Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 29, 2019 | Oct. 21, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 29, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-38618 | |
Entity Registrant Name | ARLO TECHNOLOGIES, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 38-4061754 | |
Entity Address, Address Line One | 3030 Orchard Parkway | |
Entity Address, City or Town | San Jose, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95134 | |
City Area Code | 408 | |
Local Phone Number | 890-3900 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | ARLO | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 75,708,491 | |
Entity Central Index Key | 0001736946 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Ex Transition Period | false |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 113,870 | $ 151,290 |
Short-term investments | 39,941 | 49,737 |
Accounts receivable, net | 99,698 | 166,045 |
Inventories | 74,117 | 124,791 |
Prepaid expenses and other current assets | 16,088 | 23,611 |
Total current assets | 343,714 | 515,474 |
Property and equipment, net | 24,216 | 49,428 |
Operating lease right-of-use assets, net | 32,008 | |
Intangibles, net | 1,679 | 2,823 |
Goodwill | 15,638 | 15,638 |
Restricted cash | 4,130 | 4,134 |
Other non-current assets | 5,610 | 8,449 |
Total assets | 426,995 | 595,946 |
Current liabilities: | ||
Accounts payable | 57,772 | 82,542 |
Deferred revenue | 28,443 | 26,678 |
Accrued liabilities | 110,071 | 172,036 |
Income tax payable | 995 | 734 |
Total current liabilities | 197,281 | 281,990 |
Non-current deferred rent | 19,552 | 23,313 |
Non-current operating lease liabilities | 30,484 | |
Non-current financing lease obligation | 0 | 19,978 |
Non-current income taxes payable | 58 | 22 |
Other non-current liabilities | 14 | 1,141 |
Total liabilities | 247,389 | 326,444 |
Commitments and contingencies | ||
Stockholders’ Equity: | ||
Preferred stock | 0 | 0 |
Common stock | 76 | 74 |
Additional paid-in capital | 330,618 | 315,277 |
Accumulated other comprehensive income | 46 | 0 |
Accumulated deficit | (151,134) | (45,849) |
Total stockholders’ equity | 179,606 | 269,502 |
Total liabilities and stockholders’ equity | $ 426,995 | $ 595,946 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Revenue | $ 106,116 | $ 131,174 | $ 247,594 | $ 342,760 |
Cost of revenue | 95,613 | 101,427 | 225,496 | 255,666 |
Gross profit | 10,503 | 29,747 | 22,098 | 87,094 |
Operating expenses: | ||||
Research and development | 16,701 | 16,100 | 52,456 | 41,929 |
Sales and marketing | 13,657 | 12,843 | 42,389 | 37,123 |
General and administrative | 11,062 | 8,357 | 32,512 | 19,553 |
Separation expense | 137 | 5,823 | 1,760 | 23,649 |
Total operating expenses | 41,557 | 43,123 | 129,117 | 122,254 |
Loss from operations | (31,054) | (13,376) | (107,019) | (35,160) |
Interest income | 596 | 503 | 2,170 | 503 |
Other income (expense), net | 154 | (129) | 138 | (923) |
Loss before income taxes | (30,304) | (13,002) | (104,711) | (35,580) |
Provision for income taxes | 286 | 223 | 855 | 830 |
Net loss | $ (30,590) | $ (13,225) | $ (105,566) | $ (36,410) |
Net loss per share: | ||||
Basic (in dollars per share) | $ (0.41) | $ (0.19) | $ (1.41) | $ (0.56) |
Diluted (in dollars per share) | $ (0.41) | $ (0.19) | $ (1.41) | $ (0.56) |
Weighted average shares used to compute net loss per share: | ||||
Basic (in shares) | 75,337 | 69,600 | 74,831 | 64,867 |
Diluted (in shares) | 75,337 | 69,600 | 74,831 | 64,867 |
Products | ||||
Revenue | $ 94,306 | $ 121,347 | $ 213,359 | $ 315,678 |
Cost of revenue | 88,755 | 96,754 | 206,878 | 241,808 |
Services | ||||
Revenue | 11,810 | 9,827 | 34,235 | 27,082 |
Cost of revenue | $ 6,858 | $ 4,673 | $ 18,618 | $ 13,858 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (30,590) | $ (13,225) | $ (105,566) | $ (36,410) |
Other comprehensive income (loss), before tax: | ||||
Unrealized gain (loss) on derivative instruments | 22 | 20 | 0 | 20 |
Unrealized gain (loss) on available-for-sale securities | (27) | (4) | 46 | (4) |
Total other comprehensive income (loss), before tax | (5) | 16 | 46 | 16 |
Tax benefit (provision) related to derivative instruments | 0 | (3) | 0 | (3) |
Tax benefit (provision) related to available-for-sale securities | 0 | 1 | 0 | 1 |
Total other comprehensive income (loss), net of tax | (5) | 14 | 46 | 14 |
Comprehensive loss | $ (30,595) | $ (13,211) | $ (105,520) | $ (36,396) |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Net Parent Investment | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | NETGEAR | NETGEARAdditional Paid-In Capital | NETGEARNet Parent Investment |
Beginning balance (in shares) at Dec. 31, 2017 | 0 | ||||||||
Beginning balance at Dec. 31, 2017 | $ 125,419 | $ 0 | $ 0 | $ 125,419 | $ 0 | $ 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (36,410) | ||||||||
Stock-based compensation expense | 2,579 | 2,579 | $ 2,757 | $ 2,757 | |||||
Issuance of common stock (in shares) | 11,747 | ||||||||
Issuance of common stock | 174,737 | $ 12 | 174,725 | ||||||
Initial public offering costs paid | (1,404) | (1,404) | (3,148) | $ (3,148) | |||||
Net transfer from Parent | 44,164 | 44,164 | |||||||
Conversion of Net parent investment into common stock (in shares) | 62,500 | ||||||||
Conversion of Net parent investment into common stock | 62 | $ 62 | 139,645 | (139,645) | |||||
Change in unrealized gains and losses on available-for-sale securities, net of tax | (3) | (3) | |||||||
Change in unrealized gains and losses on derivatives, net of tax | 17 | 17 | |||||||
Ending balance (in shares) at Sep. 30, 2018 | 74,247 | ||||||||
Ending balance at Sep. 30, 2018 | 305,709 | $ 74 | 312,397 | 0 | 14 | (6,776) | |||
Beginning balance (in shares) at Jul. 01, 2018 | 0 | ||||||||
Beginning balance at Jul. 01, 2018 | 111,443 | $ 0 | 0 | 111,443 | 0 | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (13,225) | ||||||||
Stock-based compensation expense | 2,579 | 2,579 | 858 | $ 858 | |||||
Issuance of common stock (in shares) | 11,747 | ||||||||
Issuance of common stock | 174,737 | $ 12 | 174,725 | ||||||
Initial public offering costs paid | (1,404) | (1,404) | $ (3,148) | $ (3,148) | |||||
Net transfer from Parent | 33,793 | 33,793 | |||||||
Conversion of Net parent investment into common stock (in shares) | 62,500 | ||||||||
Conversion of Net parent investment into common stock | 62 | $ 62 | 139,645 | (139,645) | |||||
Change in unrealized gains and losses on available-for-sale securities, net of tax | (3) | (3) | |||||||
Change in unrealized gains and losses on derivatives, net of tax | 17 | 17 | |||||||
Ending balance (in shares) at Sep. 30, 2018 | 74,247 | ||||||||
Ending balance at Sep. 30, 2018 | 305,709 | $ 74 | 312,397 | 0 | 14 | (6,776) | |||
Beginning balance (in shares) at Dec. 31, 2018 | 74,247 | ||||||||
Beginning balance at Dec. 31, 2018 | 269,502 | $ 74 | 315,277 | 0 | 0 | (45,849) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (105,566) | (105,566) | |||||||
Stock-based compensation expense | 15,261 | 15,261 | |||||||
Issuance of common stock (in shares) | 1,041 | ||||||||
Issuance of common stock | 12 | $ 1 | 11 | ||||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 767 | ||||||||
Issuance of common stock under Employee Stock Purchase Plan | 1,825 | $ 1 | 1,824 | ||||||
Restricted stock unit withholdings (in shares) | (349) | ||||||||
Restricted stock unit withholdings | (1,755) | (1,755) | |||||||
Change in unrealized gains and losses on available-for-sale securities, net of tax | 46 | 46 | |||||||
Change in unrealized gains and losses on derivatives, net of tax | 0 | ||||||||
Ending balance (in shares) at Sep. 29, 2019 | 75,706 | ||||||||
Ending balance at Sep. 29, 2019 | 179,606 | $ 76 | 330,618 | 0 | 46 | (151,134) | |||
Beginning balance (in shares) at Jun. 30, 2019 | 74,869 | ||||||||
Beginning balance at Jun. 30, 2019 | 203,230 | $ 75 | 323,648 | 0 | 51 | (120,544) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (30,590) | (30,590) | |||||||
Stock-based compensation expense | 5,219 | 5,219 | |||||||
Issuance of common stock (in shares) | 88 | ||||||||
Issuance of common stock | 0 | ||||||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 767 | ||||||||
Issuance of common stock under Employee Stock Purchase Plan | 1,825 | $ 1 | 1,824 | ||||||
Restricted stock unit withholdings (in shares) | (18) | ||||||||
Restricted stock unit withholdings | (73) | (73) | |||||||
Change in unrealized gains and losses on available-for-sale securities, net of tax | (27) | (27) | |||||||
Change in unrealized gains and losses on derivatives, net of tax | 22 | 22 | |||||||
Ending balance (in shares) at Sep. 29, 2019 | 75,706 | ||||||||
Ending balance at Sep. 29, 2019 | $ 179,606 | $ 76 | $ 330,618 | $ 0 | $ 46 | $ (151,134) |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 29, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (105,566) | $ (36,410) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 10,950 | 3,406 |
Premium amortization / discount accretion on investments, net | (391) | (3) |
Stock-based compensation expense | 15,261 | 5,336 |
Deferred income taxes | (109) | (438) |
Changes in assets and liabilities: | ||
Accounts receivable, net | 66,348 | (69,724) |
Inventories | 50,675 | (50,009) |
Prepaid expenses and other assets | (1,729) | (17,319) |
Accounts payable | (24,381) | 53,717 |
Deferred revenue | (1,996) | 7,169 |
Accrued and other liabilities | (51,777) | 57,966 |
Net cash used in operating activities | (42,715) | (46,309) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (5,023) | (10,854) |
Purchases of short-term investments | (29,768) | (39,774) |
Proceeds from maturities of short-term investments | 40,000 | 0 |
Net cash provided (cash used) by investing activities | 5,209 | (50,628) |
Cash flows from financing activities: | ||
Proceeds from initial public offering, net of offering costs | 0 | 173,395 |
Proceeds related to employee benefit plans | 1,837 | 0 |
Restricted stock unit withholdings | (1,755) | 0 |
Net investment from parent | 0 | 71,507 |
Net cash provided by financing activities | 82 | 244,902 |
Net increase (decrease) in cash and cash equivalents and restricted cash | (37,424) | 147,965 |
Cash and cash equivalents and restricted cash, at beginning of period | 155,424 | 108 |
Cash and cash equivalents and restricted cash, at end of period | 118,000 | 148,073 |
Non-cash investing and financing activities: | ||
Purchases of property and equipment included in accounts payable and accrued liabilities | 1,578 | 5,279 |
De-recognition of build-to-suit assets and liabilities | (21,610) | 0 |
Estimated fair value of a facility under build-to-suit lease | $ 0 | $ 21,858 |
The Company and Basis of Presen
The Company and Basis of Presentation | 9 Months Ended |
Sep. 29, 2019 | |
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. On July 6, 2018, the Company filed a registration statement (as amended, the “IPO Registration Statement”) relating to the IPO of common stock of Arlo with the U.S. Securities and Exchange Commission (the “SEC”). 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. 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. 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. In connection with the Distribution, 62,500,000 shares of Arlo common stock held by NETGEAR were distributed to its stockholders and NETGEAR is no longer considered a related party to the Company. Basis of Presentation The unaudited condensed 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 stand-alone 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. Following the completion of the IPO, the unaudited condensed 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”). These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for fair statement of the unaudited condensed consolidated financial statements for interim periods. The Company has evaluated all subsequent events through the date the financial statements were issued. Reclassification Certain reclassifications have been made to the prior year’s condensed consolidated balance sheets and statements of cash flows to conform to the current year’s presentation. The reclassifications had no effect on the prior year’s condensed consolidated statements of operations, statements of comprehensive income (loss) and statements of stockholders’ equity. Allocated Expenses from NETGEAR Prior to the completion of the IPO, NETGEAR provided certain corporate services to the Company, which were allocated based on revenue, headcount, or other measures the Company has determined as reasonable through July 1, 2018. The amount of these allocations from NETGEAR reflected within operating expenses in the unaudited condensed consolidated statements of operations was $30.6 million for the six months ended 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. There were no allocations from NETGEAR during the three months ended September 30, 2018. Following July 1, 2018, the Company assumed responsibility for the costs of these functions. 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 these unaudited condensed 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. Actual results could differ materially from those estimates and operating results for the nine months ended September 29, 2019 |
Significant Accounting Policies
Significant Accounting Policies and Recent Accounting Pronouncements | 9 Months Ended |
Sep. 29, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Recent Accounting Pronouncements | Significant Accounting Policies and Recent Accounting Pronouncements The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. There have been no significant changes during the nine months ended September 29, 2019 , other than the accounting policies discussed below. 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 restricted stock units ("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 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 Company recognizes these compensation expense generally on a straight-line basis over the requisite service period of the award. The fair value of stock options and PSOs is estimated on the grant or offering date using the Black-Scholes option pricing model and the forfeitures recorded as they occur. 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 three to 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. The Company's 2018 Employee Stock Purchase Plan (“ESPP”) is intended to provide employees with the opportunity to purchase the Company's common stock through accumulated payroll deductions at the end of specified purchase period. Eligible employees may contribute up to 15% of compensation, subject to certain income limits, to purchase shares of the Company'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 purchasing period is generally six months . The Company determines the fair value using the Black-Scholes Model using various inputs, including our estimate of expected volatility, term, dividend yield and risk-free interest rate. The Company recognizes compensation costs for the ESPP on a straight-line basis over the requisite service period of the award. The Company issued grants consisting of 50% of time-based vesting RSUs, 25% of performance-based RSUs (“PSUs”) and 25% of market-based performance RSUs (“MPSUs”) to its named executive officers (“NEOs”) during the fiscal quarter ended September 29, 2019: • The time-based vesting RSUs will vest in three equal annual installments during the period that begins on the RSU grant date. • The PSUs will vest in three equal annual installments during the period that begins on the PSU grant date based on the extent to which a revenue milestone for the fiscal year ending December 31, 2019 is achieved. • The MPSUs will vest on the three-year anniversary of the MPSU grant date based on the performance of the Company's common stock relative to the Russell 2000 Index (“the Benchmark”) during the three-year period from grant date. A positive 3.3 x or negative 2.5 x multiplier will be applied to the total shareholder returns (“TSR”), such that the number of shares vested will increase by 3.3% or decrease by 2.5% of the target numbers, for each 1% of positive or negative relative TSR relative to the Benchmark. In the event the Company's common stock performance is below negative 30% relative to the Benchmark, no shares will vest. In no event will the number of shares vested in each tranche exceed 200% of the target for that tranche. The estimated compensation cost relating to the PSUs, is based on the closing fair market value of the Company's stock on the date of grant. The maximum number of shares that NEOs can earn is 150% of the target number of the PSUs. The minimum number of shares that NEOs can earn is 50% of the target number of the PSUs. To estimate the compensation cost relating to the MPSUs, the Company utilized a Monte Carlo simulation model on the date of grant. The fair value determined using the Monte Carlo simulation model varies based on the assumptions used for the expected stock price volatility, the correlation coefficient between the Company and Russell 2000 Index, risk-free interest rates, and dividend yield. Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, accrued liabilities, and non-current operating lease liabilities in the unaudited condensed consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for lease payments are recognized in the unaudited condensed consolidated statements of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. ROU assets represent the Company’s right to use an underlying asset over the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, the incremental borrowing rate based on the information available was used at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made before the lease commencement date less any lease incentives received. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the options. The lease agreements with lease and non-lease components are generally accounted as a single component. 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 2016-02 In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases” (Topic 842), which requires lessees to recognize on the balance sheets a 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. On January 1, 2019 (“adoption date”), the Company adopted the new standard utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first fiscal quarter of 2019. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether an expired or existing contract as of adoption date contains a lease, (2) lease classification for any expired or existing lease as of the adoption date and (3) initial direct costs for any existing lease as of the adoption date. The Company also elected to account for each separate lease component of a contract and its associated non-lease components as a single lease component. The adoption of ASU 2016-02 resulted in the recognition of ROU assets and lease liabilities for operating leases of $14.4 million as of January 1, 2019 on its unaudited condensed consolidated balance sheets, with no material impact its unaudited consolidated statements of operations and cash flows. In addition, the Company was deemed to be the accounting owner of its build-to-suit lease arrangement for its San Jose corporate headquarters and the construction was in progress at adoption date. As such, the Company reevaluated its build-to-suit lease arrangement under ASU 2016-02 to ascertain whether it meets the criteria as the accounting owner of the build-to-suit lease arrangement through control of the underlying leased asset. The Company concluded that it did not have control over the underlying leased asset. As a result, the Company de-recognized the build to suit asset and liability as of adoption date of $21.6 million of Property and equipment and $21.9 million of financing lease obligations. The difference of $0.3 million between the de-recognized assets and the associated financing lease obligations was recorded as an adjustment to Accumulated deficit as of adoption date as mentioned above. The Company accounted for its San Jose Corporate lease arrangement as operating lease under ASU 2016-02. Consequently, as of March 31, 2019, the construction of its leasehold improvements for its San Jose corporate headquarters was partially completed and partially occupied by the Company resulting in lease commencement for the portion that was completed and occupied by the Company. Therefore, the Company proportionally recorded ROU assets and lease liabilities of $14.3 million , representing two thirds of the total value of the ROU assets and lease liabilities. As of June 30, 2019, upon the completion of the leasehold improvements and full occupation of the entire building, the Company recognized the remaining value of ROU assets and lease liabilities of $7.2 million . Refer to Note 8. Commitments and Contingencies , for further details of the impacts on the adoption. Accounting Pronouncements Not Yet Effective 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. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. 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. |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 29, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | Balance Sheet Components Cash and Cash Equivalents and 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 unaudited condensed consolidated balance sheet as of September 29, 2019 and December 31, 2018 , and the sum is presented on the unaudited condensed consolidated statements of cash flows: As of September 29, December 31, (In thousands) Cash and cash equivalents $ 113,870 $ 151,290 Restricted cash 4,130 4,134 Total as presented on the unaudited condensed consolidated statements of cash flows $ 118,000 $ 155,424 Available-for-sale short-term investments As of September 29, 2019 As of December 31, 2018 Cost Unrealized Gains Unrealized Losses Estimated Fair Value Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. treasuries $ 39,897 $ 44 $ — $ 39,941 $ 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. Accounts receivable, net As of September 29, December 31, (In thousands) Gross accounts receivable $ 100,253 $ 166,172 Allowance for doubtful accounts (555 ) (127 ) Total accounts receivable, net $ 99,698 $ 166,045 Property and equipment, net The components of property and equipment are as follows: As of September 29, December 31, (In thousands) Machinery and equipment $ 13,289 $ 11,415 Software 11,941 10,624 Computer equipment 4,042 4,342 Furniture and fixtures 3,795 2,698 Leasehold improvements 8,836 3,007 Construction in progress (1) — 28,357 Total property and equipment, gross 41,903 60,443 Accumulated depreciation and amortization (17,687 ) (11,015 ) Total property and equipment, net $ 24,216 $ 49,428 _________________________ (1) The Company had a build-to-suit lease arrangement under its corporate headquarters lease in San Jose, California. Upon the adoption of ASU 2016-02, the Company concluded that it did not have control over the underlying leased asset and de-recognized $21.6 million of Construction of progress. Refer to Note 8, Commitments and Contingencies , for further details. Depreciation and amortization expense pertaining to property and equipment was $2.4 million and $6.6 million for the three and nine months ended September 29, 2019 , respectively, and $1.1 million and $2.3 million for the three and nine months ended September 30, 2018 , respectively. Allocated depreciation expense from NETGEAR was $0.5 million and $1.2 million for the three and six months ended July 1, 2018. There was no additional allocation of depreciation expense from NETGEAR for the three months ended September 30, 2018 . For the periods prior to the completion of the IPO, the unaudited condensed consolidated statements of operations include both the depreciation expense directly identifiable as Arlo’s and allocated depreciation expense from NETGEAR. Refer to Allocated Expenses from NETGEAR as discussed in Note 1, The Company and Basis of Presentation , for detailed disclosures regarding the methodology used for allocated expenses from NETGEAR. Intangibles, net As of September 29, 2019 As of December 31, 2018 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 9,800 $ (8,196 ) $ 1,604 $ 9,800 $ (7,165 ) $ 2,635 Other 500 (425 ) 75 800 (612 ) 188 Total intangibles, net $ 10,300 $ (8,621 ) $ 1,679 $ 10,600 $ (7,777 ) $ 2,823 As of September 29, 2019 , the remaining weighted-average estimated useful life of intangibles was 0.9 years. Amortization of intangibles was $0.4 million and $1.2 million for the three and nine months ended September 29, 2019 , respectively, and $0.4 million and $1.2 million for the three and nine months ended September 30, 2018 , respectively. As of September 29, 2019 , estimated amortization expense related to finite-lived intangibles for the remaining years was as follows (in thousands): 2019 (remaining three months) $ 373 2020 1,306 Total estimated amortization expense $ 1,679 Goodwill There was no change in the carrying amount of goodwill during the nine months ended September 29, 2019 and the goodwill as of December 31, 2018 and September 29, 2019 was as follows (in thousands): As of December 31, 2018 $ 15,638 As of September 29, 2019 $ 15,638 Goodwill Impairment The Company performs an annual assessment of goodwill at the reporting unit level on the first day of the fourth fiscal quarter and during interim periods if there are triggering events to reassess goodwill. The Company’s common stock declined after the Company announced its fourth quarter of fiscal year 2018 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 Company’s 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 . The Company determined that no events occurred or circumstances changed during the three months ended September 29, 2019 that would more likely than not reduce the fair value of the Company below its carrying amount. Other non-current assets As of September 29, December 31, 2018 (In thousands) Non-current deferred income taxes $ 1,218 $ 1,108 Deposits 3,644 4,084 Other 748 3,257 Total other non-current assets $ 5,610 $ 8,449 Accrued liabilities As of September 29, December 31, (In thousands) Sales and marketing $ 44,399 $ 75,863 Sales returns 29,351 49,247 Accrued employee compensation 6,707 11,897 Current operating lease liabilities 3,814 — Warranty obligation 3,403 3,712 Freight 2,159 3,913 Current financing lease obligation — 1,632 Other 20,238 25,772 Total accrued liabilities $ 110,071 $ 172,036 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 29, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following table summarizes assets and liabilities measured at fair value on a recurring basis as of September 29, 2019 and December 31, 2018 : As of September 29, 2019 As of December 31, 2018 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) 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) $ 11,176 $ 11,176 $ — $ 438 $ 438 $ — Available-for-sale securities: U.S. treasuries (1) 39,941 39,941 — 49,737 49,737 — Foreign currency forward contracts (2) 343 — 343 322 — 322 Total assets measured at fair value $ 51,460 $ 51,117 $ 343 $ 50,497 $ 50,175 $ 322 Liabilities: Foreign currency forward contracts (3) $ 56 $ — $ 56 $ 71 $ — $ 71 Total liabilities measured at fair value $ 56 $ — $ 56 $ 71 $ — $ 71 _________________________ (1) Included in Short-term investments on the Company’s unaudited condensed consolidated balance sheets. (2) Included in Prepaid expenses and other current assets on the Company’s unaudited condensed consolidated balance sheets. (3) Included in Accrued liabilities on the Company’s unaudited condensed 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 September 29, 2019 and 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 September 29, 2019 and December 31, 2018 , the Company has no Level 3 fair value assets or liabilities. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 29, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s subsidiaries have had, and will continue to have material future cash flows, including revenue and expenses, which are denominated in currencies other than the Company’s functional currency. 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. Accordingly, the Company uses derivatives to mitigate its business exposure to foreign exchange risk. The Company enters into foreign currency forward contracts in Australian dollars, British pounds, euros, and Canadian dollars to manage its exposure to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses and existing assets and liabilities. T he Company’s foreign currency forward contracts do not contain any credit risk-related contingent features. The Company is exposed to credit losses in the event of nonperformance by the counter-parties of its forward contracts. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any one counter-party. In addition, the derivative contracts typically mature in less than six months and the Company continuously evaluates the credit standing of its counter-party financial institutions. The counter-parties to these arrangements are large highly rated financial institutions and the Company does not consider non-performance a material risk. 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. The Company records all derivatives on the balance sheets at fair value. Cash flow hedge gains and losses are recorded in other comprehensive income (“OCI”) until the hedged item is recognized in earnings. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in Other income (expense), net in the unaudited condensed consolidated statements of operations. Fair value of derivative instruments The fair values of the Company’s derivative instruments and the line items on the unaudited condensed consolidated balance sheets to which they were recorded as of September 29, 2019 and December 31, 2018 are summarized as follows: Derivative Assets Balance Sheet Location September 29, 2019 December 31, 2018 Balance Sheet Location September 29, 2019 December 31, 2018 (In thousands) (In thousands) Derivative assets not designated as hedging instruments Prepaid expenses and other current assets $ 336 $ 293 Accrued liabilities $ 46 $ 46 Derivative assets designated as hedging instruments Prepaid expenses and other current assets 7 29 Accrued liabilities 10 25 Total $ 343 $ 322 $ 56 $ 71 Refer to Note 4, 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 unaudited condensed consolidated balance sheets. The following tables set forth the offsetting of derivative assets as of September 29, 2019 and December 31, 2018: As of September 29, 2019 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 329 $ — $ 329 $ (54 ) $ — $ 275 Wells Fargo Bank 14 — 14 (2 ) — 12 Total $ 343 $ — $ 343 $ (56 ) $ — $ 287 As of December 31, 2018 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Assets Presented in the Unaudited Condensed 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 The following tables set forth the offsetting of derivative liabilities as of September 29, 2019 and December 31, 2018: As of September 29, 2019 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 54 $ — $ 54 $ (54 ) $ — $ — Wells Fargo Bank 2 — 2 (2 ) — — Total $ 56 $ — $ 56 $ (56 ) $ — $ — As of December 31, 2018 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Unaudited Condensed 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 enters into about eight forward contracts per quarter with an average size of $1.4 million USD equivalent related to its cash flow hedging program. The effects of the Company’s cash flow hedges on the unaudited condensed consolidated statements of operations for the three months ended September 29, 2019 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 106,116 $ 95,613 $ 16,701 $ 13,657 $ 11,062 Gains (losses) on cash flow hedge $ 86 $ — $ (3 ) $ (3 ) $ (2 ) The effects of the Company’s cash flow hedges on the unaudited condensed consolidated statements of operations for the nine months ended September 29, 2019 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 247,594 $ 225,496 $ 52,456 $ 42,389 $ 32,512 Gains (losses) on cash flow hedge $ 333 $ (2 ) $ (24 ) $ (38 ) $ (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 unaudited condensed consolidated statements of operations, refer to Note 6, 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 nine months ended September 29, 2019 . Non-designated hedges The Company adjusts its non-designated hedges monthly and enters into about five non-designated derivatives per quarter with an average size of $2.0 million . 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 unaudited condensed consolidated statements of operations for the three and nine months ended September 29, 2019 and September 30, 2018 were as follows: Derivatives Not Designated as Hedging Instruments Location of Gains (Losses) Recognized in Income on Derivative Three Months Ended Nine Months Ended September 29, 2019 September 30, 2018 September 29, 2019 September 30, 2018 (In thousands) Foreign currency forward contracts Other income (expense), net $ 665 $ (57 ) $ 521 $ (57 ) |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 29, 2019 | |
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 three and nine months ended September 29, 2019 . Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of June 30, 2019 $ 72 $ (22 ) $ 1 $ 51 Other comprehensive income (loss) before reclassifications (27 ) 100 73 Less: Amount reclassified from accumulated other comprehensive income (loss) — 78 — 78 Net current period other comprehensive income (loss) (27 ) 22 — (5 ) Balance as of September 29, 2019 $ 45 $ — $ 1 $ 46 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, 2018 $ (2 ) $ 2 $ — $ — Other comprehensive income (loss) before reclassifications 47 256 1 304 Less: Amount reclassified from accumulated other comprehensive income (loss) — 258 — 258 Net current period other comprehensive income (loss) 47 (2 ) 1 46 Balance as of September 29, 2019 $ 45 $ — $ 1 $ 46 The following tables provide details about significant amounts reclassified out of each component of AOCI for the three and nine months ended September 29, 2019 : Three Months Ended September 29, 2019 Nine Months Ended September 29, 2019 Gains (Losses) Recognized in OCI - Effective Portion Gains (Losses) Reclassified from OCI to Income - Effective Portion 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 $ 100 $ 86 $ 257 $ 333 Revenue Foreign currency contracts — — — (2 ) Cost of revenue Foreign currency contracts — (3 ) — (24 ) Research and development Foreign currency contracts — (3 ) — (38 ) Sales and marketing Foreign currency contracts — (2 ) — (11 ) General and administrative $ 100 $ 78 $ 257 $ 258 Total * _________________________ |
Deferred Revenue
Deferred Revenue | 9 Months Ended |
Sep. 29, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Revenue | Deferred Revenue Deferred Revenue Deferred revenue consists of advance payments and deferred revenue, where the Company has unsatisfied performance obligations. Deferred revenue primarily consists of prepaid services and customer billings in advance of revenues being recognized from the Company's subscription contracts. 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 September 29, 2019 : 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 58,575 $ 15,770 $ 5,209 $ 79,554 The majority of the performance obligation classified as greater than one year pertains to revenue deferral from prepaid services. For the three and nine months ended September 29, 2019 , $12.4 million and $32.6 million of revenue was deferred due to unsatisfied performance obligations, primarily relating to over time service revenue, and $11.9 million and $34.6 million of revenue was recognized for the satisfaction of performance obligations over time, respectively. $22.1 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 12, Segment and Geographic Information |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company primarily leases office space, with various expiration dates through June 2029 . Some of the leases include options to extend such leases for up to five years , and some include options to terminate such leases within one year . The terms of certain of the Company's leases provide for rental payments on a graduated scale. The Company recognizes lease expense on a straight-line basis over the lease term. The operating lease expense for the three and nine months ended September 29, 2019 was as follows: Statements of Operations Location Three Months Ended September 29, 2019 Nine Months Ended September 29, 2019 (In thousands) Operating lease cost (1) General and administrative $ 1,726 $ 5,068 ________________________ (1) Included short-term leases and variable lease costs which were immaterial. The effect of accounting standards adoption of ASU 2016-02 on the unaudited condensed consolidated statement of balance sheets and supplemental balance sheet information related to operating leases as of September 29, 2019 were as follows: Leases Balance Sheet Location September 29, 2019 January 1, 2019 December 31, 2018 (In thousands) Build-to-suit lease (1) Property and equipment, net $ — $ (21,610 ) $ 21,610 Build-to-suit lease (1) Accrued liabilities — (281 ) 281 Build-to-suit lease (1) Accrued liabilities — (1,632 ) 1,632 Build-to-suit lease (1) Non-current financing lease obligation — (19,978 ) 19,978 Build-to-suit lease (1) Retained earnings (Accumulated deficit) 281 281 — Operating leases (2) Operating lease right-of-use assets, net 32,008 14,400 — Operating leases (2) Accrued liabilities — (107 ) 107 Operating leases (2) Accrued liabilities 3,814 2,356 — Operating leases (2) Non-current deferred rent — (1,141 ) 1,141 Operating leases (2) Non-current operating lease liabilities 30,484 12,044 — ________________________ (1) The Company was deemed to be the accounting owner of its build-to-suit lease arrangement for its San Jose corporate headquarters and the construction was in progress at adoption date. As such, the Company reevaluated its build-to-suit lease arrangement under ASU 2016-02 to ascertain whether it meets the criteria as the accounting owner of the build-to-suit lease arrangement through control of the underlying leased asset. The Company concluded that it did not have control over the underlying leased asset. As a result, the Company de-recognized the build to suit asset and liability as of adoption date of $21.6 million of Property and equipment and $21.9 million of financing lease obligations. The difference of $0.3 million between the de-recognized assets and the associated financing lease obligations was recorded as an adjustment to Accumulated deficit as of the adoption date. (2) The Company adopted ASU 2016-02 on January 1, 2019 which resulted in the recognition of ROU assets and lease liabilities for operating leases of $14.4 million on its unaudited condensed consolidated balance sheets. The ROU assets were reduced by $0.1 million current deferred rent and $1.1 million non-current deferred rent which were de-recognized along with the adoption. As of March 31, 2019, the construction of the Company’s leasehold improvements for its San Jose corporate headquarters was partially completed and partially occupied by the Company, resulting in lease commencement inception for the portion that was completed and occupied by the Company. Therefore, the Company proportionally recorded ROU assets and lease liabilities of $14.3 million , representing two thirds of the total value of the ROU assets and lease liabilities. As of June 30, 2019, upon the completion of the leasehold improvements and full occupation of the entire building, the Company recognized the remaining value of ROU assets and lease liabilities of $7.2 million . As of September 29, 2019, the Company received $3.1 million reimbursement for leasehold improvements that the Company de-recognized during the quarter. Supplemental cash flow information related to operating leases for the three and nine months ended September 29, 2019 was as follows: Three Months Ended September 29, 2019 Nine Months Ended September 29, 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,470 $ 2,882 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ 439 $ 22,172 Weighted average remaining lease term and weighted average discount rate related to operating leases as of September 29, 2019 were as follows: Weighted average remaining lease term 5.9 years Weighted average discount rate 5.67 % The maturity of lease liabilities related to operating leases for each of the next five years and thereafter as of September 29, 2019 was as follows (in thousands): 2019 (Remaining three months) $ 1,170 2020 5,950 2021 5,789 2022 5,645 2023 4,968 Thereafter 19,488 Total lease payments 43,010 Less: interest (1) (8,712 ) Total $ 34,298 Accrued liabilities $ 3,814 Non-current operating lease liabilities 30,484 Total $ 34,298 ________________________ (1) Calculated using the Company’s incremental borrowing rate on a collateralized basis plus LIBOR rate that closely matches contractual term of most leases. 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): Leases (1) 2019 $ 4,634 2020 5,813 2021 5,678 2022 5,580 2023 4,903 Thereafter 19,252 Total $ 45,860 ________________________ (1) Amounts are based on ASC 840, Leases that was superseded upon the adoption of ASC 842, Leases on January 1, 2019. Letters of Credit In connection with the 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 September 29, 2019 the Company had approximately $3.6 million of unused letters of credit outstanding, of which $3.1 million pertains to the lease arrangement in San Jose, California. 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 September 29, 2019 , the Company had approximately $71.4 million in non-cancelable purchase commitments with suppliers. The Company establishes a loss liability for all products it does not expect to sell for which it has committed purchases from suppliers. As of September 29, 2019 , the loss liability from committed purchases was $2.6 million . 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 unaudited condensed consolidated balance sheets, were as follows: Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, (In thousands) Balance at the beginning of the period $ 3,232 $ 3,487 $ 3,712 $ 31,756 Reclassified to sales returns upon adoption of ASC 606 (1) — — — (28,713 ) Provision for warranty obligation made during the period 364 344 292 1,166 Settlements made during the period (193 ) (213 ) (601 ) (591 ) Balance at the end of the period $ 3,403 $ 3,618 $ 3,403 $ 3,618 ________________________ (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 six putative securities class action complaints in the Superior Court of California, County of Santa Clara, and one complaint 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; Pham v. Arlo Technologies, Inc. et al. , No. 19CV340741, filed January 9, 2019; Patel v. Arlo Technologies, Inc. , No. 19CV340758, filed January 10, 2019; Perros v. NetGear, Inc. , No. 19CV342071, filed February 1, 2019; Vardanian v. Arlo Technologies, Inc. , No. 19CV342318, filed February 8, 2019; and Hill v. Arlo Technologies, Inc. et al. , No. 19CV343033, filed February 22, 2019. The action pending in federal court is Wong v. Arlo Technologies, Inc. et al. , No. 19-CV-00372, filed January 22, 2019 (the “Federal Action”). 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. In the six state court actions, the court initially issued an order deeming the cases complex and temporarily stayed discovery. The six state actions were then consolidated by the court (as consolidated, the “State Action”), and the plaintiffs filed a consolidated complaint on May 1, 2019. On June 21, 2019, the court stayed the State Action pending resolution of the Federal Action, given the substantial overlap between the claims. The court set a case management conference for January 17, 2020 so the parties can provide an update regarding the status of the Federal Action. In the Federal Action, four investors filed motions to be appointed lead plaintiff. On May 6, 2019, the court appointed a shareholder named Matis Nayman to serve as lead plaintiff and the law firm of Keller Lenkner LLC as lead counsel. On June 7, 2019, plaintiff filed an amended complaint, which alleges that defendants violated the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, by failing to adequately disclose quality control problems and adverse sales trends surrounding the Company’s IPO. The amended complaint also names as defendants the underwriters in the IPO and NETGEAR, Inc. Defendants filed a motion to dismiss the amended complaint on August 6, 2019. Plaintiff opposed the motion to dismiss on September 6, 2019, and defendants filed a reply on October 4, 2019. A hearing on the motion to dismiss is currently scheduled for December 5, 2019. Pursuant to the Private Securities Litigation Reform Act (“PSLRA”), discovery is stayed until the court rules on the motion to dismiss. In addition, a shareholder named Leonard Pinto filed a tagalong derivative action on June 13, 2019 (the “Derivative Action”) in the Northern District of California. The action is brought on behalf of the Company against the majority of the Company’s current directors. The complaint is based on the same alleged misconduct as the securities class actions but asserts claims for breach of fiduciary duty, waste of corporate assets, and violation of the Securities Exchange Act of 1934, as amended. On August 20, 2019, the court stayed the Derivative Action pending resolution of the motion to dismiss in the Federal Action. 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 September 29, 2019 . 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 September 29, 2019 . 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. Change in Control and Severance Agreements The Company has entered into change in control and severance agreements with certain of its key executives (the “Severance Agreements”). Pursuant to the Severance Agreements, upon a termination without cause or resignation with good reason, the individual would be entitled to (1) cash severance equal to (a) the individual’s annual base salary and an additional amount equal to his or her target annual bonus (for the Chief Executive Officer and Chief Financial Officer) or (b) the individual’s base salary for six months (for other key executives), (2) (a) 12 months of health benefits continuation (for the Chief Executive Officer and Chief Financial Officer) or (b) six months of health benefits continuation (for other key executives) and (3) accelerated vesting of any unvested equity awards that would have vested during the 12 months following the termination date. Upon a termination without cause or resignation with good reason that occurs during the one month prior to or 12 months following a change in control, the individual would be entitled to (1) (a) cash severance equal to a multiple (2 times for the Chief Executive Officer and 1.5 times for the Chief Financial Officer) of the sum of the individual’s annual base salary and target annual bonus (for the Chief Executive Officer and Chief Financial Officer) or (b) a cash severance equal to the individual’s annual base salary (for other key executives), (2) a number of months of health benefits continuation (24 months for the Chief Executive Officer, 18 months for the Chief Financial Officer, and 12 months for other key executives) and (3) vesting of all outstanding, unvested equity awards. Severance will be conditioned upon the execution and non-revocation of a release of claims. The Company had no liabilities recorded for these agreements as of September 29, 2019 . On May 2, 2019, the Company and Patrick J. Collins III, the Company’s Senior Vice President of Products, entered into a Separation and Release Agreement (the “Separation Agreement”) regarding Mr. Collins’ separation from the Company, effective May 1, 2019. Pursuant to the Separation Agreement, Mr. Collins received cash severance equal to the his annual base salary, 12 months of health benefits continuation and accelerated vesting of any of his unvested equity awards that would have vested during the 12 months following the termination date. 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. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 29, 2019 | |
Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company grants options and RSUs under the 2018 Equity Incentive Plan (the “2018 Plan”), under which awards may be granted to all employees. Award vesting periods for this plan are generally three to 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 granted to its NEOs options to purchase 2,781,249 shares of Arlo common stock (“IPO Options”). The following table sets forth the available shares for grant under the 2018 Plan as of September 29, 2019 and December 31, 2018 : Number of Shares (In thousands) Shares available for grant as of December 31, 2018 (1) 3,969 Additional authorized shares 2,970 Granted (3) (6,303 ) Forfeited / cancelled (2) 1,464 Expired 1 Shares traded for taxes 349 Shares available for grant as of September 29, 2019 2,450 _________________________ (1) Includes 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 September 29, 2019, 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 vested. (2) Includes 0.3 million shares subject to awards that were cancelled in connection with Mr. Collins’ separation from the Company. In addition, also includes 0.5 million shares subject to the IPO Options that were voluntarily forfeited by the Chief Executive Officer as the performance metrics for Tranches 4 and 5 of the IPO Options were not expected to be achieved. (3) Includes 0.8 million shares consisting of RSUs ( 50% of the grant), PSUs ( 25% of the grant) and MPSUs ( 25% of the grant) granted to the Company's NEOs during the fiscal quarter ended September 29, 2019. The RSUs will vest in three equal annual installments during the period that begins on the RSU grant date. The PSUs will vest in three equal annual installments during the period that begins on the PSU grant date based on the extent to which a revenue milestone for the fiscal year ending December 31, 2019 is achieved. The MPSUs will vest at the end of the three-year period that begins on the MPSU grant date based on performance of the Company's common stock relative to the Russell 2000 Index (“the Benchmark”) during the three-year period from the grant date. Additionally, the Company sponsors an Employee Stock Purchase Plan (“ESPP”), pursuant to which eligible employees may contribute up to 15% of compensation, subject to certain income limits, to purchase shares of the Company’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 , with the first offering period having commenced on February 15, 2019 and ended on August 14, 2019. As of September 29, 2019 , approximately 1.5 million shares were available for issuance under the ESPP. 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. Option Activity Arlo’s stock option activity during the nine months ended September 29, 2019 was as follows: Number of shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2018 (1) 7,209 $ 12.08 Granted 10 $ 3.90 Exercised (4 ) $ 3.03 Forfeited / cancelled (2) (938 ) $ 15.88 Expired (159 ) $ 12.00 Outstanding as of September 29, 2019 6,118 $ 11.49 (1) Includes 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 September 29, 2019, 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 vested. (2) Includes 0.3 million shares subject to awards that were cancelled in connection with Mr. Collins’ separation from the Company. In addition, also includes 0.5 million shares subject to the IPO Options that were voluntarily forfeited by the Chief Executive Officer as the performance metrics for Tranches 4 and 5 of the IPO Options were not expected to be achieved. NETGEAR’s stock option activity for Arlo employees during the nine months ended September 29, 2019 was as follows: Number of shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2018 283 $ 26.53 Exercised (48 ) $ 21.35 Forfeited / cancelled (16 ) $ 36.27 Expired (14 ) $ 41.67 Outstanding as of September 29, 2019 205 $ 25.94 RSU Activity Arlo’s RSU activity during the nine months ended September 29, 2019 was as follows: Number of shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2018 3,141 $ 12.22 Granted (3) 6,293 $ 4.83 Vested (1,033 ) $ 11.30 Forfeited (368 ) $ 8.55 Outstanding as of September 29, 2019 8,033 $ 6.71 (3) Includes 0.8 million shares consisting of RSUs ( 50% of the grant), PSUs ( 25% of the grant) and MPSUs ( 25% of the grant) granted to a group of NEOs during the fiscal quarter ended September 29, 2019. The RSUs will vest in three equal annual installments during the period that begins on the RSU grant date. The PSUs will vest in three equal annual installments during the period that begins on the PSU grant date based on the extent to which a revenue milestone for the fiscal year ending December 31, 2019 is achieved. The MPSUs will vest at the end of the three-year period that begins on the MPSU grant date based on performance of the Company's common stock relative to the Benchmark during the three-year period from the grant date. A positive 3.3 x or negative 2.5 x multiplier will be applied to the total shareholder returns (“TSR”), such that the number of shares vested will increase by 3.3% or decrease by 2.5% of the target numbers, for each 1% of positive or negative TSR relative to the Benchmark. In the event the Company's common stock performance is below negative 30% relative to the Benchmark, no shares will be vested. In no event will the number of shares vested exceed 200% of the target for that tranche. NETGEAR’s RSU activity for Arlo employees during the nine months ended September 29, 2019 was as follows: Number of shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2018 522 $ 34.89 Vested (155 ) $ 32.44 Forfeited (40 ) $ 36.47 Outstanding as of September 29, 2019 327 $ 35.85 The following table sets forth the weighted average assumptions used to estimate the fair value of Arlo’s purchase rights granted under Arlo’s ESPP for the three and nine months ended September 29, 2019 and NETGEAR’s options granted and purchase rights granted under NETGEAR’s ESPP to Arlo employees during the three and nine months ended September 30, 2018 . Three Months Ended Nine Months Ended Stock Options ESPP Stock Options ESPP September 29, September 30, September 29, September 30, September 29, September 30, September 29, 2019 September 30, Expected life (in years) NA 4.4 0.5 NA 6.3 4.4 0.5 0.5 Risk-free interest rate NA 2.79 % 2.49 % NA 2.28 % 2.32 % 2.49 % 1.81 % Expected volatility NA 33.5 % 97.6 % NA 73.0 % 30.9 % 97.6 % 37.1 % Dividend yield — — — — — — — — The Company determined the fair value of the PSUs using the closing price of the Company's common stock as of the grant date. For PSUs, stock-based compensation expense of performance milestone is recognized over the expected performance achievement period when the achievement becomes probable. The Company utilized a Monte Carlo pricing model customized to the specific provisions of the 2018 Plan to value the MPSUs awards on the grant date. The fair value of the MPSUs granted during the three months ended September 29, 2019 was $4.14 per share. The assumptions used in this model to estimate fair value at the grant date are as follows: Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Expected life 3.0 N/A 3.0 N/A Risk-free interest rate 1.52 % N/A 1.52 % N/A Expected volatility 65.1 % N/A 65.1 % N/A Dividend yield — N/A — N/A Stock Beta 0.30 N/A 0.30 N/A Stock-Based Compensation Expense 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. The Company’s unaudited condensed consolidated statements of income reflect compensation expense for these stock-based plans associated with the portion of NETGEAR’s plans in which Arlo employees participated. The following tables set forth stock-based compensation expense for Arlo employees and allocated charges deemed attributable to Arlo operations resulting from NETGEAR’s and Arlo’s RSUs, PSUs, MPSUs and stock options, and the purchase rights under the NETGEAR’s ESPP included in the Company’s unaudited condensed consolidated statements of operations during the periods indicated: Three Months Ended Nine Months Ended September 29, 2019 September 30, 2018 September 29, 2019 September 30, 2018 Total Direct Indirect Total Total Direct Indirect Total (In thousands) Cost of revenue $ 467 $ 236 $ — $ 236 $ 1,286 $ 336 $ 583 $ 919 Research and development 1,569 872 — 872 4,501 2,186 396 2,582 Sales and marketing 791 754 — 754 2,722 1,239 969 2,208 General and administrative 2,392 1,575 — 1,575 6,752 1,575 2,100 3,675 Total stock-based compensation $ 5,219 $ 3,437 $ — $ 3,437 $ 15,261 $ 5,336 $ 4,048 $ 9,384 The Company recognizes these compensation expense generally on a straight-line basis over the requisite service period of the award. As of September 29, 2019 , $13.0 million of unrecognized compensation cost related to Arlo’s stock options and IPO options was expected to be recognized over a weighted-average period of 2.8 years. $33.0 million of unrecognized compensation cost related to unvested Arlo’s RSUs, PSUs and MPSUs was expected to be recognized over a weighted-average period of 2.9 years. As of September 29, 2019 , $0.5 million of unrecognized compensation cost related to NETGEAR’s stock options for Arlo employees was expected to be recognized over a weighted-average period of 1.9 years. $9.1 million of unrecognized compensation cost related to unvested NETGEAR’s RSUs for Arlo employees was expected to be recognized over a weighted-average period of 2.1 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 29, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The income tax provision for the three and nine months ended September 29, 2019 , was $0.3 million , or an effective tax rate of (0.9)% , and $0.9 million , or an effective tax rate of (0.8)% , respectively. The income tax provision for the three and nine months ended September 30, 2018 , was $0.2 million , or an effective tax rate of (1.7)% , and $0.8 million , or an effective tax rate of (2.3)% , respectively. During the three and nine months ended September 29, 2019 , the Company sustained higher book losses than the same periods in the prior year. The Company has a full valuation allowance on its U.S. federal and state deferred tax attributes. As a result, consistent with the prior year, the Company did not record a tax benefit on these losses because of uncertainty about its future profitability. The increase in income tax provision for the three months ended September 29, 2019 , compared to the prior year period was primarily due to higher foreign earnings in the 2019 period compared to 2018. The increase in income tax provision for the nine months ended September 29, 2019 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 29, 2019 | |
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 loss per share for the three and nine months ended September 29, 2019 and September 30, 2018 were as follows: Three Months Ended Nine Months Ended September 29, 2019 September 30, 2018 September 29, 2019 September 30, 2018 (In thousands, except per share data) Numerator: Net loss $ (30,590 ) $ (13,225 ) $ (105,566 ) $ (36,410 ) Denominator: Weighted average common shares - basic 75,337 69,600 74,831 64,867 Potentially dilutive common share equivalent — — — — Weighted average common shares - dilutive 75,337 69,600 74,831 64,867 Basic net loss per share $ (0.41 ) $ (0.19 ) $ (1.41 ) $ (0.56 ) Diluted net loss per share $ (0.41 ) $ (0.19 ) $ (1.41 ) $ (0.56 ) Anti-dilutive employee stock-based awards, excluded 10,287 1,929 10,114 643 |
Segment and Geographic Informat
Segment and Geographic Information | 9 Months Ended |
Sep. 29, 2019 | |
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 combined 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, net changes in deferred revenue, and gains or losses from hedging. 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: Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, (In thousands) United States (“U.S.”) $ 81,441 $ 108,236 $ 184,733 $ 263,798 Americas (excluding U.S.) 4,121 4,613 9,759 10,455 EMEA 13,002 11,760 37,370 50,416 APAC 7,552 6,565 15,732 18,091 Total revenue $ 106,116 $ 131,174 $ 247,594 $ 342,760 The Company’s Property and equipment, net are located in the following geographic locations: As of September 29, December 31, (In thousands) United States (“U.S.”) $ 18,970 $ 45,053 Americas (excluding U.S.) 1,123 218 EMEA 545 567 China 2,555 3,040 APAC (excluding China) 1,023 550 Total property and equipment, net $ 24,216 $ 49,428 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 29, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Agreements with Verisure S.à.r.l. On November 4, 2019, Arlo Technologies, Inc. (the “Company”) and Verisure S.à.r.l. (“Verisure”) concurrently entered into an Asset Purchase Agreement (the “Purchase Agreement”) and Supply Agreement (the “Supply Agreement” and together with the Purchase Agreement, the “Verisure Agreements”). The Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Purchase Agreement, the Company will transfer, sell and assign to Verisure certain assets (the “Assets”) related to the Company’s commercial operations in Europe (the “Business”) to Verisure for $50.0 million in cash plus inventory to be transferred to Verisure as of the closing of the transactions contemplated by the Purchase Agreement and subject to a net working capital adjustment. As part of the transactions contemplated by the Purchase Agreement, Verisure will offer positions to approximately 25 Company employees who support the Business, and will also assume certain liabilities related to the Business. The closing of the transactions contemplated by the Purchase Agreement (the “Closing”) is subject to certain customary closing conditions, including, among other conditions, regulatory approvals, the accuracy of the representations and warranties made by each of the Company and Verisure, the compliance by the parties with their respective obligations under the Purchase Agreement and that there shall have been no material adverse effect with respect to the Business. The Closing, which is expected to occur by the first quarter of 2020, may not be completed if any of the closing conditions are not satisfied or waived. The Purchase Agreement contains customary representations and warranties regarding Verisure, the Business and the Assets, covenants regarding the Assets and the Business that apply between signing and Closing, indemnification provisions, termination rights and other customary provisions. The Company has agreed not to engage in any business that competes with the Business for a period of three years after Closing. The Supply Agreement provides that, upon the terms and subject to the conditions set forth in the Supply Agreement, Verisure will become the exclusive distributor of Company products in Europe for all channels, and will non-exclusively distribute Company products in connection with Verisure’s security business (the “Verisure Security Business”). During the five-year period commencing January 1, 2020, Verisure has an aggregate minimum purchase commitment of $500.0 million , which includes yearly annual commitments. Verisure will pay the Company an upfront payment of $20.0 million on the date of the Closing of the Purchase Agreement and $40.0 million on the one year anniversary as prepayments. The Supply Agreement also provides that the Company will provide certain development services to Verisure, including developing certain custom products specified by Verisure, in exchange for an aggregate of $10.0 million , payable in installments provided that the Company has met certain development milestones. The Supply Agreement will have an initial term of five years , but may be automatically renewed for additional five-year terms if neither party provides written notice of re-negotiation at least 12 months prior to the expiration. If a party provides written notice of its intent to renegotiate, the parties will negotiate any revised terms in good faith, and if the parties fail to reach an agreement on new terms by six months prior to the expiration, Verisure will have the right to terminate the Supply Agreement or elect to renew the Supply Agreement for a five-year term with its current terms (excluding any prepayment or minimum volume provisions) and if Verisure takes no action, the Supply Agreement will automatically renew for an additional five years . Verisure may terminate the Supply Agreement if the Company (i) experiences a change of control without Verisure’s consent, (ii) assigns the Supply Agreement to a third party without Verisure’s consent, (iii) materially breaches the Supply Agreement and does not cure such breach within 45 days’ notice or (iv) ceases to operate in the ordinary course or undergoes an insolvency event. If the Purchase Agreement terminates prior to Closing, the Supply Agreement will be suspended and the parties will enter into a seven-week negotiation period to determine whether the Supply Agreement will continue and on what terms. The Company may terminate the Supply Agreement (a) if Verisure materially breaches the Supply Agreement and does not cure such breach within 45 days’ notice or (b) if Verisure ceases to operate in the ordinary course or undergoes an insolvency event. Credit Agreement On November 5, 2019, the Company entered into a Business Financing Agreement (the “Credit Agreement”) with Western Alliance Bank, an Arizona corporation, as lender (the “Lender”). The Credit Agreement provides for a two-year revolving credit facility (the “Credit Facility”) that matures on November 5, 2021 and that may, by its terms, be extended by mutual written agreement between the Company and the Lender. Borrowings under the Credit Facility are limited to the lesser of (x) $40.0 million , and (y) an amount equal to the borrowing base. The borrowing base will be 60% of the Company’s eligible receivables and eligible accounts receivable, less such reserves as the Lender may deem proper and necessary from time to time. The Lender is not required to make any advance under the Credit Facility during the period beginning on January 1st and continuing through June 30th, except for advances made against eligible receivables first invoiced between July 1 and December 31, 2019. The Credit Agreement also includes sublimits for the issuance by the Lender of letters of credit, credit card indebtedness and foreign exchange forward contract. Repayment of the borrowings under the Credit Facility are due upon collection of the eligible receivables. The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes. The obligations of the Company under the Credit Agreement are secured by substantially all of the Company’s domestic personal property, excluding intellectual property assets and more than 65% of the shares of voting capital stock of any of the Company’s foreign subsidiaries. Borrowings under the Credit Agreement generally bear interest at floating rates based upon the prime rate plus two and one-quarter percentage points ( 2.25% ), plus an additional five percentage points ( 5.0% ) during any period that an event of default has occurred and is continuing. Among other fees, the Company is required to pay an annual facility fee equal to 0.25% of the limit under the Credit Facility due upon entry into the Credit Agreement and on each anniversary thereof. The Credit Agreement contains customary events of default and other restrictions, including a financial covenant that requires the Company to maintain certain amount of domestic cash, and certain restrictions on the Company’s ability to incur additional indebtedness, consolidate or merge, enter into acquisitions, pay any dividend or distribution on the Company’s capital stock, redeem, retire or purchase shares of the Company’s capital stock, make investments or pledge or transfer assets, in each case subject to limited exceptions. If an event of default under the Credit Agreement occurs, then the Lender may cease making advances under the Credit Agreement and declare any outstanding obligations under the Credit Agreement to be immediately due and payable. In addition, if the Company files a bankruptcy petition, a bankruptcy petition is filed against the Company and is not dismissed or stayed within forty-five days , or the Company makes a general assignment for the benefit of creditors, then any outstanding obligations under the Credit Agreement will automatically and without notice or demand become immediately due and payable. Restructuring Plan On November 7, 2019, the Company announced a restructuring plan that includes, but is not limited to, reducing outside services, headcount, marketing and capital expenditures to manage the Company's operating expenses. The Company expects to incur restructuring charges of $1.0 million to $2.0 million which are primarily associated with headcount-related charges under the restructuring plan. |
Significant Accounting Polici_2
Significant Accounting Policies and Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 29, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed 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 stand-alone 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. Following the completion of the IPO, the unaudited condensed 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”). |
Reclassification | Reclassification |
Fiscal periods | 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 | Use of estimates |
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 restricted stock units ("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 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 Company recognizes these compensation expense generally on a straight-line basis over the requisite service period of the award. The fair value of stock options and PSOs is estimated on the grant or offering date using the Black-Scholes option pricing model and the forfeitures recorded as they occur. 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 three to 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. The Company's 2018 Employee Stock Purchase Plan (“ESPP”) is intended to provide employees with the opportunity to purchase the Company's common stock through accumulated payroll deductions at the end of specified purchase period. Eligible employees may contribute up to 15% of compensation, subject to certain income limits, to purchase shares of the Company'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 purchasing period is generally six months . The Company determines the fair value using the Black-Scholes Model using various inputs, including our estimate of expected volatility, term, dividend yield and risk-free interest rate. The Company recognizes compensation costs for the ESPP on a straight-line basis over the requisite service period of the award. The Company issued grants consisting of 50% of time-based vesting RSUs, 25% of performance-based RSUs (“PSUs”) and 25% of market-based performance RSUs (“MPSUs”) to its named executive officers (“NEOs”) during the fiscal quarter ended September 29, 2019: • The time-based vesting RSUs will vest in three equal annual installments during the period that begins on the RSU grant date. • The PSUs will vest in three equal annual installments during the period that begins on the PSU grant date based on the extent to which a revenue milestone for the fiscal year ending December 31, 2019 is achieved. • The MPSUs will vest on the three-year anniversary of the MPSU grant date based on the performance of the Company's common stock relative to the Russell 2000 Index (“the Benchmark”) during the three-year period from grant date. A positive 3.3 x or negative 2.5 x multiplier will be applied to the total shareholder returns (“TSR”), such that the number of shares vested will increase by 3.3% or decrease by 2.5% of the target numbers, for each 1% of positive or negative relative TSR relative to the Benchmark. In the event the Company's common stock performance is below negative 30% relative to the Benchmark, no shares will vest. In no event will the number of shares vested in each tranche exceed 200% of the target for that tranche. The estimated compensation cost relating to the PSUs, is based on the closing fair market value of the Company's stock on the date of grant. The maximum number of shares that NEOs can earn is 150% of the target number of the PSUs. The minimum number of shares that NEOs can earn is 50% of the target number of the PSUs. To estimate the compensation cost relating to the MPSUs, the Company utilized a Monte Carlo simulation model on the date of grant. The fair value determined using the Monte Carlo simulation model varies based on the assumptions used for the expected stock price volatility, the correlation coefficient between the Company and Russell 2000 Index, risk-free interest rates, and dividend yield. |
Leases | Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, accrued liabilities, and non-current operating lease liabilities in the unaudited condensed consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for lease payments are recognized in the unaudited condensed consolidated statements of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. ROU assets represent the Company’s right to use an underlying asset over the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, the incremental borrowing rate based on the information available was used at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made before the lease commencement date less any lease incentives received. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the options. The lease agreements with lease and non-lease components are generally accounted as a single component. |
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 2016-02 In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases” (Topic 842), which requires lessees to recognize on the balance sheets a 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. On January 1, 2019 (“adoption date”), the Company adopted the new standard utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first fiscal quarter of 2019. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether an expired or existing contract as of adoption date contains a lease, (2) lease classification for any expired or existing lease as of the adoption date and (3) initial direct costs for any existing lease as of the adoption date. The Company also elected to account for each separate lease component of a contract and its associated non-lease components as a single lease component. The adoption of ASU 2016-02 resulted in the recognition of ROU assets and lease liabilities for operating leases of $14.4 million as of January 1, 2019 on its unaudited condensed consolidated balance sheets, with no material impact its unaudited consolidated statements of operations and cash flows. In addition, the Company was deemed to be the accounting owner of its build-to-suit lease arrangement for its San Jose corporate headquarters and the construction was in progress at adoption date. As such, the Company reevaluated its build-to-suit lease arrangement under ASU 2016-02 to ascertain whether it meets the criteria as the accounting owner of the build-to-suit lease arrangement through control of the underlying leased asset. The Company concluded that it did not have control over the underlying leased asset. As a result, the Company de-recognized the build to suit asset and liability as of adoption date of $21.6 million of Property and equipment and $21.9 million of financing lease obligations. The difference of $0.3 million between the de-recognized assets and the associated financing lease obligations was recorded as an adjustment to Accumulated deficit as of adoption date as mentioned above. The Company accounted for its San Jose Corporate lease arrangement as operating lease under ASU 2016-02. Consequently, as of March 31, 2019, the construction of its leasehold improvements for its San Jose corporate headquarters was partially completed and partially occupied by the Company resulting in lease commencement for the portion that was completed and occupied by the Company. Therefore, the Company proportionally recorded ROU assets and lease liabilities of $14.3 million , representing two thirds of the total value of the ROU assets and lease liabilities. As of June 30, 2019, upon the completion of the leasehold improvements and full occupation of the entire building, the Company recognized the remaining value of ROU assets and lease liabilities of $7.2 million . Refer to Note 8. Commitments and Contingencies , for further details of the impacts on the adoption. Accounting Pronouncements Not Yet Effective 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. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. 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. |
Fair Value of Financial Instruments | 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 September 29, 2019 and December 31, 2018 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table totals cash and cash equivalents and restricted cash as reported on the unaudited condensed consolidated balance sheet as of September 29, 2019 and December 31, 2018 , and the sum is presented on the unaudited condensed consolidated statements of cash flows: As of September 29, December 31, (In thousands) Cash and cash equivalents $ 113,870 $ 151,290 Restricted cash 4,130 4,134 Total as presented on the unaudited condensed consolidated statements of cash flows $ 118,000 $ 155,424 |
Schedule of Restricted Cash | The following table totals cash and cash equivalents and restricted cash as reported on the unaudited condensed consolidated balance sheet as of September 29, 2019 and December 31, 2018 , and the sum is presented on the unaudited condensed consolidated statements of cash flows: As of September 29, December 31, (In thousands) Cash and cash equivalents $ 113,870 $ 151,290 Restricted cash 4,130 4,134 Total as presented on the unaudited condensed consolidated statements of cash flows $ 118,000 $ 155,424 |
Schedule of Available-For-Sale Short-Term Investments | Available-for-sale short-term investments As of September 29, 2019 As of December 31, 2018 Cost Unrealized Gains Unrealized Losses Estimated Fair Value Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. treasuries $ 39,897 $ 44 $ — $ 39,941 $ 49,739 $ 2 $ (4 ) $ 49,737 |
Schedule of Accounts Receivable, Net | Accounts receivable, net As of September 29, December 31, (In thousands) Gross accounts receivable $ 100,253 $ 166,172 Allowance for doubtful accounts (555 ) (127 ) Total accounts receivable, net $ 99,698 $ 166,045 |
Schedule of Property and Equipment, Net | Property and equipment, net The components of property and equipment are as follows: As of September 29, December 31, (In thousands) Machinery and equipment $ 13,289 $ 11,415 Software 11,941 10,624 Computer equipment 4,042 4,342 Furniture and fixtures 3,795 2,698 Leasehold improvements 8,836 3,007 Construction in progress (1) — 28,357 Total property and equipment, gross 41,903 60,443 Accumulated depreciation and amortization (17,687 ) (11,015 ) Total property and equipment, net $ 24,216 $ 49,428 _________________________ (1) The Company had a build-to-suit lease arrangement under its corporate headquarters lease in San Jose, California. Upon the adoption of ASU 2016-02, the Company concluded that it did not have control over the underlying leased asset and de-recognized $21.6 million of Construction of progress. Refer to Note 8, Commitments and Contingencies , for further details. |
Schedule of Intangibles, Net | Intangibles, net As of September 29, 2019 As of December 31, 2018 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 9,800 $ (8,196 ) $ 1,604 $ 9,800 $ (7,165 ) $ 2,635 Other 500 (425 ) 75 800 (612 ) 188 Total intangibles, net $ 10,300 $ (8,621 ) $ 1,679 $ 10,600 $ (7,777 ) $ 2,823 |
Schedule of Estimated Amortization Expense Related to Intangibles | As of September 29, 2019 , estimated amortization expense related to finite-lived intangibles for the remaining years was as follows (in thousands): 2019 (remaining three months) $ 373 2020 1,306 Total estimated amortization expense $ 1,679 |
Schedule of Goodwill | There was no change in the carrying amount of goodwill during the nine months ended September 29, 2019 and the goodwill as of December 31, 2018 and September 29, 2019 was as follows (in thousands): As of December 31, 2018 $ 15,638 As of September 29, 2019 $ 15,638 |
Schedule of Other Non-Current Assets | Other non-current assets As of September 29, December 31, 2018 (In thousands) Non-current deferred income taxes $ 1,218 $ 1,108 Deposits 3,644 4,084 Other 748 3,257 Total other non-current assets $ 5,610 $ 8,449 |
Schedule of Accrued Liabilities | Accrued liabilities As of September 29, December 31, (In thousands) Sales and marketing $ 44,399 $ 75,863 Sales returns 29,351 49,247 Accrued employee compensation 6,707 11,897 Current operating lease liabilities 3,814 — Warranty obligation 3,403 3,712 Freight 2,159 3,913 Current financing lease obligation — 1,632 Other 20,238 25,772 Total accrued liabilities $ 110,071 $ 172,036 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes assets and liabilities measured at fair value on a recurring basis as of September 29, 2019 and December 31, 2018 : As of September 29, 2019 As of December 31, 2018 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) 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) $ 11,176 $ 11,176 $ — $ 438 $ 438 $ — Available-for-sale securities: U.S. treasuries (1) 39,941 39,941 — 49,737 49,737 — Foreign currency forward contracts (2) 343 — 343 322 — 322 Total assets measured at fair value $ 51,460 $ 51,117 $ 343 $ 50,497 $ 50,175 $ 322 Liabilities: Foreign currency forward contracts (3) $ 56 $ — $ 56 $ 71 $ — $ 71 Total liabilities measured at fair value $ 56 $ — $ 56 $ 71 $ — $ 71 _________________________ (1) Included in Short-term investments on the Company’s unaudited condensed consolidated balance sheets. (2) Included in Prepaid expenses and other current assets on the Company’s unaudited condensed consolidated balance sheets. (3) Included in Accrued liabilities on the Company’s unaudited condensed consolidated balance sheets. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
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 unaudited condensed consolidated balance sheets to which they were recorded as of September 29, 2019 and December 31, 2018 are summarized as follows: Derivative Assets Balance Sheet Location September 29, 2019 December 31, 2018 Balance Sheet Location September 29, 2019 December 31, 2018 (In thousands) (In thousands) Derivative assets not designated as hedging instruments Prepaid expenses and other current assets $ 336 $ 293 Accrued liabilities $ 46 $ 46 Derivative assets designated as hedging instruments Prepaid expenses and other current assets 7 29 Accrued liabilities 10 25 Total $ 343 $ 322 $ 56 $ 71 |
Schedule of Offsetting of Derivative Assets | The following tables set forth the offsetting of derivative assets as of September 29, 2019 and December 31, 2018: As of September 29, 2019 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 329 $ — $ 329 $ (54 ) $ — $ 275 Wells Fargo Bank 14 — 14 (2 ) — 12 Total $ 343 $ — $ 343 $ (56 ) $ — $ 287 As of December 31, 2018 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Assets Presented in the Unaudited Condensed 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 | The following tables set forth the offsetting of derivative liabilities as of September 29, 2019 and December 31, 2018: As of September 29, 2019 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) HSBC $ 54 $ — $ 54 $ (54 ) $ — $ — Wells Fargo Bank 2 — 2 (2 ) — — Total $ 56 $ — $ 56 $ (56 ) $ — $ — As of December 31, 2018 Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets Net Amounts Of Liabilities Presented in the Unaudited Condensed 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 Locations of Gains or Losses Recognized in Income | The effects of the Company’s cash flow hedges on the unaudited condensed consolidated statements of operations for the three months ended September 29, 2019 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 106,116 $ 95,613 $ 16,701 $ 13,657 $ 11,062 Gains (losses) on cash flow hedge $ 86 $ — $ (3 ) $ (3 ) $ (2 ) The effects of the Company’s cash flow hedges on the unaudited condensed consolidated statements of operations for the nine months ended September 29, 2019 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 247,594 $ 225,496 $ 52,456 $ 42,389 $ 32,512 Gains (losses) on cash flow hedge $ 333 $ (2 ) $ (24 ) $ (38 ) $ (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 unaudited condensed consolidated statements of operations for the three and nine months ended September 29, 2019 and September 30, 2018 were as follows: Derivatives Not Designated as Hedging Instruments Location of Gains (Losses) Recognized in Income on Derivative Three Months Ended Nine Months Ended September 29, 2019 September 30, 2018 September 29, 2019 September 30, 2018 (In thousands) Foreign currency forward contracts Other income (expense), net $ 665 $ (57 ) $ 521 $ (57 ) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
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 three and nine months ended September 29, 2019 . Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of June 30, 2019 $ 72 $ (22 ) $ 1 $ 51 Other comprehensive income (loss) before reclassifications (27 ) 100 73 Less: Amount reclassified from accumulated other comprehensive income (loss) — 78 — 78 Net current period other comprehensive income (loss) (27 ) 22 — (5 ) Balance as of September 29, 2019 $ 45 $ — $ 1 $ 46 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, 2018 $ (2 ) $ 2 $ — $ — Other comprehensive income (loss) before reclassifications 47 256 1 304 Less: Amount reclassified from accumulated other comprehensive income (loss) — 258 — 258 Net current period other comprehensive income (loss) 47 (2 ) 1 46 Balance as of September 29, 2019 $ 45 $ — $ 1 $ 46 |
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 three and nine months ended September 29, 2019 : Three Months Ended September 29, 2019 Nine Months Ended September 29, 2019 Gains (Losses) Recognized in OCI - Effective Portion Gains (Losses) Reclassified from OCI to Income - Effective Portion 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 $ 100 $ 86 $ 257 $ 333 Revenue Foreign currency contracts — — — (2 ) Cost of revenue Foreign currency contracts — (3 ) — (24 ) Research and development Foreign currency contracts — (3 ) — (38 ) Sales and marketing Foreign currency contracts — (2 ) — (11 ) General and administrative $ 100 $ 78 $ 257 $ 258 Total * _________________________ * Tax impact to hedging gains and losses from derivative contracts was immaterial. |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Revenue from Contract with Customer [Abstract] | |
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 September 29, 2019 : 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 58,575 $ 15,770 $ 5,209 $ 79,554 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Effect on Financial Statements | Supplemental cash flow information related to operating leases for the three and nine months ended September 29, 2019 was as follows: Three Months Ended September 29, 2019 Nine Months Ended September 29, 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,470 $ 2,882 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ 439 $ 22,172 Weighted average remaining lease term and weighted average discount rate related to operating leases as of September 29, 2019 were as follows: Weighted average remaining lease term 5.9 years Weighted average discount rate 5.67 % The operating lease expense for the three and nine months ended September 29, 2019 was as follows: Statements of Operations Location Three Months Ended September 29, 2019 Nine Months Ended September 29, 2019 (In thousands) Operating lease cost (1) General and administrative $ 1,726 $ 5,068 ________________________ (1) Included short-term leases and variable lease costs which were immaterial. |
Effect of Accounting Standard Adoption | The effect of accounting standards adoption of ASU 2016-02 on the unaudited condensed consolidated statement of balance sheets and supplemental balance sheet information related to operating leases as of September 29, 2019 were as follows: Leases Balance Sheet Location September 29, 2019 January 1, 2019 December 31, 2018 (In thousands) Build-to-suit lease (1) Property and equipment, net $ — $ (21,610 ) $ 21,610 Build-to-suit lease (1) Accrued liabilities — (281 ) 281 Build-to-suit lease (1) Accrued liabilities — (1,632 ) 1,632 Build-to-suit lease (1) Non-current financing lease obligation — (19,978 ) 19,978 Build-to-suit lease (1) Retained earnings (Accumulated deficit) 281 281 — Operating leases (2) Operating lease right-of-use assets, net 32,008 14,400 — Operating leases (2) Accrued liabilities — (107 ) 107 Operating leases (2) Accrued liabilities 3,814 2,356 — Operating leases (2) Non-current deferred rent — (1,141 ) 1,141 Operating leases (2) Non-current operating lease liabilities 30,484 12,044 — ________________________ (1) The Company was deemed to be the accounting owner of its build-to-suit lease arrangement for its San Jose corporate headquarters and the construction was in progress at adoption date. As such, the Company reevaluated its build-to-suit lease arrangement under ASU 2016-02 to ascertain whether it meets the criteria as the accounting owner of the build-to-suit lease arrangement through control of the underlying leased asset. The Company concluded that it did not have control over the underlying leased asset. As a result, the Company de-recognized the build to suit asset and liability as of adoption date of $21.6 million of Property and equipment and $21.9 million of financing lease obligations. The difference of $0.3 million between the de-recognized assets and the associated financing lease obligations was recorded as an adjustment to Accumulated deficit as of the adoption date. (2) The Company adopted ASU 2016-02 on January 1, 2019 which resulted in the recognition of ROU assets and lease liabilities for operating leases of $14.4 million on its unaudited condensed consolidated balance sheets. The ROU assets were reduced by $0.1 million current deferred rent and $1.1 million non-current deferred rent which were de-recognized along with the adoption. As of March 31, 2019, the construction of the Company’s leasehold improvements for its San Jose corporate headquarters was partially completed and partially occupied by the Company, resulting in lease commencement inception for the portion that was completed and occupied by the Company. Therefore, the Company proportionally recorded ROU assets and lease liabilities of $14.3 million , representing two thirds of the total value of the ROU assets and lease liabilities. As of June 30, 2019, upon the completion of the leasehold improvements and full occupation of the entire building, the Company recognized the remaining value of ROU assets and lease liabilities of $7.2 million . As of September 29, 2019, the Company received $3.1 million reimbursement for leasehold improvements that the Company de-recognized during the quarter. |
Summary of Operating Lease Maturity | The maturity of lease liabilities related to operating leases for each of the next five years and thereafter as of September 29, 2019 was as follows (in thousands): 2019 (Remaining three months) $ 1,170 2020 5,950 2021 5,789 2022 5,645 2023 4,968 Thereafter 19,488 Total lease payments 43,010 Less: interest (1) (8,712 ) Total $ 34,298 Accrued liabilities $ 3,814 Non-current operating lease liabilities 30,484 Total $ 34,298 ________________________ (1) Calculated using the Company’s incremental borrowing rate on a collateralized basis plus LIBOR rate that closely matches contractual term of most leases. |
Summary of Future Minimum Lease Payments Before 842 | 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): Leases (1) 2019 $ 4,634 2020 5,813 2021 5,678 2022 5,580 2023 4,903 Thereafter 19,252 Total $ 45,860 ________________________ (1) Amounts are based on ASC 840, Leases that was superseded upon the adoption of ASC 842, Leases on January 1, 2019. |
Schedule of Changes in Warranty Obligation | Changes in the Company’s warranty liability, which is included in Accrued liabilities in the unaudited condensed consolidated balance sheets, were as follows: Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, (In thousands) Balance at the beginning of the period $ 3,232 $ 3,487 $ 3,712 $ 31,756 Reclassified to sales returns upon adoption of ASC 606 (1) — — — (28,713 ) Provision for warranty obligation made during the period 364 344 292 1,166 Settlements made during the period (193 ) (213 ) (601 ) (591 ) Balance at the end of the period $ 3,403 $ 3,618 $ 3,403 $ 3,618 ________________________ (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) | 9 Months Ended |
Sep. 29, 2019 | |
Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Schedule of Shares Available for Grant | The following table sets forth the available shares for grant under the 2018 Plan as of September 29, 2019 and December 31, 2018 : Number of Shares (In thousands) Shares available for grant as of December 31, 2018 (1) 3,969 Additional authorized shares 2,970 Granted (3) (6,303 ) Forfeited / cancelled (2) 1,464 Expired 1 Shares traded for taxes 349 Shares available for grant as of September 29, 2019 2,450 _________________________ (1) Includes 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 September 29, 2019, 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 vested. (2) Includes 0.3 million shares subject to awards that were cancelled in connection with Mr. Collins’ separation from the Company. In addition, also includes 0.5 million shares subject to the IPO Options that were voluntarily forfeited by the Chief Executive Officer as the performance metrics for Tranches 4 and 5 of the IPO Options were not expected to be achieved. (3) Includes 0.8 million shares consisting of RSUs ( 50% of the grant), PSUs ( 25% of the grant) and MPSUs ( 25% of the grant) granted to the Company's NEOs during the fiscal quarter ended September 29, 2019. The RSUs will vest in three equal annual installments during the period that begins on the RSU grant date. The PSUs will vest in three equal annual installments during the period that begins on the PSU grant date based on the extent to which a revenue milestone for the fiscal year ending December 31, 2019 is achieved. The MPSUs will vest at the end of the three-year period that begins on the MPSU grant date based on performance of the Company's common stock relative to the Russell 2000 Index (“the Benchmark”) during the three-year period from the grant date. |
Schedule of Stock Option Activity | NETGEAR’s stock option activity for Arlo employees during the nine months ended September 29, 2019 was as follows: Number of shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2018 283 $ 26.53 Exercised (48 ) $ 21.35 Forfeited / cancelled (16 ) $ 36.27 Expired (14 ) $ 41.67 Outstanding as of September 29, 2019 205 $ 25.94 Arlo’s stock option activity during the nine months ended September 29, 2019 was as follows: Number of shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2018 (1) 7,209 $ 12.08 Granted 10 $ 3.90 Exercised (4 ) $ 3.03 Forfeited / cancelled (2) (938 ) $ 15.88 Expired (159 ) $ 12.00 Outstanding as of September 29, 2019 6,118 $ 11.49 |
Schedule of RSU Activity | NETGEAR’s RSU activity for Arlo employees during the nine months ended September 29, 2019 was as follows: Number of shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2018 522 $ 34.89 Vested (155 ) $ 32.44 Forfeited (40 ) $ 36.47 Outstanding as of September 29, 2019 327 $ 35.85 Arlo’s RSU activity during the nine months ended September 29, 2019 was as follows: Number of shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2018 3,141 $ 12.22 Granted (3) 6,293 $ 4.83 Vested (1,033 ) $ 11.30 Forfeited (368 ) $ 8.55 Outstanding as of September 29, 2019 8,033 $ 6.71 (3) Includes 0.8 million shares consisting of RSUs ( 50% of the grant), PSUs ( 25% of the grant) and MPSUs ( 25% of the grant) granted to a group of NEOs during the fiscal quarter ended September 29, 2019. The RSUs will vest in three equal annual installments during the period that begins on the RSU grant date. The PSUs will vest in three equal annual installments during the period that begins on the PSU grant date based on the extent to which a revenue milestone for the fiscal year ending December 31, 2019 is achieved. The MPSUs will vest at the end of the three-year period that begins on the MPSU grant date based on performance of the Company's common stock relative to the Benchmark during the three-year period from the grant date. A positive 3.3 x or negative 2.5 x multiplier will be applied to the total shareholder returns (“TSR”), such that the number of shares vested will increase by 3.3% or decrease by 2.5% of the target numbers, for each 1% of positive or negative TSR relative to the Benchmark. In the event the Company's common stock performance is below negative 30% relative to the Benchmark, no shares will be vested. In no event will the number of shares vested exceed 200% of the target for that tranche. |
Schedule of Weighted Average Assumptions | The assumptions used in this model to estimate fair value at the grant date are as follows: Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, Expected life 3.0 N/A 3.0 N/A Risk-free interest rate 1.52 % N/A 1.52 % N/A Expected volatility 65.1 % N/A 65.1 % N/A Dividend yield — N/A — N/A Stock Beta 0.30 N/A 0.30 N/A The following table sets forth the weighted average assumptions used to estimate the fair value of Arlo’s purchase rights granted under Arlo’s ESPP for the three and nine months ended September 29, 2019 and NETGEAR’s options granted and purchase rights granted under NETGEAR’s ESPP to Arlo employees during the three and nine months ended September 30, 2018 . Three Months Ended Nine Months Ended Stock Options ESPP Stock Options ESPP September 29, September 30, September 29, September 30, September 29, September 30, September 29, 2019 September 30, Expected life (in years) NA 4.4 0.5 NA 6.3 4.4 0.5 0.5 Risk-free interest rate NA 2.79 % 2.49 % NA 2.28 % 2.32 % 2.49 % 1.81 % Expected volatility NA 33.5 % 97.6 % NA 73.0 % 30.9 % 97.6 % 37.1 % Dividend yield — — — — — — — — |
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 Arlo employees and allocated charges deemed attributable to Arlo operations resulting from NETGEAR’s and Arlo’s RSUs, PSUs, MPSUs and stock options, and the purchase rights under the NETGEAR’s ESPP included in the Company’s unaudited condensed consolidated statements of operations during the periods indicated: Three Months Ended Nine Months Ended September 29, 2019 September 30, 2018 September 29, 2019 September 30, 2018 Total Direct Indirect Total Total Direct Indirect Total (In thousands) Cost of revenue $ 467 $ 236 $ — $ 236 $ 1,286 $ 336 $ 583 $ 919 Research and development 1,569 872 — 872 4,501 2,186 396 2,582 Sales and marketing 791 754 — 754 2,722 1,239 969 2,208 General and administrative 2,392 1,575 — 1,575 6,752 1,575 2,100 3,675 Total stock-based compensation $ 5,219 $ 3,437 $ — $ 3,437 $ 15,261 $ 5,336 $ 4,048 $ 9,384 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Net Income Per Share | Net loss per share for the three and nine months ended September 29, 2019 and September 30, 2018 were as follows: Three Months Ended Nine Months Ended September 29, 2019 September 30, 2018 September 29, 2019 September 30, 2018 (In thousands, except per share data) Numerator: Net loss $ (30,590 ) $ (13,225 ) $ (105,566 ) $ (36,410 ) Denominator: Weighted average common shares - basic 75,337 69,600 74,831 64,867 Potentially dilutive common share equivalent — — — — Weighted average common shares - dilutive 75,337 69,600 74,831 64,867 Basic net loss per share $ (0.41 ) $ (0.19 ) $ (1.41 ) $ (0.56 ) Diluted net loss per share $ (0.41 ) $ (0.19 ) $ (1.41 ) $ (0.56 ) Anti-dilutive employee stock-based awards, excluded 10,287 1,929 10,114 643 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 9 Months Ended |
Sep. 29, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geography | The following table shows revenue by geography for the periods indicated: Three Months Ended Nine Months Ended September 29, September 30, September 29, September 30, (In thousands) United States (“U.S.”) $ 81,441 $ 108,236 $ 184,733 $ 263,798 Americas (excluding U.S.) 4,121 4,613 9,759 10,455 EMEA 13,002 11,760 37,370 50,416 APAC 7,552 6,565 15,732 18,091 Total revenue $ 106,116 $ 131,174 $ 247,594 $ 342,760 |
Schedule of Property and Equipment, Net By Geography | The Company’s Property and equipment, net are located in the following geographic locations: As of September 29, December 31, (In thousands) United States (“U.S.”) $ 18,970 $ 45,053 Americas (excluding U.S.) 1,123 218 EMEA 545 567 China 2,555 3,040 APAC (excluding China) 1,023 550 Total property and equipment, net $ 24,216 $ 49,428 |
The Company and Basis of Pres_2
The Company and Basis of Presentation - Narrative (Details) | Dec. 31, 2018shares | Dec. 17, 2018 | Nov. 29, 2018shares | Aug. 07, 2018USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Jul. 01, 2018USD ($) | Sep. 29, 2019region | Aug. 02, 2018$ / sharesshares |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Number of geographic regions in which the Company conducts business | region | 3 | |||||||
Allocation of Corporate Expenses | NETGEAR | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Purchases from related party | $ 0 | $ 30,600,000 | ||||||
Research and development | Allocation of Corporate Expenses | NETGEAR | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Purchases from related party | 9,400,000 | |||||||
Sales and marketing | Allocation of Corporate Expenses | NETGEAR | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Purchases from related party | 10,000,000 | |||||||
General and administrative | Allocation of Corporate Expenses | NETGEAR | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Purchases from related party | $ 11,200,000 | |||||||
IPO | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common stock, issued (in shares) | shares | 11,747,250 | 10,215,000 | ||||||
Stock price, common stock (in dollars per share) | $ / shares | $ 16 | $ 16 | ||||||
Proceeds from initial public offering, net of offering costs | $ 173,400,000 | |||||||
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 | $ 1,400,000 | |||||||
Payments for offering costs | 4,600,000 | |||||||
NETGEAR | IPO | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Payments for offering costs | $ 3,200,000 | |||||||
Percentage of shares owned | 84.20% | |||||||
NETGEAR | Special Stock Dividend Distribution | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Number of shares authorized (in shares) | shares | 62,500,000 | |||||||
Ratio of Arlo to NETGEAR common stock (as a ratio) | 1.980295 | |||||||
Number of shares issued (in shares) | shares | 62,500,000 |
Significant Accounting Polici_3
Significant Accounting Policies and Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 29, 2019 | Sep. 29, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Operating lease right-of-use assets, net | $ 32,008 | $ 32,008 | |||||
Operating lease liability | 34,298 | 34,298 | |||||
Total property and equipment, gross | 41,903 | 41,903 | $ 60,443 | ||||
Property and equipment, net | 24,216 | 24,216 | 49,428 | ||||
Accumulated deficit | (151,134) | (151,134) | (45,849) | ||||
Build-to-suit lease | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Property and equipment, net | 0 | 0 | $ 21,610 | ||||
Accumulated deficit | $ 281 | $ 281 | |||||
Accounting Standards Update 2016-02 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Operating lease right-of-use assets, net | $ 7,200 | $ 14,300 | $ 14,400 | ||||
Operating lease liability | $ 7,200 | $ 14,300 | 14,400 | ||||
Accounting Standards Update 2016-02 | Build-to-suit lease | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Property and equipment, net | (21,610) | ||||||
Finance lease liability | (21,900) | ||||||
Accumulated deficit | $ 281 | ||||||
RSUs | Tranche One | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||||||
RSUs | Tranche Two | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||||||
RSUs | Tranche Three | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||||||
RSUs | Executive Officer | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 50.00% | ||||||
PSUs | Minimum | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Number of shares that can be earned of targeted award (as a percentage) | 50.00% | ||||||
PSUs | Maximum | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Number of shares that can be earned of targeted award (as a percentage) | 150.00% | ||||||
PSUs | Tranche One | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||||||
PSUs | Tranche Two | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||||||
PSUs | Tranche Three | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||||||
PSUs | Executive Officer | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 25.00% | ||||||
MPSUs | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Vesting period | 3 years | ||||||
Positive movement of benchmark (multiplier) | 3.3 | 3.3 | |||||
Negative movement of benchmark (multiplier) | 2.5 | 2.5 | |||||
Positive movement of benchmark (as a percentage) | 3.30% | 3.30% | |||||
Negative movement of benchmark (as a percentage) | 2.50% | 2.50% | |||||
Movement of benchmark, increment (as a percentage) | 1.00% | 1.00% | |||||
Threshold (as a percentage) | 30.00% | 30.00% | |||||
MPSUs | Maximum | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Threshold (as a percentage) | 200.00% | 200.00% | |||||
MPSUs | Executive Officer | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Stock awards, annual vesting installments (as a percentage) | 25.00% | ||||||
2018 Plan | Minimum | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Vesting period | 3 years | ||||||
2018 Plan | Maximum | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Vesting period | 4 years | ||||||
2018 Plan | Stock Options | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Vesting period | 4 years | ||||||
2018 Plan | Stock Options | Tranche One | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Vesting period | 3 years | ||||||
2018 Plan | RSUs | Minimum | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Vesting period | 3 years | ||||||
2018 Plan | RSUs | Maximum | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Vesting period | 4 years | ||||||
2018 Stock Repurchase Program | ESPP | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Maximum percentage of compensation contributed by employees | 15.00% | ||||||
ESPP purchase price of common stock, percent of market price | 85.00% | ||||||
Offering period (in years) | 6 months |
Balance Sheet Components (Sched
Balance Sheet Components (Schedule of Cash, Cash Equivalents and Restricted Cash) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | ||||
Cash and cash equivalents | $ 113,870 | $ 151,290 | ||
Restricted cash | 4,130 | 4,134 | ||
Total as presented on the unaudited condensed consolidated statements of cash flows | $ 118,000 | $ 155,424 | $ 148,073 | $ 108 |
Balance Sheet Components (Sch_2
Balance Sheet Components (Schedule of Available-for-Sale Short-Term Investments) (Details) - U.S. treasuries - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 29, 2019 | Dec. 31, 2018 | |
Debt Securities, Available-For-Sale [Line Items] | ||
Cost | $ 39,897 | $ 49,739 |
Unrealized Gains | 44 | 2 |
Unrealized Losses | 0 | (4) |
Estimated Fair Value | $ 39,941 | $ 49,737 |
Balance Sheet Components (Sch_3
Balance Sheet Components (Schedule of Accounts Receivable and Related Allowances) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Gross accounts receivable | $ 100,253 | $ 166,172 |
Allowance for doubtful accounts | (555) | (127) |
Total accounts receivable, net | $ 99,698 | $ 166,045 |
Balance Sheet Components (Sch_4
Balance Sheet Components (Schedule of Property and Equipment, Net) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Total property and equipment, gross | $ 41,903 | $ 60,443 | |
Accumulated depreciation and amortization | (17,687) | (11,015) | |
Property and equipment, net | 24,216 | 49,428 | |
Machinery and equipment | |||
Total property and equipment, gross | 13,289 | 11,415 | |
Software | |||
Total property and equipment, gross | 11,941 | 10,624 | |
Computer equipment | |||
Total property and equipment, gross | 4,042 | 4,342 | |
Furniture and fixtures | |||
Total property and equipment, gross | 3,795 | 2,698 | |
Leasehold improvements | |||
Total property and equipment, gross | 8,836 | 3,007 | |
Construction in progress | |||
Total property and equipment, gross | $ 0 | $ 28,357 | |
Construction in progress | Accounting Standards Update 2016-02 | |||
Total property and equipment, gross | $ (21,600) |
Balance Sheet Components (Prope
Balance Sheet Components (Property and Equipment, Other Information) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Sep. 29, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Sep. 29, 2019 | Sep. 30, 2018 | |
Balance Sheet Related Disclosures [Abstract] | ||||||
Depreciation expense | $ 2,400,000 | $ 1,100,000 | $ 6,600,000 | $ 2,300,000 | ||
Depreciation expense allocated from NETGEAR | $ 500,000 | $ 0 | $ 1,200,000 |
Balance Sheet Components (Sch_5
Balance Sheet Components (Schedule of Intangibles, Net) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Intangible Assets [Line Items] | ||
Gross | $ 10,300 | $ 10,600 |
Accumulated Amortization | (8,621) | (7,777) |
Net | 1,679 | 2,823 |
Technology | ||
Intangible Assets [Line Items] | ||
Gross | 9,800 | 9,800 |
Accumulated Amortization | (8,196) | (7,165) |
Net | 1,604 | 2,635 |
Other | ||
Intangible Assets [Line Items] | ||
Gross | 500 | 800 |
Accumulated Amortization | (425) | (612) |
Net | $ 75 | $ 188 |
Balance Sheet Components (Intan
Balance Sheet Components (Intangibles, Other Information) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Balance Sheet Related Disclosures [Abstract] | ||||
Acquired intangible assets, estimated useful life | 10 months 24 days | |||
Amortization of intangibles | $ 0.4 | $ 0.4 | $ 1.2 | $ 1.2 |
Balance Sheet Components (Sch_6
Balance Sheet Components (Schedule of Estimated Amortization Expense Related to Intangibles) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
2019 (remaining three months) | $ 373 | |
2020 | 1,306 | |
Net | $ 1,679 | $ 2,823 |
Balance Sheet Components (Sch_7
Balance Sheet Components (Schedule of Goodwill) (Details) (Details) - USD ($) | 9 Months Ended | |
Sep. 29, 2019 | Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | ||
Increase (decrease) in goodwill | $ 0 | |
Goodwill | $ 15,638,000 | $ 15,638,000 |
Balance Sheet Components (Goodw
Balance Sheet Components (Goodwill Impairment Narrative) (Details) | Feb. 07, 2019USD ($) | Feb. 05, 2019$ / shares | Sep. 29, 2019USD ($) | Sep. 29, 2019segment | Dec. 31, 2018USD ($) |
Goodwill [Line Items] | |||||
Average cost per share (in usd per share) | $ / shares | $ 3.71 | ||||
Decrease in average cost per share (as a percentage) | 223.30% | ||||
Number of operating segments | segment | 1 | ||||
Number of reportable segments | segment | 1 | ||||
Fair value in excess of carrying amount (as a percentage) | 29.80% | ||||
Decrease in stock price, estimated impairment loss | $ | $ 15,600,000 | ||||
Goodwill impairment | $ | $ 0 | $ 0 | |||
MPAP | |||||
Goodwill [Line Items] | |||||
Market participant acquisition premium | 0.25 | ||||
Fair value in excess of carrying amount (as a percentage) | 27.20% | ||||
MPAP - Adjustment | |||||
Goodwill [Line Items] | |||||
Market participant acquisition premium | 2.50 |
Balance Sheet Components (Sch_8
Balance Sheet Components (Schedule of Other Non-Current Assets) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Non-current deferred income taxes | $ 1,218 | $ 1,108 |
Deposits | 3,644 | 4,084 |
Other | 748 | 3,257 |
Total other non-current assets | $ 5,610 | $ 8,449 |
Balance Sheet Components (Sch_9
Balance Sheet Components (Schedule of Other Accrued Liabilities) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Sales and marketing | $ 44,399 | $ 75,863 |
Sales returns | 29,351 | 49,247 |
Accrued employee compensation | 6,707 | 11,897 |
Current operating lease liabilities | 3,814 | |
Warranty obligation | 3,403 | 3,712 |
Freight | 2,159 | 3,913 |
Current financing lease obligation | 0 | |
Current financing lease obligation | 1,632 | |
Other | 20,238 | 25,772 |
Total accrued liabilities | $ 110,071 | $ 172,036 |
Fair Value Measurements (Summar
Fair Value Measurements (Summary of Valuation of Company's Financial Instruments by Various Levels) (Details) - Fair value, measurements, recurring - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents: U.S. treasuries | $ 11,176 | $ 438 |
Available-for-sale securities: U.S. treasuries | 39,941 | 49,737 |
Foreign currency forward contracts | 343 | 322 |
Total assets measured at fair value | 51,460 | 50,497 |
Foreign currency forward contracts | 56 | 71 |
Total liabilities measured at fair value | 56 | 71 |
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 | 11,176 | 438 |
Available-for-sale securities: U.S. treasuries | 39,941 | 49,737 |
Foreign currency forward contracts | 0 | 0 |
Total assets measured at fair value | 51,117 | 50,175 |
Foreign currency forward contracts | 0 | 0 |
Total liabilities measured at fair value | 0 | 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 | 0 | 0 |
Available-for-sale securities: U.S. treasuries | 0 | 0 |
Foreign currency forward contracts | 343 | 322 |
Total assets measured at fair value | 343 | 322 |
Foreign currency forward contracts | 56 | 71 |
Total liabilities measured at fair value | $ 56 | $ 71 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Narrative) (Details) - Foreign currency contracts $ in Millions | 3 Months Ended |
Sep. 29, 2019USD ($)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 | $ | $ 2 |
Cash Flow Hedges | |
Derivative [Line Items] | |
Number of derivatives entered into | derivative_instrument | 8 |
Average size of derivative contracts | $ | $ 1.4 |
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) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | $ 343 | $ 322 |
Gross Amounts of recognized liabilities | 56 | 71 |
Prepaid expenses and other current assets | Derivative assets not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | 336 | 293 |
Prepaid expenses and other current assets | Derivative assets designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | 7 | 29 |
Other accrued liabilities | Derivative assets not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized liabilities | 46 | 46 |
Other accrued liabilities | Derivative assets designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized liabilities | $ 10 | $ 25 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Schedule of Offsetting of Derivative Assets) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | $ 343 | $ 322 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets | 343 | 322 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (56) | (68) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | 287 | 254 |
HSBC | ||
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | 329 | 100 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets | 329 | 100 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (54) | 0 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | 275 | 100 |
Wells Fargo Bank | ||
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | 14 | 222 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented in the Unaudited Condensed Consolidated Balance Sheets | 14 | 222 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (2) | (68) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | $ 12 | $ 154 |
Derivative Financial Instrume_6
Derivative Financial Instruments (Schedule of Offsetting of Derivative Liabilities) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Offsetting of Derivative Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | $ 56 | $ 71 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets | 56 | 71 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (56) | (68) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | 0 | 3 |
HSBC | ||
Offsetting of Derivative Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 54 | |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | |
Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets | 54 | |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (54) | |
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 Unaudited Condensed Consolidated Balance Sheets | 0 | |
Net Amounts Of Liabilities Presented in the Unaudited Condensed 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 | |
Wells Fargo Bank | ||
Offsetting of Derivative Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 2 | 68 |
Gross Amounts Offset in the Unaudited Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Liabilities Presented in the Unaudited Condensed Consolidated Balance Sheets | 2 | 68 |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Financial Instruments | (2) | (68) |
Gross Amounts Not Offset in the Unaudited Condensed Consolidated Balance Sheets: Cash Collateral Pledged | 0 | 0 |
Net Amount | $ 0 | $ 0 |
Derivative Financial Instrume_7
Derivative Financial Instruments (Schedule of Location and Amount of Gains or Losses Recognized in Income on Cash Flow Hedges) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Revenue | $ 106,116 | $ 131,174 | $ 247,594 | $ 342,760 |
Cost of revenue | 95,613 | 101,427 | 225,496 | 255,666 |
Research and development | 16,701 | 16,100 | 52,456 | 41,929 |
Sales and marketing | 13,657 | 12,843 | 42,389 | 37,123 |
General and administrative | 11,062 | $ 8,357 | 32,512 | $ 19,553 |
Foreign currency contracts | Gain (losses) on cash flow hedge | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Revenue | 100 | 257 | ||
Cost of revenue | 0 | 0 | ||
Research and development | 0 | 0 | ||
Sales and marketing | 0 | 0 | ||
General and administrative | 0 | 0 | ||
Foreign currency contracts | Gain (losses) on cash flow hedge | Amount Reclassified from AOCI | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Revenue | 86 | 333 | ||
Cost of revenue | 0 | (2) | ||
Research and development | (3) | (24) | ||
Sales and marketing | (3) | (38) | ||
General and administrative | $ (2) | $ (11) |
Derivative Financial Instrume_8
Derivative Financial Instruments (Schedule of Derivatives not Designated as Hedging Instruments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
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 | $ 665 | $ (57) | $ 521 | $ (57) |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Schedule of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
AOCI, before tax | ||||
Beginning balance | $ 203,230 | $ 111,443 | $ 269,502 | $ 125,419 |
Net current period other comprehensive income (loss) | (5) | 16 | 46 | 16 |
Ending balance | 179,606 | 305,709 | 179,606 | 305,709 |
AOCI, Tax | ||||
Beginning balance, tax | 1 | 0 | ||
Other comprehensive income (loss) before reclassifications, tax | 1 | |||
Less: Amount reclassified from accumulated other comprehensive income (loss), tax | 0 | 0 | ||
Net current period other comprehensive income (loss), tax | 0 | 1 | ||
Ending balance, tax | 1 | 1 | ||
AOCI, after tax | ||||
Other comprehensive income (loss) before reclassifications | 73 | 304 | ||
Less: Amount reclassified from accumulated other comprehensive income (loss) | 78 | 258 | ||
Total other comprehensive income (loss), net of tax | (5) | $ 14 | 46 | $ 14 |
Unrealized gains (losses) on available-for-sale securities | ||||
AOCI, before tax | ||||
Beginning balance | 72 | (2) | ||
Other comprehensive income (loss) before reclassifications | (27) | 47 | ||
Less: Amount reclassified from accumulated other comprehensive income (loss) | 0 | 0 | ||
Net current period other comprehensive income (loss) | (27) | 47 | ||
Ending balance | 45 | 45 | ||
Unrealized gains (losses) on derivatives | ||||
AOCI, before tax | ||||
Beginning balance | (22) | 2 | ||
Other comprehensive income (loss) before reclassifications | 100 | 256 | ||
Less: Amount reclassified from accumulated other comprehensive income (loss) | 78 | 258 | ||
Net current period other comprehensive income (loss) | 22 | (2) | ||
Ending balance | 0 | 0 | ||
Total | ||||
AOCI, before tax | ||||
Beginning balance | 51 | 0 | ||
Ending balance | $ 46 | $ 46 |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Reclassifications out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Revenue | $ 106,116 | $ 131,174 | $ 247,594 | $ 342,760 |
Cost of revenue | 95,613 | 101,427 | 225,496 | 255,666 |
Research and development | 16,701 | 16,100 | 52,456 | 41,929 |
Sales and marketing | 13,657 | 12,843 | 42,389 | 37,123 |
General and administrative | 11,062 | $ 8,357 | 32,512 | $ 19,553 |
Foreign currency contracts | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total before tax | 100 | 257 | ||
Gain (losses) on cash flow hedge | Foreign currency contracts | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Revenue | 100 | 257 | ||
Cost of revenue | 0 | 0 | ||
Research and development | 0 | 0 | ||
Sales and marketing | 0 | 0 | ||
General and administrative | 0 | 0 | ||
Amount Reclassified from AOCI | Foreign currency contracts | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total before tax | 78 | 258 | ||
Amount Reclassified from AOCI | Gain (losses) on cash flow hedge | Foreign currency contracts | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Revenue | 86 | 333 | ||
Cost of revenue | 0 | (2) | ||
Research and development | (3) | (24) | ||
Sales and marketing | (3) | (38) | ||
General and administrative | $ (2) | $ (11) |
Deferred Revenue (Schedule of R
Deferred Revenue (Schedule of Remaining Performance Obligations) (Details) $ in Thousands | Sep. 29, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 79,554 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 58,575 |
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]: 2020-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 15,770 |
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]: 2021-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations | $ 5,209 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, expected timing of satisfaction |
Deferred Revenue (Narrative) (D
Deferred Revenue (Narrative) (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 29, 2019USD ($) | Sep. 29, 2019USD ($)region | |
Revenue from Contract with Customer [Abstract] | ||
Revenue deferred due to unsatisfied performance obligations | $ 12.4 | $ 32.6 |
Revenue recognized for satisfaction of performance obligations over time | $ 11.9 | 34.6 |
Recognized revenue that was included in contract liability balance at beginning of period | $ 22.1 | |
Number of geographic regions in which the Company conducts business | region | 3 |
Commitments and Contingencies_2
Commitments and Contingencies (Narrative) (Details) | 9 Months Ended |
Sep. 29, 2019USD ($) | |
Loss Contingencies [Line Items] | |
Option to extend lease (in years) | 5 years |
Option to terminate lease (in years) | 1 year |
Number of days for non-cancellation of purchase obligations prior to expected shipment date | 30 days |
Non-cancelable purchase commitments with suppliers | $ 71,400,000 |
Liabilities recorded for director and officer indemnification agreements | 0 |
Liabilities recorded for customers, distributors, and resellers indemnification agreements | $ 0 |
Continued vesting period after termination without cause (in years) | 1 year |
Liabilities for executive's employment agreements | $ 0 |
Loss on Long-term Purchase Commitment | |
Loss Contingencies [Line Items] | |
Loss liability from committed purchases | $ 2,600,000 |
46 to 60 Days | |
Loss Contingencies [Line Items] | |
Percentage of cancelable orders | 50.00% |
31 to 45 Days | |
Loss Contingencies [Line Items] | |
Percentage of cancelable orders | 25.00% |
Letter of Credit | |
Loss Contingencies [Line Items] | |
Letters of credit outstanding | $ 3,600,000 |
Build-to-suit lease | Letter of Credit | |
Loss Contingencies [Line Items] | |
Letters of credit outstanding | $ 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 (Summary of Operating Lease Cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 29, 2019 | Sep. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease cost | $ 1,726 | $ 5,068 |
Commitments and Contingencies_4
Commitments and Contingencies (Summary of Effect of Accounting Standard Adoption) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Property and equipment, net | $ 24,216 | $ 49,428 | |||
Accrued liabilities | 3,814 | ||||
Accrued liabilities | 110,071 | 172,036 | |||
Non-current financing lease obligation | 0 | 19,978 | |||
Accumulated deficit | (151,134) | (45,849) | |||
Operating lease right-of-use assets, net | 32,008 | ||||
Non-current deferred rent | 19,552 | 23,313 | |||
Non-current operating lease liabilities | 30,484 | ||||
Total property and equipment, gross | 41,903 | 60,443 | |||
Operating lease liability | 34,298 | ||||
Construction in progress | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total property and equipment, gross | 0 | 28,357 | |||
Leasehold improvements | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total property and equipment, gross | 8,836 | 3,007 | |||
Build-to-suit lease | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Property and equipment, net | 0 | 21,610 | |||
Accrued liabilities | 0 | 281 | |||
Accrued liabilities | 0 | 1,632 | |||
Non-current financing lease obligation | 19,978 | ||||
Accumulated deficit | 281 | ||||
Operating leases | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accrued liabilities | 0 | 107 | |||
Accrued liabilities | 3,814 | 0 | |||
Non-current deferred rent | $ 1,141 | ||||
Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Operating lease right-of-use assets, net | $ 7,200 | $ 14,300 | $ 14,400 | ||
Current deferred rent | 100 | ||||
Noncurrent deferred rent | 1,100 | ||||
Operating lease liability | $ 7,200 | $ 14,300 | 14,400 | ||
Accounting Standards Update 2016-02 | Construction in progress | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Total property and equipment, gross | (21,600) | ||||
Accounting Standards Update 2016-02 | Leasehold improvements | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reimbursement for leasehold improvements | $ 3,100 | ||||
Accounting Standards Update 2016-02 | Build-to-suit lease | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Property and equipment, net | (21,610) | ||||
Accrued liabilities | (281) | ||||
Accrued liabilities | (1,632) | ||||
Non-current financing lease obligation | (19,978) | ||||
Accumulated deficit | 281 | ||||
Finance lease liability | (21,900) | ||||
Accounting Standards Update 2016-02 | Operating leases | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accrued liabilities | (107) | ||||
Accrued liabilities | 2,356 | ||||
Operating lease right-of-use assets, net | 14,400 | ||||
Non-current deferred rent | (1,141) | ||||
Non-current operating lease liabilities | $ 12,044 |
Commitments and Contingencies_5
Commitments and Contingencies (Schedule of Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 29, 2019 | Sep. 29, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 1,470 | $ 2,882 |
Right-of-use assets obtained in exchange for lease liabilities | ||
Operating leases | $ 439 | $ 22,172 |
Commitments and Contingencies_6
Commitments and Contingencies (Summary of Weighted Averages Related to Operating Leases) (Details) | Sep. 29, 2019 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted average remaining lease term | 5 years 10 months 24 days |
Weighted average discount rate | 5.67% |
Commitments and Contingencies_7
Commitments and Contingencies (Summary of Operating Lease Maturity) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Operating Leases, After Adoption of 842 | ||
2019 (Remaining three months) | $ 1,170 | |
2020 | 5,950 | |
2021 | 5,789 | |
2022 | 5,645 | |
2023 | 4,968 | |
Thereafter | 19,488 | |
Total lease payments | 43,010 | |
Less: interest | (8,712) | |
Total | 34,298 | |
Accrued liabilities | 3,814 | |
Non-current operating lease liabilities | $ 30,484 | |
Operating Leases, Before Adoption of 842 | ||
2019 | $ 4,634 | |
2020 | 5,813 | |
2021 | 5,678 | |
2022 | 5,580 | |
2023 | 4,903 | |
Thereafter | 19,252 | |
Total | $ 45,860 |
Commitments and Contingencies_8
Commitments and Contingencies (Schedule of Changes in Warranty Obligation) (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||||
Balance at the beginning of the period | $ 31,756 | $ 3,232 | $ 3,487 | $ 3,712 | $ 31,756 |
Reclassified to sales returns upon adoption of ASC 606 (1) | $ (28,700) | 0 | 0 | 0 | (28,713) |
Provision for warranty obligation made during the period | 364 | 344 | 292 | 1,166 | |
Settlements made during the period | (193) | (213) | (601) | (591) | |
Balance at the end of the period | $ 3,403 | $ 3,618 | $ 3,403 | $ 3,618 |
Employee Benefit Plans (Narrati
Employee Benefit Plans (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 23, 2019 | Jan. 01, 2019 | Sep. 29, 2019 | Sep. 29, 2019 | Dec. 31, 2018 |
ESPP | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Reserved stock for issuance, common stock | 1,500,000 | 1,500,000 | |||
Stock Compensation Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted during the period (in shares) | 742,472 | ||||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted period (in years) | 10 years | ||||
Granted (in shares) | 10,000 | ||||
Total unrecognized compensation | $ 13 | $ 13 | |||
Weighted-average period of recognition of stock based compensation | 2 years 9 months 18 days | ||||
Stock Options, IPO performance-based | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 2,781,249 | ||||
MPSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted, vesting term (in years) | 3 years | ||||
RSUs, PSUs and MPSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total unrecognized compensation | $ 33 | $ 33 | |||
Weighted-average period of recognition of stock based compensation | 2 years 10 months 24 days | ||||
2018 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 2,800,000 | ||||
Reserved stock for issuance, common stock | 2,450,000 | 2,450,000 | 3,969,000 | ||
Granted during the period (in shares) | 9,792,677 | 6,303,000 | |||
Number of shares automatically added to shares authorized for issuance | 2,970,000 | ||||
2018 Plan | ESPP | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares reserved (in shares) | 10,535,149 | ||||
Number of shares automatically added to shares authorized for issuance | 2,969,890 | ||||
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 | RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 800,000 | ||||
2018 Plan | MPSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Fair value of grants in period (in dollars per share) | $ 4.14 | ||||
ESPP | ESPP | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Maximum percentage of compensation contributed by employees | 15.00% | 15.00% | |||
Percentage of stock price purchased at offering date (as a percentage) | 85.00% | ||||
Offering period (in years) | 6 months | ||||
NETGEAR | Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total unrecognized compensation | $ 0.5 | $ 0.5 | |||
Weighted-average period of recognition of stock based compensation | 1 year 10 months 24 days | ||||
NETGEAR | RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total unrecognized compensation | $ 9.1 | $ 9.1 | |||
Weighted-average period of recognition of stock based compensation | 2 years 1 month 6 days | ||||
NETGEAR | 2018 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares converted at distribution (in shares) | 6,822,787 | ||||
Tranche One | 2018 Plan | Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted, vesting term (in years) | 3 years | ||||
Minimum | 2018 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted, vesting term (in years) | 3 years | ||||
Minimum | 2018 Plan | RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted, vesting term (in years) | 3 years | ||||
Maximum | 2018 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted, vesting term (in years) | 4 years | ||||
Maximum | 2018 Plan | RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted, vesting term (in years) | 4 years |
Employee Benefit Plans (Summary
Employee Benefit Plans (Summary of Available Shares for Future Grants) (Details) - shares | Jan. 23, 2019 | Sep. 29, 2019 | Sep. 29, 2019 | Dec. 31, 2018 |
Stock Options, IPO performance-based | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Granted (in shares) | 2,781,249 | |||
RSUs | Tranche One | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
RSUs | Tranche Two | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
RSUs | Tranche Three | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
PSUs | Tranche One | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
PSUs | Tranche Two | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
PSUs | Tranche Three | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 33.33% | |||
MPSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Vesting period | 3 years | |||
2018 Plan | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Shares available for grants as of December 31, 2018 | 3,969,000 | |||
Additional authorized shares (in shares) | 2,970,000 | |||
Granted (in shares) | (9,792,677) | (6,303,000) | ||
Forfeited/cancelled (in shares) | 1,464,000 | |||
Expired (in shares) | 1,000 | |||
Shares traded for taxes (in shares) | 349,000 | |||
Shares available for grants as of June 30, 2019 | 2,450,000 | 2,450,000 | 3,969,000 | |
Granted (in shares) | 2,800,000 | |||
2018 Plan | RSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Granted (in shares) | 800,000 | |||
CEO | Stock Options, IPO performance-based | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Number of shares forfeited (in shares) | 500,000 | |||
Terminated NEO | Stock Options, IPO performance-based | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Number of shares forfeited (in shares) | 300,000 | |||
Executive Officer | RSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 50.00% | |||
Executive Officer | PSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 25.00% | |||
Executive Officer | MPSUs | ||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Number Of Shares [Roll Forward] | ||||
Stock awards, annual vesting installments (as a percentage) | 25.00% |
Employee Benefit Plans (Schedul
Employee Benefit Plans (Schedule of Stock Option Activity) (Details) - Stock Options shares in Thousands | 9 Months Ended |
Sep. 29, 2019$ / sharesshares | |
Number of shares | |
Beginning balance (in shares) | shares | 7,209 |
Granted (in shares) | shares | 10 |
Exercised (in shares) | shares | (4) |
Cancelled (in shares) | shares | (938) |
Expired (in shares) | shares | (159) |
Ending balance (in shares) | shares | 6,118 |
Weighted Average Exercise Price Per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 12.08 |
Granted (in dollars per share) | $ / shares | 3.90 |
Exercised (in dollars per share) | $ / shares | 3.03 |
Cancelled (in dollars per share) | $ / shares | 15.88 |
Expired (in dollars per share) | $ / shares | 12 |
Ending balance (in dollars per share) | $ / shares | $ 11.49 |
NETGEAR | |
Number of shares | |
Beginning balance (in shares) | shares | 283 |
Exercised (in shares) | shares | (48) |
Cancelled (in shares) | shares | (16) |
Expired (in shares) | shares | (14) |
Ending balance (in shares) | shares | 205 |
Weighted Average Exercise Price Per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 26.53 |
Exercised (in dollars per share) | $ / shares | 21.35 |
Cancelled (in dollars per share) | $ / shares | 36.27 |
Expired (in dollars per share) | $ / shares | 41.67 |
Ending balance (in dollars per share) | $ / shares | $ 25.94 |
Employee Benefit Plans (Sched_2
Employee Benefit Plans (Schedule of RSU Activity) (Details) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 29, 2019 | Sep. 29, 2019 | Dec. 31, 2018 | |
RSUs | |||
Number of shares | |||
Beginning balance (in shares) | 3,141,000 | ||
Granted (in shares) | 6,293,000 | ||
Vested (in shares) | (1,033,000) | ||
Forfeited / Cancelled (in shares) | (368,000) | ||
Ending balance (in shares) | 8,033,000 | 8,033,000 | 3,141,000 |
Weighted Average Grant Date Fair Value Per Share | |||
Beginning Balance (in dollars per share) | $ 12.22 | ||
Granted (in dollars per share) | 4.83 | ||
Vested (in dollars per share) | 11.30 | ||
Forfeited / Cancelled (in dollars per share) | 8.55 | ||
Ending Balance (in dollars per share) | $ 6.71 | $ 6.71 | $ 12.22 |
MPSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Positive movement of benchmark (multiplier) | 3.3 | 3.3 | |
Negative movement of benchmark (multiplier) | 2.5 | 2.5 | |
Positive movement of benchmark (as a percentage) | 3.30% | 3.30% | |
Negative movement of benchmark (as a percentage) | 2.50% | 2.50% | |
Movement of benchmark, increment (as a percentage) | 1.00% | 1.00% | |
Threshold (as a percentage) | 30.00% | 30.00% | |
NETGEAR | RSUs | |||
Number of shares | |||
Beginning balance (in shares) | 522,000 | ||
Vested (in shares) | (155,000) | ||
Forfeited / Cancelled (in shares) | (40,000) | ||
Ending balance (in shares) | 327,000 | 327,000 | 522,000 |
Weighted Average Grant Date Fair Value Per Share | |||
Beginning Balance (in dollars per share) | $ 34.89 | ||
Vested (in dollars per share) | 32.44 | ||
Forfeited / Cancelled (in dollars per share) | 36.47 | ||
Ending Balance (in dollars per share) | $ 35.85 | $ 35.85 | $ 34.89 |
2018 Plan | |||
Weighted Average Grant Date Fair Value Per Share | |||
Granted (in shares) | 2,800,000 | ||
2018 Plan | RSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Granted (in shares) | 800,000 | ||
Tranche One | RSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||
Tranche One | PSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||
Tranche Two | RSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||
Tranche Two | PSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||
Tranche Three | RSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||
Tranche Three | PSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Stock awards, annual vesting installments (as a percentage) | 33.33% | ||
Maximum | MPSUs | |||
Weighted Average Grant Date Fair Value Per Share | |||
Threshold (as a percentage) | 200.00% | 200.00% |
Employee Benefit Plans (Sched_3
Employee Benefit Plans (Schedule of Valuation and Expense Information) (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 6 years 3 months 18 days | |||
Risk-free interest rate | 2.28% | |||
Expected volatility | 73.00% | |||
Dividend yield | 0.00% | 0.00% | ||
ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 6 months | 6 months | ||
Risk-free interest rate | 2.49% | 2.49% | ||
Expected volatility | 97.60% | 97.60% | ||
Dividend yield | 0.00% | 0.00% | ||
MPSUs | 2018 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 3 years | 3 years | ||
Risk-free interest rate | 1.52% | 1.52% | ||
Expected volatility | 65.10% | 65.10% | ||
Dividend yield | 0.00% | 0.00% | ||
Stock Beta | 0.30 | 0.30 | ||
NETGEAR | Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 4 years 4 months 24 days | 4 years 4 months 24 days | ||
Risk-free interest rate | 2.79% | 2.32% | ||
Expected volatility | 33.50% | 30.90% | ||
Dividend yield | 0.00% | 0.00% | ||
NETGEAR | ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 6 months | |||
Risk-free interest rate | 1.81% | |||
Expected volatility | 37.10% | |||
Dividend yield | 0.00% | 0.00% |
Employee Benefit Plans (Sched_4
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 | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 3,437 | $ 9,384 | ||
Direct | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 5,219 | 3,437 | $ 15,261 | 5,336 |
Indirect | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 0 | 4,048 | ||
Cost of revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 236 | 919 | ||
Cost of revenue | Direct | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 467 | 236 | 1,286 | 336 |
Cost of revenue | Indirect | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 0 | 583 | ||
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 872 | 2,582 | ||
Research and development | Direct | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 1,569 | 872 | 4,501 | 2,186 |
Research and development | Indirect | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 0 | 396 | ||
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 754 | 2,208 | ||
Sales and marketing | Direct | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 791 | 754 | 2,722 | 1,239 |
Sales and marketing | Indirect | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 0 | 969 | ||
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 1,575 | 3,675 | ||
General and administrative | Direct | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 2,392 | 1,575 | $ 6,752 | 1,575 |
General and administrative | Indirect | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 0 | $ 2,100 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 286 | $ 223 | $ 855 | $ 830 |
Effective tax rate | (0.90%) | (1.70%) | (0.80%) | (2.30%) |
Net Income (Loss) Per Share (Sc
Net Income (Loss) Per Share (Schedule of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Aug. 02, 2018 | Aug. 02, 2018 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | Aug. 02, 2018 | Sep. 29, 2019 | Sep. 30, 2018 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
Stock issued during period, common stock | 62,499 | |||||||
Numerator: | ||||||||
Net loss | $ (6,449) | $ (6,776) | $ (30,590) | $ (13,225) | $ (29,634) | $ (105,566) | $ (36,410) | |
Denominator: | ||||||||
Weighted average common shares - basic (in shares) | 75,337 | 69,600 | 74,831 | 64,867 | ||||
Potentially dilutive common share equivalent (in shares) | 0 | 0 | 0 | 0 | ||||
Weighted average common shares - dilutive (in shares) | 75,337 | 69,600 | 74,831 | 64,867 | ||||
Basic net income per share (in dollars per share) | $ (0.41) | $ (0.19) | $ (1.41) | $ (0.56) | ||||
Diluted net income per share (in dollars per share) | $ (0.41) | $ (0.19) | $ (1.41) | $ (0.56) | ||||
Anti-dilutive employee stock-based awards, excluded | 10,287 | 1,929 | 10,114 | 643 | ||||
Retained Earnings | ||||||||
Numerator: | ||||||||
Net loss | $ (6,776) | $ (30,590) | $ (105,566) |
Subsequent Events (Details)
Subsequent Events (Details) | Nov. 05, 2019USD ($) | Nov. 04, 2019USD ($)employee | Sep. 29, 2019 | Nov. 07, 2019USD ($) |
Subsequent Event [Line Items] | ||||
Non-compete period | 10 months 24 days | |||
Subsequent Event | Minimum | ||||
Subsequent Event [Line Items] | ||||
Expected restructuring charges | $ 1,000,000 | |||
Subsequent Event | Maximum | ||||
Subsequent Event [Line Items] | ||||
Expected restructuring charges | $ 2,000,000 | |||
Subsequent Event | Supply Agreement | Verisure S.a.r.l | ||||
Subsequent Event [Line Items] | ||||
Renewal term | 5 years | |||
Aggregate minimum purchase commitment | $ 500,000,000 | |||
Prepayment | 20,000,000 | |||
Annual prepayments | 40,000,000 | |||
Proceeds from development services | $ 10,000,000 | |||
Term of contract | 5 years | |||
Minimum period prior to expiration for re-negotiation notice | 12 months | |||
Minimum period for agreement notice | 6 months | |||
Automatic renewal period | 5 years | |||
Subsequent Event | Revolving Credit Facility | Line of Credit | Credit Agreement | ||||
Subsequent Event [Line Items] | ||||
Credit agreement term | 2 years | |||
Maximum borrowing capacity | $ 40,000,000 | |||
Borrowing base multiplier (as a percentage) | 60.00% | |||
Minimum amount of foreign subsidiaries voting interest not secured (as a percentage) | 65.00% | |||
Additional interest in event of default (as a percentage) | 5.00% | |||
Annual facility fee (as a percentage) | 0.25% | |||
Period of bankruptcy petition | 45 days | |||
Subsequent Event | Revolving Credit Facility | Line of Credit | Credit Agreement | Prime Rate | ||||
Subsequent Event [Line Items] | ||||
Basis spread on variable rate (as a percentage) | 2.25% | |||
Subsequent Event | Verisure S.a.r.l | Non-compete Agreements | ||||
Subsequent Event [Line Items] | ||||
Non-compete period | 3 years | |||
Subsequent Event | Business | Purchase Agreement | ||||
Subsequent Event [Line Items] | ||||
Cash plus inventory transferred in closing | $ 50,000,000 | |||
Number of employees to be offered positions | employee | 25 |
Segment and Geographic Inform_3
Segment and Geographic Information (Narrative) (Details) | 9 Months Ended |
Sep. 29, 2019regionsegment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Number of operating segments | 1 |
Number of geographic regions in which the Company conducts business | region | 3 |
Segment Information (Schedule o
Segment Information (Schedule of Net Revenue by Geographic Areas) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Sep. 29, 2019 | Sep. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 106,116 | $ 131,174 | $ 247,594 | $ 342,760 |
United States (“U.S.”) | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 81,441 | 108,236 | 184,733 | 263,798 |
Americas (excluding U.S.) | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 4,121 | 4,613 | 9,759 | 10,455 |
EMEA | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 13,002 | 11,760 | 37,370 | 50,416 |
Asia Pacific | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 7,552 | $ 6,565 | $ 15,732 | $ 18,091 |
Segment Information (Schedule_2
Segment Information (Schedule of Long-Lived Asset by Geographic Areas) (Details) - USD ($) $ in Thousands | Sep. 29, 2019 | Dec. 31, 2018 |
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 24,216 | $ 49,428 |
United States (“U.S.”) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 18,970 | 45,053 |
Americas (excluding U.S.) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 1,123 | 218 |
EMEA | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 545 | 567 |
China | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 2,555 | 3,040 |
APAC (excluding China) | ||
Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 1,023 | $ 550 |
Uncategorized Items - arlo20190
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 281,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (3,061,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 281,000 |
Net Parent Investment [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (3,061,000) |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | (6,449,000) |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | $ (29,634,000) |