Arlo(ARLO) - 2023 Q4 - Annual Results

Revenue Performance - Record fourth quarter service revenue of $55.9 million, growing 45.9% year over year[1] - Total revenue for Q4 2023 was $135.1 million, an increase of 14.0% year over year[2] - Annual recurring revenue (ARR) ended at $210.1 million, growing 52.5% year over year[2] - Full year service revenue reached $201.2 million, growing 47.4% year over year[3] - Total revenue for the year ended December 31, 2023, was $491.176 million, a slight increase from $490.414 million in 2022[22] - Total revenue for the three months ended December 31, 2023, was $135,093,000, representing a 3% increase from $130,003,000 in the previous quarter[34] Profitability Metrics - GAAP net loss per share for the full year was $(0.24), while record non-GAAP EPS was $0.28[3] - Gross profit for the year was $167.563 million, resulting in a gross margin of 34.1%, compared to 27.7% in the previous year[22] - GAAP total gross profit for Q4 2023 was $47,349,000, up from $43,139,000 in Q4 2022, representing an increase of 5% year-over-year[27] - Non-GAAP gross profit for services in Q4 2023 was $41,620,000, compared to $37,810,000 in Q4 2022, reflecting a growth of 7.5%[27] - Non-GAAP net income for the twelve months ended December 31, 2023, was $27,824,000, an improvement from a loss of $5,876,000 in the previous year[32] Cash Flow and Liquidity - Full year free cash flow (FCF) was $35.5 million, with a FCF margin of 7.2%[1] - Cash and cash equivalents decreased to $60.653 million at the end of 2023, down from $88.179 million at the end of 2022[25] - Cash, cash equivalents, and short-term investments as of December 31, 2023, totaled $136,496,000, an increase from $126,049,000 in the previous quarter[33] - Free cash flow usage margin for the twelve months ended December 31, 2023, was 7.2%, compared to a margin of (9.8)% in the previous year[32] Subscriber and Account Growth - Cumulative paid accounts increased to 2.8 million, growing 51.1% year over year[2] - The company crossed the 3 million subscribers milestone earlier than projected[2] - Cumulative registered accounts reached 8,652,000 as of December 31, 2023, up from 8,193,000 in the previous quarter[33] Expenses and Liabilities - Operating expenses for the year were $192.466 million, consistent with $192.914 million in 2022[22] - Research and development expenses for the year were $68.647 million, up from $64.709 million in 2022[22] - The company’s total liabilities decreased to $182.262 million from $184.506 million in 2022[20] Future Outlook - First quarter 2024 revenue outlook is estimated between $117 million and $127 million[6] Other Financial Metrics - GAAP gross margin for Q4 was 35.0%, up from 33.2% in the previous quarter[4] - Non-GAAP gross margin for services reached 74.4% in Q4 2023, slightly up from 74.1% in Q3 2023[27] - GAAP income tax rate for Q4 2023 was 16.1%, compared to a negative rate of (2.7)% in Q3 2023[29] - Total GAAP operating expenses for the full year 2023 were $192,466,000, nearly flat compared to $192,914,000 in 2022[29] - GAAP operating loss narrowed to $(458,000) in Q4 2023 from $(2,276,000) in Q3 2023[29] - Non-GAAP operating income for Q4 2023 was $9,861,000, compared to $8,426,000 in Q3 2023, indicating a sequential increase of 17%[29] - The company reported a net loss of $22.036 million for the year, an improvement from a net loss of $56.626 million in 2022[25] - The company’s accounts receivable decreased slightly to $65.360 million from $65.960 million in the previous year[20] - Inventory turns improved to 7.6 for the three months ended December 31, 2023, compared to 5.5 in the previous quarter[33] - Deferred revenue (current and non-current) as of December 31, 2023, was $18,114,000, an increase from $17,706,000 in the previous quarter[33] - The Americas accounted for 64.2% of total revenue for the three months ended December 31, 2023, up from 61.5% in the previous quarter[34]