, 2018 2017 2016 Direct (1) Indirect Total Direct Indirect Total Direct Indirect Total (In thousands) Cost of revenue $ 608 $ 583 $ 1,191 $ 102 $ 599 $ 701 $ 61 $ 266 $ 327 Research and development 3,078 396 3,474 1,959 455 2,414 1,349 195 1,544 Sales and marketing 1,992 969 2,961 390 866 1,256 110 407 517 General and administrative 3,153 2,100 5,253 — 2,547 2,547 — 1,216 1,216 Total stock-based compensation $ 8,831 $ 4,048 $ 12,879 $ 2,451 $ 4,467 $ 6,918 $ 1,520 $ 2,084 $ 3,604 _________________________ (1) Reflecting expenses for those legacy NETGEAR stock-based plans that have converted to equivalent Arlo stock-based plans upon the spin-off transaction. |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Net Revenue by Geography | The following table shows revenue by geography for the periods indicated: Year Ended December 31, 2018 2017 2016 (In thousands) United States (“U.S.”) $ 359,936 $ 279,504 $ 142,129 Americas (excluding U.S.) 16,869 13,167 6,035 EMEA 65,462 58,795 27,457 APAC 22,651 19,192 8,983 Total revenue $ 464,918 $ 370,658 $ 184,604 |
Schedule of Long-Lived Asset By Geographic Areas | The Company’s Property and equipment, net are located in the following geographic locations: As of December 31, December 31, (In thousands) United States (“U.S.”) $ 45,053 $ 2,053 Americas (excluding U.S.) 218 61 EMEA 567 1 China 3,040 1,702 APAC (excluding China) 550 66 Total property and equipment, net $ 49,428 $ 3,883 |
Quarterly Unaudited Financial_2
Quarterly Unaudited Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Quarterly Unaudited Financial Data | December 31, September 30, July 1, April 1, (In thousands, except per share amounts) Revenue (1) $ 122,158 $ 131,174 $ 110,948 $ 100,638 Gross profit $ 4,981 $ 29,747 $ 28,294 $ 29,053 Provision for (benefit from) income taxes $ (58 ) $ 223 $ 288 $ 319 Net loss $ (39,073 ) $ (13,225 ) $ (17,822 ) $ (5,363 ) Net loss per share—basic (2) $ (0.53 ) $ (0.19 ) $ (0.29 ) $ (0.09 ) Net loss per share—diluted (3) $ (0.53 ) $ (0.19 ) $ (0.29 ) $ (0.09 ) December 31, October 1, July 2, April 2, (In thousands, except per share amounts) Revenue (1) $ 124,774 $ 104,887 $ 79,194 $ 61,803 Gross profit $ 29,817 $ 28,352 $ 16,712 $ 16,353 Provision for income taxes $ 327 $ 445 $ 137 $ 219 Net income (loss) $ 2,663 $ 6,014 $ (2,152 ) $ 24 Net income (loss) per share—basic (2) $ 0.04 $ 0.10 $ (0.03 ) $ — Net income (loss) per share—diluted (3) $ 0.04 $ 0.10 $ (0.03 ) $ — _________________________ (1) On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASC 606”) and applied this guidance to those contracts which were not completed at the date of adoption using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods (“ASC 605”). The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of Net parent investment. (2) Net loss per share basic and diluted are computed independently for each quarters presented based on the weighted-average basic and fully diluted shares outstanding for each quarters. As a result, the sum of quarterly Net loss per share basic and diluted information may not equal annual Net loss per share basic and diluted. (3) On December 31, 2018, 6.8 million of stock options and RSUs were added to the Company’s equity awards as issued and outstanding resulting from the adjustment of NETGEAR’s equity awards that were granted to both NETGEAR and Arlo employees and non-employee directors, a portion of which were converted as Arlo awards. The dilutive effect of these converted stock options and RSUs is reflected above per share by application of the treasury stock method and none are potentially dilutive. |
The Company and Basis of Pres_2
The Company and Basis of Presentation - Narrative (Details) $ / shares in Units, $ in Thousands | Dec. 17, 2018 | Nov. 09, 2018shares | Aug. 07, 2018USD ($)$ / sharesshares | Aug. 02, 2018$ / sharesshares | Jul. 01, 2018USD ($) | Aug. 02, 2018$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Aug. 01, 2018shares |
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Common stock, issued (in shares) | shares | 74,247,250 | |||||||||
Common stock, authorized (in shares) | shares | 500,000,000 | 500,000,000 | 500,000,000 | |||||||
Preferred stock, authorized (in shares) | shares | 50,000,000 | 50,000,000 | 50,000,000 | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Stock issued during period, common stock | shares | 62,499,000 | 62,500,000 | ||||||||
Common stock, outstanding (in shares) | shares | 62,500,000 | 62,500,000 | 74,247,250 | |||||||
Reserved stock for issuance, common stock | shares | 9,000,000 | |||||||||
Net investment from parent | $ 70,892 | $ 43,188 | $ 43,579 | |||||||
IPO | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Common stock, issued (in shares) | shares | 11,747,250 | 10,215,000 | 10,215,000 | |||||||
Stock price, common stock (in dollars per share) | $ / shares | $ 16 | $ 16 | $ 16 | |||||||
Proceeds from initial public offering, net of offering costs | $ 173,400 | |||||||||
Over-Allotment Option | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Common stock, issued (in shares) | shares | 1,532,250 | |||||||||
Arlo | IPO | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Proceeds from initial public offering, net of offering costs | $ 1,400 | |||||||||
Payments for offering costs | 4,600 | |||||||||
NETGEAR | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Net assets | $ 80,900 | |||||||||
Accounts receivable | 111,100 | |||||||||
Accounts payable | 25,500 | |||||||||
Net investment from parent | 70,000 | |||||||||
NETGEAR | IPO | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Payments for offering costs | $ 3,200 | |||||||||
Percentage of shares owned | 84.20% | |||||||||
NETGEAR | Special Stock Dividend Distribution | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Percentage of shares owned | 84.20% | |||||||||
Number of shares issued (in shares) | shares | 62,500,000 | |||||||||
Ratio of Arlo to NETGEAR common stock (as a ratio) | 1.980295 | 1.980295 | ||||||||
NETGEAR | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Net investment from parent | $ 70,000 | |||||||||
NETGEAR | Allocation of Corporate Expenses | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Purchases from related party | 30,600 | 40,000 | 20,600 | |||||||
NETGEAR | Allocation of Corporate Expenses | Research and development | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Purchases from related party | 9,400 | 11,800 | 5,900 | |||||||
NETGEAR | Allocation of Corporate Expenses | Sales and marketing | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Purchases from related party | 10,000 | 13,100 | 6,400 | |||||||
NETGEAR | Allocation of Corporate Expenses | General and administrative | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Purchases from related party | $ 11,200 | $ 15,100 | $ 8,300 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Summary of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 151,290 | $ 108 | ||
Restricted cash | 4,134 | 0 | ||
Total as presented on the consolidated statements of cash flows | $ 155,424 | $ 108 | $ 220 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Property, Plant and Equipment Range of Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 2 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 5 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 2 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 5 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 2 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 3 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Range of Useful Lives | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 12 Months Ended | ||||||||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jul. 01, 2018USD ($) | Apr. 01, 2018USD ($) | Dec. 31, 2017USD ($) | Oct. 01, 2017USD ($) | Jul. 02, 2017USD ($) | Apr. 02, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Feb. 07, 2019 | Jan. 01, 2019USD ($) | Oct. 01, 2018USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Impairment of intangible assets | $ 0 | $ 0 | $ 0 | |||||||||||||
Cost of revenue | 372,843,000 | 279,424,000 | 146,570,000 | |||||||||||||
Number of operating segments | 1 | 1 | ||||||||||||||
Number of reportable segments | segment | 1 | |||||||||||||||
Fair value in excess of carrying amount | $ 471,000,000 | $ 471,000,000 | $ 471,000,000 | $ 471,000,000 | $ 772,000,000 | |||||||||||
Fair value in excess of carrying amount (as a percentage) | 175.00% | 175.00% | 175.00% | 175.00% | 253.00% | |||||||||||
Goodwill impairment | $ 0 | 0 | ||||||||||||||
Cumulative impact from adoption of ASC 606, net of tax | $ (3,061,000) | (3,061,000) | ||||||||||||||
Income tax benefit | $ 58,000 | $ (223,000) | $ (288,000) | $ (319,000) | $ (327,000) | $ (445,000) | $ (137,000) | $ (219,000) | (772,000) | $ (1,128,000) | (83,000) | |||||
Customer One | Customer Concentration Risk | Accounts Receivable | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Concentration risk (as a percentage) | 36.40% | 45.60% | ||||||||||||||
Customer Two | Customer Concentration Risk | Accounts Receivable | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Concentration risk (as a percentage) | 18.00% | 11.30% | ||||||||||||||
Shipping and Handling | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Cost of revenue | 3,700,000 | $ 2,800,000 | 1,500,000 | |||||||||||||
Advertising | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Cost of revenue | $ 10,800,000 | $ 10,800,000 | $ 6,200,000 | |||||||||||||
Subsequent Event | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Fair value in excess of carrying amount (as a percentage) | 29.80% | |||||||||||||||
Subsequent Event | Minimum | Accounting Standards Update 2016-02 | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Operating lease, right-of-use asset | $ 12,000,000 | |||||||||||||||
Operating lease, liability | 13,000,000 | |||||||||||||||
Subsequent Event | Maximum | Accounting Standards Update 2016-02 | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Operating lease, right-of-use asset | 16,000,000 | |||||||||||||||
Operating lease, liability | 17,000,000 | |||||||||||||||
Subsequent Event | Build-to-Suit | Accounting Standards Update 2016-02 | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Operating lease, right-of-use asset | 18,400,000 | |||||||||||||||
Operating lease, liability | 18,400,000 | |||||||||||||||
Subsequent Event | Retained Earnings | Build-to-Suit | Accounting Standards Update 2016-02 | ||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||||||
Cumulative impact from adoption of ASC 606, net of tax | $ 300,000 |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($)region | |
Revenue from Contract with Customer [Abstract] | |
Revenue deferred due to unsatisfied performance obligations | $ 50.9 |
Revenue recognized for satisfaction of performance obligations over time | 38.8 |
Recognized revenue that was included in contract liability balance at beginning of period | $ 24.7 |
Number of geographic regions in which the Company conducts business | region | 3 |
Revenue Recognition (Balance Sh
Revenue Recognition (Balance Sheet Impact) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Accounts receivable, net | $ 166,045 | $ 158,507 | $ 157,680 |
Inventories | 124,791 | 82,575 | 82,952 |
Other non-current assets | 8,449 | 2,437 | 2,193 |
Liabilities: | |||
Accounts payable | 82,542 | 20,663 | 20,711 |
Deferred revenue | 26,678 | 24,746 | 34,072 |
Accrued liabilities | 172,036 | 89,467 | 76,097 |
Non-current deferred revenue | 23,313 | 13,091 | 13,332 |
Equity: | |||
Net parent investment | 122,358 | $ 125,419 | |
Accumulated deficit | (45,849) | ||
Adjustments | Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Accounts receivable, net | (16,123) | 827 | |
Inventories | 115 | (377) | |
Other non-current assets | 0 | 244 | |
Liabilities: | |||
Accounts payable | (227) | (48) | |
Deferred revenue | 976 | (9,326) | |
Accrued liabilities | (29,627) | 13,370 | |
Non-current deferred revenue | 3,176 | (241) | |
Equity: | |||
Net parent investment | $ (3,061) | ||
Accumulated deficit | 9,694 | ||
Balance without adoption of ASC 606 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Accounts receivable, net | 149,922 | ||
Inventories | 124,906 | ||
Other non-current assets | 8,449 | ||
Liabilities: | |||
Accounts payable | 82,315 | ||
Deferred revenue | 27,654 | ||
Accrued liabilities | 142,409 | ||
Non-current deferred revenue | 26,489 | ||
Equity: | |||
Accumulated deficit | $ (36,155) |
Revenue Recognition (Income Sta
Revenue Recognition (Income Statement Impact) (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 7 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Aug. 02, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||||||
Revenue | $ 122,158 | $ 131,174 | $ 110,948 | $ 100,638 | $ 124,774 | $ 104,887 | $ 79,194 | $ 61,803 | $ 464,918 | $ 370,658 | $ 184,604 | ||
Cost of revenue | 372,843 | 279,424 | 146,570 | ||||||||||
Gross profit | 4,981 | 29,747 | 28,294 | 29,053 | 29,817 | 28,352 | 16,712 | 16,353 | 92,075 | 91,234 | 38,034 | ||
Provision for income taxes | (58) | 223 | 288 | 319 | 327 | 445 | 137 | 219 | 772 | 1,128 | 83 | ||
Net loss | $ (45,849) | $ (39,073) | $ (13,225) | $ (17,822) | $ (5,363) | $ 2,663 | $ 6,014 | $ (2,152) | $ 24 | $ (29,634) | (75,483) | $ 6,549 | $ (13,743) |
Adjustments | Accounting Standards Update 2014-09 | |||||||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||||||
Revenue | 6,958 | ||||||||||||
Cost of revenue | 262 | ||||||||||||
Gross profit | 6,696 | ||||||||||||
Provision for income taxes | 63 | ||||||||||||
Net loss | 6,633 | ||||||||||||
Balance without adoption of ASC 606 | |||||||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||||||
Revenue | 471,876 | ||||||||||||
Cost of revenue | 373,105 | ||||||||||||
Gross profit | 98,771 | ||||||||||||
Provision for income taxes | 835 | ||||||||||||
Net loss | $ (68,850) |
Revenue Recognition (Schedule o
Revenue Recognition (Schedule of Remaining Performance Obligations) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 70,759 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-02 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 47,024 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-02 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 15,412 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-02 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 8,323 |
Revenue Recognition (Schedule_2
Revenue Recognition (Schedule of Changes in Contract Balances and Impacts of Entries to Adopt ASC 606) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Accounts receivable, net | |
Beginning balance | $ 158,507 |
$ change | $ 7,538 |
% change | 4.80% |
Contract liabilities - current | |
Beginning balance | $ 24,746 |
$ change | $ 1,932 |
% change | 7.80% |
Ending balance | $ 26,678 |
Contract liabilities - non-current | |
Beginning balance | 13,091 |
$ change | $ 10,222 |
% change | 78.10% |
Ending balance | $ 23,313 |
Business Acquisition (Narrative
Business Acquisition (Narrative) (Details) - USD ($) | Nov. 30, 2016 | Apr. 02, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 15,638,000 | $ 15,638,000 | $ 15,638,000 | ||
Acquired intangible assets, estimated useful life | 2 years | 3 years | |||
Placemeter | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | $ 9,600,000 | ||||
Purchase price, cash paid | $ 800,000 | $ 8,800,000 | |||
Goodwill | 3,742,000 | ||||
Deferred tax liabilities | 308,000 | ||||
Intangibles | 6,000,000 | ||||
Placemeter | Technology | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 5,500,000 | ||||
Discount rate used to calculate present value of future cash flows | 15.00% | ||||
Acquired intangible assets, estimated useful life | 4 years | ||||
Placemeter | Database | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 200,000 | ||||
Discount rate used to calculate present value of future cash flows | 15.00% | ||||
Acquired intangible assets, estimated useful life | 4 years | ||||
Placemeter | Non-compete Agreements | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 300,000 | ||||
Discount rate used to calculate present value of future cash flows | 20.00% | ||||
Acquired intangible assets, estimated useful life | 3 years | ||||
Placemeter | U.S. Federal | |||||
Business Acquisition [Line Items] | |||||
Goodwill deductible for income tax purposes | $ 0 | ||||
Placemeter | U.S. State | |||||
Business Acquisition [Line Items] | |||||
Goodwill deductible for income tax purposes | $ 0 |
Business Acquisition (Schedule
Business Acquisition (Schedule of Allocation of Purchase Price) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 30, 2016 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 15,638 | $ 15,638 | $ 15,638 | |
Placemeter | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 8 | |||
Accounts receivable | 11 | |||
Prepaid expenses and other current assets | 130 | |||
Property and equipment | 83 | |||
Intangibles | 6,000 | |||
Goodwill | 3,742 | |||
Accounts payable | (40) | |||
Accrued liabilities | (74) | |||
Deferred tax liabilities | (308) | |||
Total purchase price | $ 9,552 |
Business Acquisition (Summary o
Business Acquisition (Summary of Unaudited Pro-forma Financial Information) (Details) - Placemeter $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Business Acquisition [Line Items] | |
Revenue | $ 184,744 |
Net income (loss) | $ (18,258) |
Balance Sheet Components (Sched
Balance Sheet Components (Schedule of Available-for-Sale Short-Term Investments) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Securities, Available-For-Sale [Line Items] | ||
Short-term investments | $ 49,737,000 | $ 0 |
U.S. treasuries | ||
Debt Securities, Available-For-Sale [Line Items] | ||
Cost | 49,739,000 | |
Unrealized Gains | 2,000 | |
Unrealized Losses | (4,000) | |
Estimated Fair Value | $ 49,737,000 |
Balance Sheet Components (Sch_2
Balance Sheet Components (Schedule of Accounts Receivable and Related Allowances) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Gross accounts receivable | $ 166,172 | $ 164,157 | |
Total allowances | (127) | (6,477) | |
Total accounts receivable, net | 166,045 | $ 158,507 | 157,680 |
Allowance For Doubtful Account | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total allowances | (127) | (207) | |
Allowance for sales returns | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total allowances | 0 | (5,868) | |
Allowance for price protection | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total allowances | $ 0 | $ (402) |
Balance Sheet Components (Sch_3
Balance Sheet Components (Schedule of Property and Equipment, Net) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Total property and equipment, gross | $ 60,443 | $ 7,270 |
Accumulated depreciation | (11,015) | (3,387) |
Total property and equipment, net | 49,428 | 3,883 |
Machinery and equipment | ||
Total property and equipment, gross | 11,415 | 6,067 |
Software | ||
Total property and equipment, gross | 10,624 | 180 |
Computer equipment | ||
Total property and equipment, gross | 4,342 | 50 |
Leasehold improvements | ||
Total property and equipment, gross | 3,007 | 530 |
Furniture and fixtures | ||
Total property and equipment, gross | 2,698 | 443 |
Construction in progress | ||
Total property and equipment, gross | $ 28,357 | $ 0 |
Balance Sheet Components (Prope
Balance Sheet Components (Property and Equipment, Other Information) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |||
Depreciation expense | $ 3.8 | $ 1.8 | $ 0.7 |
Depreciation expense allocated from NETGEAR | $ 1.2 | $ 2 | $ 1.4 |
Balance Sheet Components (Sch_4
Balance Sheet Components (Schedule of Intangibles, Net) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Intangible Assets [Line Items] | ||
Gross | $ 12,000 | $ 12,000 |
Accumulated Amortization | (9,177) | (7,652) |
Net | 2,823 | 4,348 |
Technology | ||
Intangible Assets [Line Items] | ||
Gross | 9,800 | 9,800 |
Accumulated Amortization | (7,165) | (5,790) |
Net | 2,635 | 4,010 |
Trademarks and trade names | ||
Intangible Assets [Line Items] | ||
Gross | 1,400 | 1,400 |
Accumulated Amortization | (1,400) | (1,400) |
Net | 0 | 0 |
Other | ||
Intangible Assets [Line Items] | ||
Gross | 800 | 800 |
Accumulated Amortization | (612) | (462) |
Net | $ 188 | $ 338 |
Balance Sheet Components (Intan
Balance Sheet Components (Intangibles, Other Information) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairment of intangible assets | $ 0 | $ 0 | $ 0 |
Amortization of intangibles | $ 1,500,000 | $ 1,900,000 | $ 1,400,000 |
Acquired intangible assets, estimated useful life | 2 years | 3 years |
Balance Sheet Components (Sch_5
Balance Sheet Components (Schedule of Estimated Amortization Expense Related to Intangibles) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | ||
2,019 | $ 1,517 | |
2,020 | 1,306 | |
Net | $ 2,823 | $ 4,348 |
Balance Sheet Components Balanc
Balance Sheet Components Balance Sheet Components (Schedule of Goodwill) (Details) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Increase (decrease) in goodwill | $ 0 | ||
Goodwill | $ 15,638,000 | $ 15,638,000 | $ 15,638,000 |
Balance Sheet Components (Sch_6
Balance Sheet Components (Schedule of Other Non-Current Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | |||
Non-current deferred income taxes | $ 1,108 | $ 865 | |
Deposits | 4,084 | 0 | |
Other | 3,257 | 1,328 | |
Total other non-current assets | $ 8,449 | $ 2,437 | $ 2,193 |
Balance Sheet Components (Sch_7
Balance Sheet Components (Schedule of Other Accrued Liabilities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
Balance Sheet Related Disclosures [Abstract] | ||||
Sales and marketing | $ 75,863 | $ 31,613 | ||
Sales returns | 49,247 | 0 | ||
Warranty obligation | 3,712 | 31,756 | ||
Accrued employee compensation | 11,897 | 3,184 | ||
Freight | 3,913 | 3,862 | ||
Current financing lease obligation | 1,632 | 0 | ||
Other | 25,772 | 5,682 | ||
Total accrued liabilities | 172,036 | 76,097 | $ 89,467 | |
Reclassified to sales returns upon adoption of ASC 606 | 28,713 | 0 | $ 0 | |
Non-current financing lease obligation | $ 19,978 | $ 0 |
Fair Value Measurements (Summar
Fair Value Measurements (Summary of Valuation of Company's Financial Instruments by Various Levels) (Details) - Fair value, measurements, recurring | Dec. 31, 2018USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Cash equivalents: U.S. treasuries (90 days) | $ 438,000 |
Foreign currency forward contracts | 322,000 |
Total assets measured at fair value | 50,497,000 |
Foreign currency forward contracts | 71,000 |
Total liabilities measured at fair value | 71,000 |
Quoted market prices in active markets (Level 1) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Cash equivalents: U.S. treasuries (90 days) | 438,000 |
Foreign currency forward contracts | 0 |
Total assets measured at fair value | 50,175,000 |
Foreign currency forward contracts | 0 |
Total liabilities measured at fair value | 0 |
Significant other observable inputs (Level 2) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Cash equivalents: U.S. treasuries (90 days) | 0 |
Foreign currency forward contracts | 322,000 |
Total assets measured at fair value | 322,000 |
Foreign currency forward contracts | 71,000 |
Total liabilities measured at fair value | 71,000 |
Significant other unobservable inputs (Level 3) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | 0 |
Total liabilities measured at fair value | 0 |
U.S. treasuries | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Available-for-sale securities: U.S. treasuries | 49,737,000 |
U.S. treasuries | Quoted market prices in active markets (Level 1) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Available-for-sale securities: U.S. treasuries | 49,737,000 |
U.S. treasuries | Significant other observable inputs (Level 2) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Available-for-sale securities: U.S. treasuries | $ 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Narrative) (Details) - Foreign currency contracts $ in Millions | 3 Months Ended |
Dec. 31, 2018USD ($)derivative_instrument | |
Derivative [Line Items] | |
Term of derivative contracts | 6 months |
Derivatives Not Designated as Hedging Instruments | |
Derivative [Line Items] | |
Number of derivatives entered into | derivative_instrument | 5 |
Average size of derivative contracts | $ | $ 3.5 |
Cash Flow Hedges | |
Derivative [Line Items] | |
Number of derivatives entered into | derivative_instrument | 8 |
Average size of derivative contracts | $ | $ 3 |
Minimum | Derivatives Not Designated as Hedging Instruments | |
Derivative [Line Items] | |
Term of derivative contracts | 1 month |
Maximum | Derivatives Not Designated as Hedging Instruments | |
Derivative [Line Items] | |
Term of derivative contracts | 3 months |
Derivative Financial Instrume_4
Derivative Financial Instruments (Schedule of Fair Values of the Company's Derivative Instruments and the Line Items on the Consolidated Balance Sheets) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Derivatives, Fair Value [Line Items] | |
Gross Amounts of recognized assets | $ 322 |
Gross Amounts of recognized liabilities | 71 |
Prepaid expenses and other current assets | Derivative assets not designated as hedging instruments | |
Derivatives, Fair Value [Line Items] | |
Gross Amounts of recognized assets | 293 |
Prepaid expenses and other current assets | Derivative assets designated as hedging instruments | |
Derivatives, Fair Value [Line Items] | |
Gross Amounts of recognized assets | 29 |
Other accrued liabilities | |
Derivatives, Fair Value [Line Items] | |
Gross Amounts of recognized liabilities | 71 |
Other accrued liabilities | Derivative assets not designated as hedging instruments | |
Derivatives, Fair Value [Line Items] | |
Gross Amounts of recognized liabilities | 46 |
Other accrued liabilities | Derivative assets designated as hedging instruments | |
Derivatives, Fair Value [Line Items] | |
Gross Amounts of recognized liabilities | $ 25 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Schedule of Offsetting of Derivative Assets) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Offsetting of Derivative Assets [Line Items] | |
Gross Amounts of Recognized Assets | $ 322 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 |
Net Amounts Of Assets Presented in the Consolidated Balance Sheets | 322 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (68) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 |
Net Amount | 254 |
HSBC | |
Offsetting of Derivative Assets [Line Items] | |
Gross Amounts of Recognized Assets | 100 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 |
Net Amounts Of Assets Presented in the Consolidated Balance Sheets | 100 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | 0 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 |
Net Amount | 100 |
Wells Fargo Bank | |
Offsetting of Derivative Assets [Line Items] | |
Gross Amounts of Recognized Assets | 222 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 |
Net Amounts Of Assets Presented in the Consolidated Balance Sheets | 222 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (68) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 |
Net Amount | $ 154 |
Derivative Financial Instrume_6
Derivative Financial Instruments (Schedule of Offsetting of Derivative Liabilities) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Offsetting of Derivative Liabilities [Line Items] | |
Gross Amounts of Recognized Liabilities | $ 71 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 |
Net Amounts Of Liabilities Presented in the Consolidated Balance Sheets | 71 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (68) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 |
Net Amount | 3 |
Wells Fargo Bank | |
Offsetting of Derivative Liabilities [Line Items] | |
Gross Amounts of Recognized Liabilities | 68 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 |
Net Amounts Of Liabilities Presented in the Consolidated Balance Sheets | 68 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (68) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 |
Net Amount | 0 |
JP Morgan | |
Offsetting of Derivative Liabilities [Line Items] | |
Gross Amounts of Recognized Liabilities | 3 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 |
Net Amounts Of Liabilities Presented in the Consolidated Balance Sheets | 3 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | 0 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 |
Net Amount | $ 3 |
Derivative Financial Instrume_7
Derivative Financial Instruments (Schedule of Derivatives not Designated as Hedging Instruments) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Other income (expense), net | Foreign currency contracts | Derivatives Not Designated as Hedging Instruments | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Gains (losses) on cash flow hedge | $ 589 |
Derivative Financial Instrume_8
Derivative Financial Instruments (Schedule of Effects and Locations of Gains or Losses Recognized in Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||
Revenue | $ 122,158 | $ 131,174 | $ 110,948 | $ 100,638 | $ 124,774 | $ 104,887 | $ 79,194 | $ 61,803 | $ 464,918 | $ 370,658 | $ 184,604 |
Cost of revenue | 372,843 | 279,424 | 146,570 | ||||||||
Research and development | 58,794 | 34,683 | 24,438 | ||||||||
Sales and marketing | 52,593 | 34,340 | 18,455 | ||||||||
General and administrative | 28,209 | $ 15,096 | $ 8,289 | ||||||||
Unrealized gains (losses) on derivatives | Amount Reclassified from AOCI | |||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||
Revenue | 315 | ||||||||||
Cost of revenue | 0 | ||||||||||
Research and development | (2) | ||||||||||
Sales and marketing | (28) | ||||||||||
General and administrative | $ (11) |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Schedule of AOCI (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
AOCI, before tax | |
Beginning balance | $ 125,419 |
Ending balance | 269,502 |
AOCI, Tax | |
Beginning balance, tax | 0 |
Other comprehensive income (loss) before reclassifications, tax | 0 |
Less: Amount reclassified from accumulated other comprehensive income (loss), tax | 0 |
Net current period other comprehensive income (loss), tax | 0 |
Ending balance, tax | 0 |
Unrealized gains (losses) on available-for-sale securities | |
AOCI, before tax | |
Beginning balance | 0 |
Other comprehensive income (loss) before reclassifications | (2) |
Less: Amount reclassified from accumulated other comprehensive income (loss) | 0 |
Net current period other comprehensive income (loss) | (2) |
Ending balance | (2) |
Unrealized gains (losses) on derivatives | |
AOCI, before tax | |
Beginning balance | 0 |
Other comprehensive income (loss) before reclassifications | 276 |
Less: Amount reclassified from accumulated other comprehensive income (loss) | 274 |
Net current period other comprehensive income (loss) | 2 |
Ending balance | 2 |
Total | |
AOCI, before tax | |
Beginning balance | 0 |
Ending balance | 0 |
AOCI, after tax | |
Other comprehensive income (loss) before reclassifications | 274 |
Less: Amount reclassified from accumulated other comprehensive income (loss) | 274 |
Total other comprehensive income, net of tax | $ 0 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Reclassifications out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Revenue | $ 122,158 | $ 131,174 | $ 110,948 | $ 100,638 | $ 124,774 | $ 104,887 | $ 79,194 | $ 61,803 | $ 464,918 | $ 370,658 | $ 184,604 |
Cost of revenue | 372,843 | 279,424 | 146,570 | ||||||||
Research and development | 58,794 | 34,683 | 24,438 | ||||||||
Sales and marketing | 52,593 | 34,340 | 18,455 | ||||||||
General and administrative | 28,209 | $ 15,096 | $ 8,289 | ||||||||
Tax impact | 0 | ||||||||||
Foreign currency contracts | |||||||||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Total before tax | 276 | ||||||||||
Unrealized gains (losses) on derivatives | Foreign currency contracts | |||||||||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Revenue | 276 | ||||||||||
Cost of revenue | 0 | ||||||||||
Research and development | 0 | ||||||||||
Sales and marketing | 0 | ||||||||||
General and administrative | 0 | ||||||||||
Amount Reclassified from AOCI | Foreign currency contracts | |||||||||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Total before tax | 274 | ||||||||||
Amount Reclassified from AOCI | Unrealized gains (losses) on derivatives | |||||||||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Revenue | 315 | ||||||||||
Cost of revenue | 0 | ||||||||||
Research and development | (2) | ||||||||||
Sales and marketing | (28) | ||||||||||
General and administrative | (11) | ||||||||||
Amount Reclassified from AOCI | Unrealized gains (losses) on derivatives | Foreign currency contracts | |||||||||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Revenue | 315 | ||||||||||
Cost of revenue | 0 | ||||||||||
Research and development | (2) | ||||||||||
Sales and marketing | (28) | ||||||||||
General and administrative | $ (11) |
Other Income (Expense), Net (De
Other Income (Expense), Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |||
Foreign currency transaction gain (loss), net | $ (1,819) | $ 1,946 | $ (512) |
Foreign currency contract gain | 589 | 0 | 0 |
Other | 53 | 0 | 0 |
Other income (expense), net | $ (1,177) | $ 1,946 | $ (512) |
Income Taxes (Summary of Income
Income Taxes (Summary of Income (Loss) Before Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (79,581) | $ 3,318 | $ (15,432) |
International | 4,870 | 4,359 | 1,772 |
Income (loss) before income taxes | $ (74,711) | $ 7,677 | $ (13,660) |
Net Income (Loss) Per Share (Sc
Net Income (Loss) Per Share (Schedule of Net Income Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 02, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Aug. 02, 2018 | Aug. 02, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Stock issued during period, common stock | 62,499,000 | 62,500,000 | |||||||||||||
Numerator: | |||||||||||||||
Net income (loss) | $ (45,849) | $ (39,073) | $ (13,225) | $ (17,822) | $ (5,363) | $ 2,663 | $ 6,014 | $ (2,152) | $ 24 | $ (29,634) | $ (75,483) | $ 6,549 | $ (13,743) | ||
Denominator: | |||||||||||||||
Weighted average common shares - basic (in shares) | 67,231,000 | 62,250,000 | 62,250,000 | ||||||||||||
Potentially dilutive common share equivalent (in shares) | 0 | 0 | 0 | ||||||||||||
Stock option and RSU conversion (in shares) | 0 | 0 | 0 | ||||||||||||
Weighted average common shares - dilutive (in shares) | 67,231,000 | 62,250,000 | 62,250,000 | ||||||||||||
Basic net income per share (in dollars per share) | $ (0.53) | $ (0.19) | $ (0.29) | $ (0.09) | $ 0.04 | $ 0.10 | $ (0.03) | $ 0 | $ (1.12) | $ 0.11 | $ (0.22) | ||||
Diluted net income per share (in dollars per share) | $ (0.53) | $ (0.19) | $ (0.29) | $ (0.09) | $ 0.04 | $ 0.10 | $ (0.03) | $ 0 | $ (1.12) | $ 0.11 | $ (0.22) | ||||
Employee Stock-based Awards | |||||||||||||||
Denominator: | |||||||||||||||
Anti-dilutive employee stock-based awards, excluded | 1,109,000 | 0 | 0 | ||||||||||||
2018 Plan | |||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Converted at Distribution (in shares) | 6,823,000 | 6,823,000 | |||||||||||||
2018 Plan | NETGEAR | |||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Converted at Distribution (in shares) | 6,822,787 | 6,822,787 |
Income Taxes (Summary of Inco_2
Income Taxes (Summary of Income Tax Provision/Benefit) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||||||||||
U.S. Federal | $ 0 | $ 0 | $ 0 | ||||||||
State | 16 | 260 | 22 | ||||||||
Foreign | 1,425 | 1,255 | 727 | ||||||||
Current income tax expense (benefit) | 1,441 | 1,515 | 749 | ||||||||
Deferred: | |||||||||||
U.S. Federal | 0 | (66) | (129) | ||||||||
State | 0 | 0 | (180) | ||||||||
Foreign | (669) | (321) | (357) | ||||||||
Deferred income taxes | (669) | (387) | (666) | ||||||||
Provision for income taxes | $ (58) | $ 223 | $ 288 | $ 319 | $ 327 | $ 445 | $ 137 | $ 219 | $ 772 | $ 1,128 | $ 83 |
Income Taxes (Summary of Deferr
Income Taxes (Summary of Deferred Tax Assets (Liabilities)) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Tax Assets: | ||
Accruals and allowances | $ 17,974 | $ 7,339 |
Net operating loss carryforwards | 2,946 | 3,478 |
Stock-based compensation | 1,927 | 931 |
Deferred rent | 373 | 0 |
Deferred revenue | 2,573 | 1,688 |
Tax credit carryforwards | 0 | 3,504 |
Depreciation and amortization | 567 | 0 |
Total deferred tax assets | 26,360 | 16,940 |
Deferred Tax Liabilities: | ||
Depreciation and amortization | (775) | (464) |
Total deferred tax liabilities | (775) | (464) |
Valuation Allowance | (24,477) | (15,611) |
Net deferred tax assets | $ 1,108 | $ 865 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Loss Carryforwards [Line Items] | |||||||||||
Valuation Allowance | $ 24,477 | $ 15,611 | $ 24,477 | $ 15,611 | |||||||
Decrease in valuation allowance during period | 8,900 | ||||||||||
Provision for income taxes | (58) | $ 223 | $ 288 | $ 319 | 327 | $ 445 | $ 137 | $ 219 | $ 772 | $ 1,128 | $ 83 |
Effective tax rate | (1.00%) | 14.70% | (0.60%) | ||||||||
Net operating loss carryforwards | 2,946 | $ 3,478 | $ 2,946 | $ 3,478 | |||||||
U.S. Federal | |||||||||||
Operating Loss Carryforwards [Line Items] | |||||||||||
Net operating loss | $ (14,000) | $ (14,000) |
Income Taxes (Summary of Effect
Income Taxes (Summary of Effective Income Tax Rate Reconciliation, Percent) (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Tax at federal statutory rate | 21.00% | 35.00% | 35.00% |
State, net of federal benefit | 5.90% | (8.70%) | 2.10% |
Impact of international operations | 0.40% | (6.20%) | 9.30% |
Stock-based compensation | (0.10%) | (5.00%) | 0.00% |
Tax credits | 1.50% | (6.80%) | 2.90% |
Valuation allowance | (27.00%) | (105.10%) | (51.40%) |
Impact of the Tax Act | 0.00% | 115.60% | 0.00% |
Non-deductible transaction costs | (2.60%) | 0.00% | 0.00% |
Others | (0.10%) | (4.10%) | 1.50% |
Provision for income taxes | (1.00%) | 14.70% | (0.60%) |
Income Taxes (Reconciliation of
Income Taxes (Reconciliation of Gross Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits beginning balance | $ 1,022 | $ 676 |
Additions based on tax positions related to the current year | 338 | 361 |
Additions for tax positions of prior years | 30 | |
Reductions for tax positions of prior years | (45) | |
Adjustments to Net parent investments | (1,338) | |
Unrecognized tax benefits ending balance | $ 22 | $ 1,022 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 5 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Loss Contingencies [Line Items] | |||
Operating lease, rent expense | $ 1,400,000 | ||
Operating lease, term of contract | 10 years 6 months | 10 years 6 months | |
Operating leases, annual base rent | $ 2,600,000 | ||
Tenant improvements | $ 60,443,000 | 60,443,000 | $ 7,270,000 |
Non-current financing lease obligation | 19,978,000 | 19,978,000 | 0 |
Current financing lease obligation | 1,632,000 | $ 1,632,000 | 0 |
Number of days for non-cancellation of purchase obligations prior to expected shipment date | 30 days | ||
Non-cancelable purchase commitments with suppliers | 36,800,000 | $ 36,800,000 | |
Liabilities recorded for director and officer indemnification agreements | 0 | 0 | |
Liabilities recorded for customers, distributors, and resellers indemnification agreements | 0 | $ 0 | |
Continued vesting period after termination without cause (in years) | 1 year | ||
Liabilities for executive's employment agreements | $ 0 | $ 0 | |
Chief Executive Officer | |||
Loss Contingencies [Line Items] | |||
Number of years after change of control to trigger full accelerated vest of unvested portion of stock options (in years) | 1 year | ||
Other Key Executives | |||
Loss Contingencies [Line Items] | |||
Maximum number of years covered by accelerated vest for other key executives if term without cause is within one year of change in control (in years) | 2 years | ||
46 to 60 Days | |||
Loss Contingencies [Line Items] | |||
Percentage of cancelable orders | 50.00% | 50.00% | |
31 to 45 Days | |||
Loss Contingencies [Line Items] | |||
Percentage of cancelable orders | 25.00% | 25.00% | |
Construction in progress | |||
Loss Contingencies [Line Items] | |||
Tenant improvements | $ 28,357,000 | $ 28,357,000 | $ 0 |
Letters of Credit | |||
Loss Contingencies [Line Items] | |||
Unused letters of credit outstanding | 3,600,000 | 3,600,000 | |
Letters of Credit | Build-to-Suit | |||
Loss Contingencies [Line Items] | |||
Unused letters of credit outstanding | $ 3,100,000 | $ 3,100,000 | |
Minimum | 46 to 60 Days | |||
Loss Contingencies [Line Items] | |||
Required notice period prior to expected shipment date | 46 days | ||
Minimum | 31 to 45 Days | |||
Loss Contingencies [Line Items] | |||
Required notice period prior to expected shipment date | 31 days | ||
Maximum | 46 to 60 Days | |||
Loss Contingencies [Line Items] | |||
Required notice period prior to expected shipment date | 60 days | ||
Maximum | 31 to 45 Days | |||
Loss Contingencies [Line Items] | |||
Required notice period prior to expected shipment date | 45 days |
Commitments and Contingencies_3
Commitments and Contingencies (Schedule of Changes in Warranty Obligation) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Balance at the beginning of the period | $ 31,756 | $ 15,949 | $ 6,490 |
Reclassified to sales returns upon adoption of ASC 606 (1) | (28,713) | 0 | 0 |
Provision for warranty obligation made during the period | 1,477 | 51,709 | 22,912 |
Settlements made during the period | (808) | (35,902) | (13,453) |
Balance at the end of the period | $ 3,712 | $ 31,756 | $ 15,949 |
Commitments and Contingencies_4
Commitments and Contingencies (Summary of Future Minimum Lease Payments) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,019 | $ 4,634 |
2,020 | 5,813 |
2,021 | 5,678 |
2,022 | 5,580 |
2,023 | 4,903 |
Thereafter | 19,252 |
Total | $ 45,860 |
Employee Benefit Plans (Narrati
Employee Benefit Plans (Narrative) (Details) $ in Millions | Dec. 17, 2018 | Nov. 09, 2018 | Aug. 01, 2018shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Aug. 02, 2018shares |
NETGEAR | Special Stock Dividend Distribution | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Ratio of Arlo to NETGEAR common stock (as a ratio) | 1.980295 | 1.980295 | |||||
ESPP | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares purchased (in shares) | 0 | ||||||
ESPP | NETGEAR | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Cash received from stock option exercises and ESPP purchases | $ | $ 0.4 | $ 1.6 | $ 1.9 | ||||
Stock Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Converted at Distribution (in shares) | 3,866,000 | ||||||
Options granted period (in years) | 10 years | ||||||
Total unrecognized compensation | $ | $ 17.8 | ||||||
Weighted-average period of recognition of stock based compensation | 3 years 6 months 5 days | ||||||
Stock Options | NETGEAR | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Converted at Distribution (in shares) | 283,000 | ||||||
Total unrecognized compensation | $ | $ 1.2 | ||||||
Weighted-average period of recognition of stock based compensation | 2 years 6 months | ||||||
RSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Converted at Distribution (in shares) | 2,957,000 | ||||||
Cash paid to administer RSU withholdings | $ | $ 0.8 | $ 1.1 | $ 0.6 | ||||
Total unrecognized compensation | $ | $ 12.7 | ||||||
Weighted-average period of recognition of stock based compensation | 2 years 6 months 20 days | ||||||
RSUs | NETGEAR | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Converted at Distribution (in shares) | 521,000 | ||||||
Total unrecognized compensation | $ | $ 14.3 | ||||||
Weighted-average period of recognition of stock based compensation | 2 years 8 months 5 days | ||||||
2018 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares reserved (in shares) | 7,500,000 | 7,500,000 | |||||
Converted at Distribution (in shares) | 6,823,000 | ||||||
Options granted, vesting term (in years) | 4 years | ||||||
2018 Plan | Tranche One | IPO | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options granted, vesting term (in years) | 24 months | ||||||
2018 Plan | NETGEAR | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares purchased (in shares) | 1,500,000 | ||||||
Converted at Distribution (in shares) | 6,822,787 | ||||||
2018 Plan | Stock Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options granted, vesting term (in years) | 4 years | ||||||
2018 Plan | Stock Options | Tranche One | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options granted, vesting term (in years) | 3 years | ||||||
2018 Plan | RSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options granted, vesting term (in years) | 3 years | ||||||
ESPP | ESPP | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares purchased (in shares) | 0 |
Employee Benefit Plans (Arlo Su
Employee Benefit Plans (Arlo Summary of Available Shares for Future Grants) (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 02, 2018 | Aug. 01, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares available for grants as of December 31, 2018 (in shares) | 9,000,000 | ||||||
Compensation expense | $ 12,879 | $ 6,918 | $ 3,604 | ||||
2018 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares reserved (in shares) | 7,500,000 | 7,500,000 | |||||
Granted at IPO (in shares) | (3,403,000) | ||||||
Granted during the period (in shares) | (137,000) | ||||||
Additional authorized (in shares) | 6,823,000 | ||||||
Converted at Distribution (in shares) | 6,823,000 | 6,823,000 | 6,823,000 | ||||
Cancelled (in shares) | 9,000 | ||||||
Shares available for grants as of December 31, 2018 (in shares) | 3,969,000 | 3,969,000 | 3,969,000 | ||||
Compensation expense | $ (200) | ||||||
Stock Options, IPO performance-based | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares granted (in shares) | 2,800,000 |
Employee Benefit Plans (IPO Opt
Employee Benefit Plans (IPO Options) (Details) - 2018 Plan - shares | Aug. 02, 2018 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
IPO | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares issued (in shares) | 2,781,249 | |
IPO | Tranche One | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 24 months | |
IPO | Performance Shares | Tranche Two | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting rights (as a percentage) | 50.00% | |
IPO | Performance Shares | Tranche Three | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting rights (as a percentage) | 50.00% | |
IPO | Performance Shares | First Anniversary | Tranche Two | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting rights (as a percentage) | 25.00% | |
IPO | Performance Shares | First Anniversary | Tranche Three | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting rights (as a percentage) | 25.00% | |
IPO | Performance Shares | Second Anniversary | Tranche Two | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting rights (as a percentage) | 25.00% | |
IPO | Performance Shares | Second Anniversary | Tranche Three | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting rights (as a percentage) | 25.00% |
Employee Benefit Plans (Employe
Employee Benefit Plans (Employee Stock Purchase Plan) (Details) - ESPP - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of stock price purchased at purchase date | 85.00% | ||
Number of shares purchased (in shares) | 0 | ||
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum percentage of compensation contributed by employees (as a percentage) | 15.00% | ||
Percentage of stock price purchased at offering date (as a percentage) | 85.00% | ||
Number of shares purchased (in shares) | 0 | ||
ESPP | NETGEAR | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
ESPP compensation expense | $ 0.2 | $ 0.2 | $ 0.2 |
Granted during the period (in shares) | 37,000 | 19,000 | 16,000 |
Average exercise price (in dollars per share) | $ 45.06 | $ 43.09 | $ 31.52 |
Employee Benefit Plans (Arlo We
Employee Benefit Plans (Arlo Weighted-Average Assumptions) (Details) - Stock Options | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected life (in years) | 6 years 3 months |
Risk-free interest rate | 2.86% |
Expected volatility | 40.00% |
Dividend yield | 0.00% |
Employee Benefit Plans (Arlo Sc
Employee Benefit Plans (Arlo Schedule of Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 5 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted Average Exercise Price Per Share | |||||
Outstanding Shares, Weighted Average Remaining Contractual Term | 1 year 5 months 8 days | ||||
Outstanding Shares, Aggregate Intrinsic Value | $ 31,349 | $ 31,349 | $ 31,349 | ||
Total stock-based compensation | $ 12,879 | $ 6,918 | $ 3,604 | ||
2018 Plan | |||||
Number of Shares | |||||
Converted at Distribution (in shares) | 6,823 | 6,823 | 6,823 | ||
Weighted Average Exercise Price Per Share | |||||
Total stock-based compensation | $ (200) | ||||
Stock Options, IPO performance-based | |||||
Number of Shares | |||||
Number of shares granted (in shares) | 2,800 | ||||
Stock Options | |||||
Number of Shares | |||||
Beginning balance (in shares) | 0 | ||||
Number of shares granted (in shares) | 3,343 | ||||
Converted at Distribution (in shares) | 3,866 | 3,866 | 3,866 | ||
Ending balance (in shares) | 7,209 | 7,209 | 7,209 | ||
Vested and expected to vest (in shares) | 7,209 | 7,209 | 7,209 | ||
Exercisable Options (in shares) | 2,429 | 2,429 | 2,429 | ||
Weighted Average Exercise Price Per Share | |||||
Beginning balance (in dollars per share) | $ 0 | ||||
Granted (in dollars per share) | 16 | ||||
Converted at Distribution (in dollars per share) | $ 8.69 | 8.69 | $ 8.69 | ||
Ending balance (in dollars per share) | 12.08 | 12.08 | 12.08 | ||
Vested and expected to vest (in dollars per share) | 12.08 | 12.08 | 12.08 | ||
Exercisable Options (in dollars per share) | $ 7.10 | $ 7.10 | $ 7.10 | ||
Outstanding Shares, Weighted Average Remaining Contractual Term | 7 years 10 months 2 days | ||||
Outstanding Shares, Aggregate Intrinsic Value | $ 8,114 | $ 8,114 | $ 8,114 | ||
Vested and expected to vest, Weighted Average Remaining Contractual Term | 7 years 10 months 2 days | ||||
Vested and expected to vest, Aggregate Intrinsic Value | 8,114 | $ 8,114 | 8,114 | ||
Exercisable Options, Weighted Average Remaining Contractual Term | 5 years 6 days | ||||
Exercisable Options, Aggregate Intrinsic Value | $ 6,989 | $ 6,989 | $ 6,989 |
Employee Benefit Plans (Arlo Es
Employee Benefit Plans (Arlo Estimated Volatility Assumption) (Details) - Stock Options $ / shares in Units, $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total intrinsic value of options exercised | $ 0 |
Total fair value of options vested | $ 0 |
Granted (in dollars per share) | $ / shares | $ 7.02 |
Employee Benefit Plans (Arlo _2
Employee Benefit Plans (Arlo Schedule of Ranges of Outstanding and Exercisable Stock Options) (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | $ 2.51 |
Exercise Price Range, Upper Range Limit (in dollars per share) | 16 |
$2.51 - $6.94 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | 2.51 |
Exercise Price Range, Upper Range Limit (in dollars per share) | 6.94 |
$6.96 - $8.76 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | 6.96 |
Exercise Price Range, Upper Range Limit (in dollars per share) | 8.76 |
$10.09 - $13.23 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | 10.09 |
Exercise Price Range, Upper Range Limit (in dollars per share) | 13.23 |
$14.39 - $14.39 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | 14.39 |
Exercise Price Range, Upper Range Limit (in dollars per share) | 14.39 |
$16.00 - $16.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Range, Lower Range Limit (in dollars per share) | 16 |
Exercise Price Range, Upper Range Limit (in dollars per share) | $ 16 |
Stock Options | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Outstanding Options ( in shares) | shares | 7,209 |
Options Outstanding, Weighted- Average Remaining Contractual Life | 7 years 10 months 2 days |
Options Outstanding, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 12.08 |
Options Exercisable, Number of Exercisable Options (in shares) | shares | 2,429 |
Options Exercisable, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 7.10 |
Stock Options | $2.51 - $6.94 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Outstanding Options ( in shares) | shares | 1,534 |
Options Outstanding, Weighted- Average Remaining Contractual Life | 4 years 8 months 8 days |
Options Outstanding, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 6.52 |
Options Exercisable, Number of Exercisable Options (in shares) | shares | 1,466 |
Options Exercisable, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 6.53 |
Stock Options | $6.96 - $8.76 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Outstanding Options ( in shares) | shares | 1,566 |
Options Outstanding, Weighted- Average Remaining Contractual Life | 6 years 6 months 18 days |
Options Outstanding, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 8.18 |
Options Exercisable, Number of Exercisable Options (in shares) | shares | 951 |
Options Exercisable, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 7.95 |
Stock Options | $10.09 - $13.23 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Outstanding Options ( in shares) | shares | 100 |
Options Outstanding, Weighted- Average Remaining Contractual Life | 9 years 3 months 8 days |
Options Outstanding, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 11.97 |
Options Exercisable, Number of Exercisable Options (in shares) | shares | 12 |
Options Exercisable, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 10.09 |
Stock Options | $14.39 - $14.39 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Outstanding Options ( in shares) | shares | 666 |
Options Outstanding, Weighted- Average Remaining Contractual Life | 9 years 25 days |
Options Outstanding, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 14.39 |
Options Exercisable, Number of Exercisable Options (in shares) | shares | 0 |
Options Exercisable, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 0 |
Stock Options | $16.00 - $16.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of Outstanding Options ( in shares) | shares | 3,343 |
Options Outstanding, Weighted- Average Remaining Contractual Life | 9 years 7 months 1 day |
Options Outstanding, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 16 |
Options Exercisable, Number of Exercisable Options (in shares) | shares | 0 |
Options Exercisable, Weighted- Average Exercise Price Per Share (in dollars per share) | $ 0 |
Employee Benefit Plans (NETGEAR
Employee Benefit Plans (NETGEAR Weighted-Average Assumptions) (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life (in years) | 6 years 3 months | ||
Risk-free interest rate | 2.86% | ||
Expected volatility | 40.00% | ||
Dividend yield | 0.00% | ||
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares purchased (in shares) | 0 | ||
NETGEAR | Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life (in years) | 4 years 5 months | 4 years 5 months | 4 years 5 months |
Risk-free interest rate | 2.32% | 1.66% | 1.28% |
Expected volatility | 30.93% | 31.60% | 35.40% |
Dividend yield | 0.00% | 0.00% | 0.00% |
NETGEAR | ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life (in years) | 6 months | 6 months | 6 months |
Risk-free interest rate | 1.81% | 0.93% | 0.43% |
Expected volatility | 37.10% | 29.70% | 38.30% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Employee Benefit Plans (NETGE_2
Employee Benefit Plans (NETGEAR Schedule of Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 5 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2018 | |
Weighted Average Exercise Price Per Share | ||
Outstanding Shares, Weighted Average Remaining Contractual Term | 1 year 5 months 8 days | |
Outstanding Shares, Aggregate Intrinsic Value | $ 31,349 | $ 31,349 |
Stock Options | ||
Number of Shares | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 3,343 | |
Converted at Distribution (in shares) | 3,866 | 3,866 |
Ending balance (in shares) | 7,209 | 7,209 |
Vested and expected to vest (in shares) | 7,209 | 7,209 |
Exercisable Options (in shares) | 2,429 | 2,429 |
Weighted Average Exercise Price Per Share | ||
Beginning balance (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 16 | |
Converted at Distribution (in dollars per share) | 8.69 | $ 8.69 |
Ending balance (in dollars per share) | 12.08 | 12.08 |
Vested and expected to vest (in dollars per share) | 12.08 | 12.08 |
Exercisable Options (in dollars per share) | $ 7.10 | $ 7.10 |
Outstanding Shares, Weighted Average Remaining Contractual Term | 7 years 10 months 2 days | |
Outstanding Shares, Aggregate Intrinsic Value | $ 8,114 | $ 8,114 |
Vested and expected to vest, Weighted Average Remaining Contractual Term | 7 years 10 months 2 days | |
Vested and expected to vest, Aggregate Intrinsic Value | $ 8,114 | 8,114 |
Exercisable Options, Weighted Average Remaining Contractual Term | 5 years 6 days | |
Exercisable Options, Aggregate Intrinsic Value | $ 6,989 | $ 6,989 |
NETGEAR | ||
Weighted Average Exercise Price Per Share | ||
Outstanding Shares, Weighted Average Remaining Contractual Term | 1 year 5 months 28 days | |
Vested and expected to vest, Aggregate Intrinsic Value | $ 27,111 | $ 27,111 |
NETGEAR | Stock Options | ||
Number of Shares | ||
Beginning balance (in shares) | 78 | |
Granted (in shares) | 60 | |
Converted at Distribution (in shares) | 283 | 283 |
Exercised (in shares) | (11) | |
Cancelled (in shares) | (6) | |
Cancelled at Distribution (in shares) | (276) | (276) |
Transferred (in shares) | 155 | |
Ending balance (in shares) | 283 | 283 |
Vested and expected to vest (in shares) | 283 | 283 |
Exercisable Options (in shares) | 152 | 152 |
Weighted Average Exercise Price Per Share | ||
Beginning balance (in dollars per share) | $ 35.56 | |
Granted (in dollars per share) | 70.15 | |
Converted at Distribution (in dollars per share) | $ 26.53 | 26.53 |
Exercised (in dollars per share) | 20.30 | |
Cancelled (in dollars per share) | 28.59 | |
Cancelled at Distribution (in dollars per share) | 45.11 | 45.11 |
Transferred (in dollars per share) | 36.71 | |
Ending balance (in dollars per share) | 26.53 | 26.53 |
Vested and expected to vest (in dollars per share) | 26.53 | 26.53 |
Exercisable Options (in dollars per share) | $ 21.27 | $ 21.27 |
Outstanding Shares, Weighted Average Remaining Contractual Term | 6 years 9 months 25 days | |
Outstanding Shares, Aggregate Intrinsic Value | $ 7,219 | $ 7,219 |
Vested and expected to vest, Weighted Average Remaining Contractual Term | 6 years 9 months 25 days | |
Vested and expected to vest, Aggregate Intrinsic Value | 7,219 | $ 7,219 |
Exercisable Options, Weighted Average Remaining Contractual Term | 5 years 4 months 8 days | |
Exercisable Options, Aggregate Intrinsic Value | $ 4,684 | $ 4,684 |
Employee Benefit Plans (NETGE_3
Employee Benefit Plans (NETGEAR Estimated Volatility Assumption) (Details) - Stock Options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total intrinsic value of options exercised | $ 0 | ||
Total fair value of options vested | $ 0 | ||
Granted (in dollars per share) | $ 7.02 | ||
NETGEAR | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total intrinsic value of options exercised | $ 0.6 | $ 0.5 | $ 0.8 |
Total fair value of options vested | $ 1.1 | $ 0.2 | $ 0.2 |
Granted (in dollars per share) | $ 20.63 | $ 12.25 | $ 12.28 |
Employess Benefit Plans (Arlo S
Employess Benefit Plans (Arlo Schedule of RSU Activity) (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 5 Months Ended | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Weighted Average Grant Date Fair Value Per Share | ||
Outstanding Shares, Weighted Average Remaining Contractual Term | 1 year 5 months 8 days | |
Outstanding Shares, Aggregate Intrinsic Value | $ | $ 31,349 | $ 31,349 |
RSUs | ||
Number of Shares | ||
Beginning balance (in shares) | shares | 0 | |
Granted (in shares) | shares | 197 | |
Converted at Distribution (in shares) | shares | 2,957 | 2,957 |
Vested (in shares) | shares | (4) | |
Cancelled (in shares) | shares | (9) | |
Ending balance (in shares) | shares | 3,141 | 3,141 |
Weighted Average Grant Date Fair Value Per Share | ||
Beginning Balance (in dollars per share) | $ / shares | $ 0 | |
Granted (in dollars per share) | $ / shares | 14.46 | $ 14.46 |
Converted at Distribution (in dollars per share) | $ / shares | 10.67 | 10.67 |
Vested (in dollars per share) | $ / shares | 10.44 | |
Cancelled (in dollars per share) | $ / shares | 22.71 | |
Ending Balance (in dollars per share) | $ / shares | $ 12.22 | $ 12.22 |
Employee Benefit Plans (Arlo RS
Employee Benefit Plans (Arlo RSU Estimated Volatility Assumption) (Details) - RSUs - USD ($) $ / shares in Units, $ in Thousands | 5 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total intrinsic value of options exercised | $ 40 | |
Total fair value of options vested | $ 40 | |
Granted (in dollars per share) | $ 14.46 | $ 14.46 |
Employee Benefit Plans (NETGE_4
Employee Benefit Plans (NETGEAR Schedule of RSU Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 5 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted Average Grant Date Fair Value Per Share | ||||
Outstanding Shares, Weighted Average Remaining Contractual Term | 1 year 5 months 8 days | |||
RSUs | ||||
Number of Shares | ||||
Beginning balance (in shares) | 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 197 | |||
Converted at Distribution (in shares) | 2,957 | 2,957 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 4 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 9 | |||
Ending balance (in shares) | 3,141 | 3,141 | ||
Weighted Average Grant Date Fair Value Per Share | ||||
Beginning Balance (in dollars per share) | $ 0 | |||
Granted (in dollars per share) | 14.46 | $ 14.46 | ||
Converted at Distribution (in dollars per share) | 10.67 | 10.67 | ||
Total fair value of options vested | 10.44 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 22.71 | |||
Ending Balance (in dollars per share) | $ 12.22 | $ 12.22 | ||
NETGEAR | ||||
Weighted Average Grant Date Fair Value Per Share | ||||
Outstanding Shares, Weighted Average Remaining Contractual Term | 1 year 5 months 28 days | |||
Vested and expected to vest, Aggregate Intrinsic Value | $ 27,111 | $ 27,111 | ||
NETGEAR | RSUs | ||||
Number of Shares | ||||
Beginning balance (in shares) | 132 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 339 | |||
Converted at Distribution (in shares) | 521 | 521 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 119 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 7 | |||
Cancelled at Distribution (in shares) | (530) | (530) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Other, in Period | 185 | |||
Ending balance (in shares) | 521 | 521 | 132 | |
Weighted Average Grant Date Fair Value Per Share | ||||
Beginning Balance (in dollars per share) | $ 45.54 | |||
Granted (in dollars per share) | 67.24 | $ 52.89 | $ 41.92 | |
Converted at Distribution (in dollars per share) | $ 30.91 | 30.91 | ||
Total fair value of options vested | 56.70 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 59.85 | |||
Cancelled at Distribution (in dollars per share) | 59.27 | 59.27 | ||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options, Other, In Period Weighted Average Fair Value | 43.60 | |||
Ending Balance (in dollars per share) | $ 34.89 | $ 34.89 | $ 45.54 |
Employee Benefit Plans (NETGE_5
Employee Benefit Plans (NETGEAR RSU Estimated Volatility Assumption) (Details) - RSUs - USD ($) $ / shares in Units, $ in Thousands | 5 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total intrinsic value of options exercised | $ 40 | |||
Total fair value of options vested | $ 40 | |||
Granted (in dollars per share) | $ 14.46 | $ 14.46 | ||
NETGEAR | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total intrinsic value of options exercised | $ 6,900 | $ 2,700 | $ 1,400 | |
Total fair value of options vested | $ 5,000 | $ 2,000 | $ 1,000 | |
Granted (in dollars per share) | $ 67.24 | $ 52.89 | $ 41.92 |
Employee Benefit Plans (Schedul
Employee Benefit Plans (Schedule of Total Stock-Based Compensation Expense Resulting from Stock Options, Restricted Stock Awards, and the Employee Stock Purchase Plan) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | $ 12,879 | $ 6,918 | $ 3,604 |
Direct (1) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 8,831 | 2,451 | 1,520 |
Indirect | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 4,048 | 4,467 | 2,084 |
Cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 1,191 | 701 | 327 |
Cost of revenue | Direct (1) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 608 | 102 | 61 |
Cost of revenue | Indirect | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 583 | 599 | 266 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 3,474 | 2,414 | 1,544 |
Research and development | Direct (1) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 3,078 | 1,959 | 1,349 |
Research and development | Indirect | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 396 | 455 | 195 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 2,961 | 1,256 | 517 |
Sales and marketing | Direct (1) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 1,992 | 390 | 110 |
Sales and marketing | Indirect | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 969 | 866 | 407 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 5,253 | 2,547 | 1,216 |
General and administrative | Direct (1) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 3,153 | 0 | 0 |
General and administrative | Indirect | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | $ 2,100 | $ 2,547 | $ 1,216 |
Employee Benefit Plans (401(k)
Employee Benefit Plans (401(k) Plan) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jan. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Employer matching contribution, percent of employees' gross pay (as a percentage) | 50.00% | ||||
Maximum matching contribution by employer | $ 6,000 | ||||
Subsequent Event | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Maximum annual contributions per employee (as a percentage) | 100.00% | ||||
NETGEAR | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Maximum annual contributions per employee (as a percentage) | 100.00% | ||||
Employer matching contribution, percent of employees' gross pay (as a percentage) | 50.00% | ||||
Maximum matching contribution by employer | $ 6,000 | ||||
Cost recognized | $ 500,000 | $ 200,000 | $ 200,000 |
Segment Information (Schedule o
Segment Information (Schedule of Net Revenue by Geographic Areas) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 122,158 | $ 131,174 | $ 110,948 | $ 100,638 | $ 124,774 | $ 104,887 | $ 79,194 | $ 61,803 | $ 464,918 | $ 370,658 | $ 184,604 |
United States (“U.S.”) | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 359,936 | 279,504 | 142,129 | ||||||||
Americas (excluding U.S.) | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 16,869 | 13,167 | 6,035 | ||||||||
EMEA | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 65,462 | 58,795 | 27,457 | ||||||||
Asia Pacific | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 22,651 | $ 19,192 | $ 8,983 |
Segment and Geographic Inform_3
Segment and Geographic Information (Narrative) (Details) | 12 Months Ended | ||||
Dec. 31, 2018number_of_customers | Dec. 31, 2018regionnumber_of_customers | Dec. 31, 2018segmentnumber_of_customers | Dec. 31, 2017number_of_customers | Dec. 31, 2016number_of_customers | |
Segment Reporting Information [Line Items] | |||||
Number of customers | number_of_customers | 3 | 3 | 3 | 3 | 3 |
Number of reportable segments | segment | 1 | ||||
Number of operating segments | 1 | 1 | |||
Number of geographic regions in which the Company conducts business | region | 3 | ||||
Customer One | Revenue | Customer Concentration Risk | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk (as a percentage) | 24.40% | 28.30% | 31.50% | ||
Customer Two | Revenue | Customer Concentration Risk | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk (as a percentage) | 17.50% | 16.40% | 15.00% | ||
Customer Three | Revenue | Customer Concentration Risk | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk (as a percentage) | 16.60% | 13.10% | 11.00% |
Segment Information (Schedule_2
Segment Information (Schedule of Long-Lived Asset by Geographic Areas) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 49,428 | $ 3,883 |
United States (“U.S.”) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 45,053 | 2,053 |
Americas (excluding U.S.) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 218 | 61 |
EMEA | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 567 | 1 |
China | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 3,040 | 1,702 |
APAC (excluding China) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 550 | $ 66 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jul. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 02, 2018 | |
Related Party Transaction [Line Items] | |||||
Common stock, outstanding (in shares) | 74,247,250 | 62,500,000 | |||
Receivables from NETGEAR, net | $ 12,184 | $ 0 | |||
Cash contribution | $ 70,892 | 43,188 | $ 43,579 | ||
Arlo | |||||
Related Party Transaction [Line Items] | |||||
Common stock, outstanding (in shares) | 62,500,000 | ||||
NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Cash contribution | $ 70,000 | ||||
Allocation of Corporate Expenses | NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | $ 30,600 | 40,000 | 20,600 | ||
Allocation of Corporate Expenses | Research and development | NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | 9,400 | 11,800 | 5,900 | ||
Allocation of Corporate Expenses | Sales and marketing | NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | 10,000 | 13,100 | 6,400 | ||
Allocation of Corporate Expenses | General and administrative | NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | $ 11,200 | $ 15,100 | $ 8,300 | ||
Transition Services Agreement | NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | 6,300 | ||||
Transition Services Agreement | Research and development | NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | 400 | ||||
Transition Services Agreement | Sales and marketing | NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | 1,600 | ||||
Transition Services Agreement | General and administrative | NETGEAR | |||||
Related Party Transaction [Line Items] | |||||
Purchases from related party | $ 4,300 |
Subsequent Events (Details)
Subsequent Events (Details) | Feb. 07, 2019USD ($) | Feb. 05, 2019$ / shares | Jan. 23, 2019shares | Dec. 31, 2018shares | Dec. 31, 2018shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2018segmentshares | Dec. 31, 2017USD ($) | Oct. 01, 2018 | Aug. 02, 2018shares | Aug. 01, 2018shares |
Subsequent Event [Line Items] | |||||||||||
Number of operating segments | 1 | 1 | |||||||||
Fair value in excess of carrying amount (as a percentage) | 175.00% | 175.00% | 175.00% | 175.00% | 253.00% | ||||||
Goodwill impairment | $ | $ 0 | $ 0 | |||||||||
2018 Plan | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares offered (in shares) | 7,500,000 | 7,500,000 | |||||||||
Number of shares issuable (in shares) | 137,000 | ||||||||||
Converted at Distribution (in shares) | 6,823,000 | 6,823,000 | 6,823,000 | 6,823,000 | |||||||
Additional authorized (in shares) | 6,823,000 | ||||||||||
Subsequent Event | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Average cost per share (in usd per share) | $ / shares | $ 3.71 | ||||||||||
Decrease in average cost per share (as a percentage) | 223.30% | ||||||||||
Fair value in excess of carrying amount (as a percentage) | 29.80% | ||||||||||
Goodwill, Decrease In Stock Price, Estimated Impairment Loss | $ | $ 15,600,000 | ||||||||||
Subsequent Event | MPAP | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Fair value in excess of carrying amount (as a percentage) | 27.20% | ||||||||||
Market participant acquisition premium | 0.25 | ||||||||||
Subsequent Event | MPAP Adjustment | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Market participant acquisition premium | 0.0250 | ||||||||||
Subsequent Event | Stock Compensation Plan | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issuable (in shares) | 742,472 | ||||||||||
Subsequent Event | 2018 Plan | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issuable (in shares) | 9,792,677 | ||||||||||
Subsequent Event | 2018 Plan | ESPP | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares offered (in shares) | 10,535,149 | ||||||||||
Additional authorized (in shares) | 2,969,890 | ||||||||||
NETGEAR | 2018 Plan | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Converted at Distribution (in shares) | 6,822,787 | 6,822,787 | 6,822,787 | 6,822,787 | |||||||
NETGEAR | Subsequent Event | 2018 Plan | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Converted at Distribution (in shares) | 6,822,787 |
Quarterly Unaudited Financial_3
Quarterly Unaudited Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 2 Months Ended | 3 Months Ended | 7 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Aug. 02, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | $ 122,158 | $ 131,174 | $ 110,948 | $ 100,638 | $ 124,774 | $ 104,887 | $ 79,194 | $ 61,803 | $ 464,918 | $ 370,658 | $ 184,604 | ||
Gross Profit | 4,981 | 29,747 | 28,294 | 29,053 | 29,817 | 28,352 | 16,712 | 16,353 | 92,075 | 91,234 | 38,034 | ||
Provision for (benefit from) income taxes | (58) | 223 | 288 | 319 | 327 | 445 | 137 | 219 | 772 | 1,128 | 83 | ||
Net income (loss) | $ (45,849) | $ (39,073) | $ (13,225) | $ (17,822) | $ (5,363) | $ 2,663 | $ 6,014 | $ (2,152) | $ 24 | $ (29,634) | $ (75,483) | $ 6,549 | $ (13,743) |
Basic (in dollars per share) | $ (0.53) | $ (0.19) | $ (0.29) | $ (0.09) | $ 0.04 | $ 0.10 | $ (0.03) | $ 0 | $ (1.12) | $ 0.11 | $ (0.22) | ||
Diluted (in dollars per share) | $ (0.53) | $ (0.19) | $ (0.29) | $ (0.09) | $ 0.04 | $ 0.10 | $ (0.03) | $ 0 | $ (1.12) | $ 0.11 | $ (0.22) | ||
2018 Plan | |||||||||||||
Converted at Distribution (in shares) | 6,823,000 | 6,823,000 | |||||||||||
2018 Plan | NETGEAR | |||||||||||||
Converted at Distribution (in shares) | 6,822,787 | 6,822,787 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for doubtful accounts: | |||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance as of the beginning of year | $ 207 | $ 206 | $ 206 |
Additions | 0 | 1 | 0 |
Deductions | (80) | 0 | 0 |
Balance as of the end of year | 127 | 207 | 206 |
Allowance for deferred tax assets: | |||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance as of the beginning of year | 15,611 | 22,155 | 15,170 |
Additions | 13,760 | 10,896 | 10,386 |
Deductions | (4,894) | (17,440) | (3,401) |
Balance as of the end of year | $ 24,477 | $ 15,611 | $ 22,155 |