ARLO - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Erik Bylin. Please go ahead, sir.

Erik Bylin

you. Thank welcome First and Results XXXX Arlo Call. Conference to afternoon Quarter Technologies Financial Good

the any Mr. financials by the then Company and from Matt, guidance commentary us Joining are provided provided business first questions. Gorjanc, with introduction time by The have quarter on start with the Ms. by Matthew will CFO. format the We’ll Christine; of the we call: followed an for and for Christine CEO; McRae, along

a copy Investor received today’s release, www.arlo.com. If Arlo’s not you of please visit Relations have at website

that the conference Before remarks, we begin formal contains we advise statements. you today's forward-looking call

contemplated statements Forward-looking these outlook. include tax results forward-looking rates, gross and regarding statements those margins, Actual operating differ margins, by expected revenue, could or statements. business future trends expenses, from materially

please Any to Arlo's these call on that most future Arlo update recent this of statements Factors discussed information, of today to with or SEC XX-K more as new undertakes Form forward-looking on are XX-Q. on and no based Risk refer and including obligation in the result the Form a events. statements information annual the assumptions filings as periodic make For we report

of be to financial today's non-GAAP would over like addition, measures In At time, A to website. on call this our in release to the Matt. measures I press now non-GAAP will financial call. this reconciliation can several be in turn the GAAP mentioned found Investor Relations

Matt McRae

in market while we Market loss objectives. share quarter the distribution, our quarter through we across one you diluted for progress thank large We installed our earnings is make of for integrated track professionally partnership on remains and Eric, joining The operational video accelerated. preannounced first to and and announced product Ultra gross today margin strong subscription expectations continual financial to Arlo's are you, for families was a and exceeded security. our net doorbell enter the paid and revenue, worldwide progress XXXX Thank year. per us on call. Arlo's everyone first solid financial share

Let's we million, in through growth XX%. above down ago results represented Services start $XX.X was the a of million year from $XX.X but year-over-year In a QX, by of revenue revenue, which some our talking quarter. guidance. delivered

XXX,XXX QX, Arlo to we total During added up a than total users XX.X% to X.X reach year-over-year. registered the about million registered more platform of users

More paid which XXX,XXX importantly base is grew to up subscriber year-over-year. our approximately users, XX.X%

strong our drive results We believe such users validates to in which are strategy thrilled growth. revenue to we see paid recurring

paid who Ultra the new not believe users service which significant business include drive we of as the our subscriber does future. As numbers yet subscriber growth purchase a in will the paid under model reminder receive incremental bundled part

leadership We connected in sale position and you consumer, to on in match channel higher point consumer continue reduce the market inventory maintaining that of fourth in sales the normal may XXXX. operations quarter were in QX, remember inventory Arlo last the XXXX. channel call, able while at the slowdown US As slowdown of into the indications may market. market, we impacted buildup quickly the to actions caused and which took about immediate from adjusted talked our camera the reacted during substantially despite promotions basis our quarter, to XX% a

vision camera' security to image true week new exclusive version a XXX our noise launched Best camera family the with integrated on of we partner design. market with packages reviews is our the Ultra five-star consumer recent features clearly year Arlo four had subscriber West one most reviews to or paid Arlo and Smart segment would the commented up the HCR, a that anniversary. top-notch they black video, Arlo home pass 'beautifully conversion an Hive wide and service when vision, Arlo Ultra's where flagship crafted XK also their and capable bundled says are Trend the Ultra clear cancellation night our testing. Insider XK integration Last year and Customer computer other advanced Ultra we model performance Arlo modular Ultra 'in view, the at believe spotlight painless roll 'the XXXXp in new in of view, people, for among owners smart subscription powerful Ultra upcoming video accelerate a full two-way completed and latest design, with business ISC products features. a Moving products, wider in product new one We of clarity'. ecosystem detecting a rollout has field purchase on Ultra a starting Smart. a includes 'delivers rolled With and reviews of collaboration will Arlo vehicles, Tech our our of launch quality to Buy. AI another professional Ultra full At out model and with and positive hub. security hardware Digital a Arlo'. doorbells, our this integrated recommend worldwide animals into set that Arlo color since it winner and previewed features. field free wire are our extensive set for after audio and commented we Ultra smart in superstar Show breadth just of bar security showcased and video ultimate Apple crystal called heartbeat'.

and provide of about excited the fast our into growing part later the XXXX. entry updates we'll are in market further We

to alarm Arlo to Arlo across dealers an Arlo's AI West of at partnership cloud IB false security well times alarm and existing capabilities as as based with platform. for provider and announced enables a camera conjunction reduce and deliver Now mind verified systems response infrastructure monitoring Additionally added Now services alarms, offer we ISC peace with security faster of in with a collaboration video IB level businesses. cloud of homes verification ensure

for channel year our this and security later expansion into additional the of a growth. installed professionally represents an For Arlo large, this catalyst market

the to like Christine to on turn quarter for her would call first over the guidance commentary quarter, for and I the second Now full-year.

Christine Gorjanc

of joining for thank for XXXX and Matt quarter first us our everyone call. you, you earnings Thank

Matt $XX.X delivered exceeding year-over-year. in million XX.X% high guidance our As down but revenue, of we the end highlighted

reminder and XXXX the comparison financials. standalone references ago a and QX whereas QX results year for QX on QX and XXXX our based the As financials period carveout XXXX are QX

You SX in filed can offering find contained Arlo related our including public further and carveout financials SEC previously detail regarding our prospectus. Form filings, the

Arlo total XXX,XXX a shipped we added in QX. approximately are quarter, which XXX,XXX the the cameras. approximately approximately devices of to XXX,XXX of registered platform users We During

revenue which our XX.X% which bringing from a XX.X% million increase year-over-year. predictability. both added quarter recurring subscribers ago. of will of in our As QX margins base We is improve help business total subscription an of Growing and first XX,XXX about the the users, to XXX,XXX our end paid X.XX subscriber registered critical year paid we count user we up our growing had believe registered to is

We Ultra in pleased very be are the believe subscriber driver will a with the and new the recurring of model our in for base future. subscriber substantial our business growth revenue and growth base

non year. earnings is my million was discussion QX XX.X% point focus GAAP reconciliation distributed Our our non-GAAP on which earlier numbers. last detailed to over services up revenue GAAP this on The from From in is release $XX.X point XXXX will for today.

non-GAAP of the quarter period resulted quarter. the in in guidance. first profit XXXX Our $XX.X comparable to margin non-GAAP million million, ago the in This end was high gross which of year $X.X $X.X million a X.X% gross the of above compares our and prior for

carveout $XX.X depreciation in Total was Our operating to operating service margin largely fill at requisition. QX key and financials sequentially. due year-over-year expenses XX% came additional effect X.X% during non-GAAP open back XX.X%. of We million increase the expenses record and slightly up we is up gross which as anticipate to

the and Our was X.X% for total million execute sequentially. to invest creates R&D differentiation in service as continue our we to $XX.X innovation service first critical maps. non-GAAP and up R&D R&D product our product expense we the that and road is quarter

our 'XX end Our of for of tax XXXX QX the is first expense was the XXX employees, non-GAAP at $XXX,XXX. headcount quarter

a and per investments. our in For our and share specifically larger were loss million during in channel. non-GAAP retail we fourth cash $XXX.X of of lowering short-term with pleased diluted $X.XX. with QX the quarter quarter progress in more cash, ended inventory We channel equivalents first posted the We XXXX

quarter. US not reflect lower to it our level does that weeks season the then XX.X and stock progress end reported seasonally the is the we on of channel strong of the data, at retail stock is While the of made slow That said, channel to much the number which of QX in of QX at holiday quarter, be weeks then the during prior by close of at end of with we given the second back the QX sell end QX. the through six compute the normal inventory expect the we

Now turning to our outlook.

to channel the quarter our work partners increase While normal return a we to with from will to to levels second. expect sequential the inventory we first strong see continue to

of We expect range to revenue the quarter $XX to $XX be million second in million. in the

XXXX. to our the and quarter X% come non-GAAP XX% XX% in between and in expect in between We of margin GAAP come XX% our second gross gross to and margins

expect in share. GAAP $X.XX loss and non-GAAP $X.XX diluted between between come diluted and our and come share $X.XX in We $X.XX for to loss our to per share per

full-year for XXXX Q&A. call QX to be 'XX and we the guidance Matt gave I non-GAAP last the GAAP announcement. in comments we some We the back to and before approximately we earnings expect our over With to reaffirming turn will tax that for our are go XXX,XXX expense

Matt McRae

the our also the efficient about Thank our the product and organization. the maniacally strong and you, the task have the made looking be excited forward vigilant is strategy launches management in execution, for Christine. that at team hand and couple and proud Hoever optimizing our season. must holiday execution, on quarters focused of our I’m announcements last investments of team's clear it to new across

OpEx, will path improve and profitability. reduce cost services decisive actions and focus manage to both have introductions product tightly to new and continue hardware for taking execute our to on We to

competitiveness, leadership Board that of for has are More ensure we strategic in our press Directors that time. not And confident we release positioning all options in shareholder While impact value can be is line our open we this remain announced effort in market. found for can company strategy, to Arlo at with further we market the in and questions. Arlo the comment to and the the reviewing and plan an for information today the do maximizing greatest

Operator

of Your [Operator line question Adam comes first Tindle the instructions] Raymond James. from from

is Your line now go ahead. open. Please

Madison Suhr

or taking afternoon on meaningful the has did things how is some March the this categories question. wanted cadence normalized my thanks volatility growth still there QX for a the month progress? know I to quarter quarter, of Madison but in rates? for returned more Good had I Adam to by on start the month volatility product Was

Christine Gorjanc

think channel on because said clear channel we the QX very was will what our in helping the channel less. to meaning had bit inventory partners in that quite our shipping out, I we is we a focused had be

the is through what inventory amount So especially would as increased there I channel month Ultra probably was the went you in given our already third and the tell the as was we shipping released of that quarter. of

Madison Suhr

want touch I guide. Okay QX also to and margin on then

more other range, it how clearing seems that gross mid-single factors, manufacturing talk Thanks. excess other is in versus to tariff to pricing margin things. pressure a about benefit China channel inventory like the So margins of much X the or are can gross maybe out still digit that environment ex million trending exiting related competitive related the you

Christine Gorjanc

I February spend expect to and do clear that that to to first in is we we also the true inventory. so had channel to clear going some of half it today, inventory, we said us marketing as dollars was XXXX continue what think take through

don’t really issues QX. going have in is Now no there really we on tariff any,

we market this have what less to are to do completely see see margin where the gross the categories. grow will is promotional will far expect and China our revenue the products out biggest at subscription hit we moved We of in as point the continues to improvement new but

Madison Suhr

innovations? kind could I would marketing any be an nice here. services of if one of to understand Okay driving accelerated more was product obviously I a adoption helpful. of see know that’s and the it what's and efforts, an there targeted bright more help you level? spot more on sneak commentary additional helpful services Is Just us Can acceleration

Matt McRae

holiday people the I we're Matt, and Arlo as There's install been experience optimizations understand registered is by a service targeted are up, sign gotten better it learn we're and marketing you new up specially the the been users are what the has is where awareness marketing think seeing week analytics general week lot as the marketing I streamlined. and will positioning users off new tell eco is board We've for some at less also I some so dropping obviously that there quarter. to is of things, period system. across both then the XX signing think people use it the buying the January. signing in trial slow free and well for day our to we into and so necessarily product up up This time some through in after of that doing December But into first down the base the didn’t

awareness dropping a the the better getting platform converted think subscriber. of I funnel in that performance to actual at free through trial us overall from the and paid streamlining all way

Operator

Company. ahead. Please Your Jeff next question comes & from Cowen go from Osborne

open. Your line is

Jeff Osborne

just and of I that be touch Best talk of is to getting up had you the store initiatives something that's in that the to stores Just call nationwide the you personal still a work about is getting last out percentage are end. on or rolled that speed. trained Can experience and from the Is one couple more done? Buy my think everybody

Matt McRae

work done. There still be is to

activities, footprint the very with black of mentioned doing partnership a that come script rollout interesting. in which we an the is event So in them I Achievers week, launch of with an there people version as event. actually They right and wider March who last now and of strong got we've was with exclusive Buy actually a Ultra we're are and the them across series to Best called SKU Ultra hosting training a one is

educate it side Best see normal on in to beginning that, have. QX. of will Buy at you the will but ramp they both we Buy the we would it's get But stages especially get So continue the their early, engage side of to to for vendors and we say educational we're middle the closer stages through do Best the also season. not as cadence as I And holiday awareness Ultra continuing are resources

Jeff Osborne

for to That's the your perspective in was your hear in now environment that what's environment we're anticipation the the or good and promotion QX? is summer in how intensified What did months.

Matt McRae

carry is ready getting typical spring share after competitive inventory you last into over in Some having was are we QX market and happy clearing so that where to XX%. of experienced is It this holiday we're QX a period at a see that this promotional year reset. people and the we're then and definitely able that our for hold

we obviously, I holiday go into during you'll get as think continued period. seasonality as promotions normal and see you'll QX additional through the the progress you where year the see

the we're So of a the rest normal more for seasonality expecting year.

Jeff Osborne

channel… questions. what with you, it you and just for XX.X callers normalized of mentioned Got then talked you weeks we Christine inventory your us the prior of target is remind But and can the

Christine Gorjanc

that was year quarter Typically on it's probably the it XX retail in. which that to the depend would XX of and

But six it to basis by the for XX. on on down that that’s POS weeks, a we in we were we you looking why actually inventory view but the quite end backward normal do see much a channel So came would to prior difference have be believe the the and will levels of how we again so QX. inventory really pleased XX

Jeff Osborne

Should the control a Obviously you on half, in then of X% requisites you second last in to in not increase the modeling. but just guidance a or as in and a some third highlighted out expenses do can you're the business that anticipate it XQ. you sort lot quarter just R&D bit in to I there one Got you the fourth your and items to of there continue a we is know giving X% in one model things particular the that OpEx of so control can't is one look pause. of

Christine Gorjanc

of we be all through relatively flat I flat different actually just where there depreciation flat our this after at non-cash quarter relatively cut it would process. we that to be down. be like can a but and is going can and where planning or stay we as expenses lot exit might ups the where a in say, we looking get downs, few small gone going will We've QX forward and it's number come from

baked that quite bit guidance annual have we So we a of the into that did.

So of relatively flat we as out come QX.

Jeff Osborne

Got it, it. thank you that's appreciate helpful,

Operator

are no time. conference There questions call. further This at this concludes today’s

You may now disconnect.

Arlo (ARLO) 30 Apr 192019 Q1 Earnings call transcript