Revenue Recognition (Tables)

3 Months Ended

Apr. 01, 2018

Revenue from Contract with Customer [Abstract]

The following table summarizes the changes made to the unaudited condensed consolidated balance sheets of December 31, 2017 for the adoption of ASC 606:



	As of		Adjustments			As of
	December 31, 2017		Adjustments			January 1, 2018
	(In thousands)
Assets:
Accounts receivable, net	$	412,798	$	6,113		$	418,911
Inventories	$	245,894	$	(2,368	)	$	243,526
Other non-current assets	$	61,789	$	4,344		$	66,133

Liabilities:
Accounts payable	$	111,915	$	(156	)	$	111,759
Other accrued liabilities	$	222,470	$	45,481		$	267,951
Deferred revenue	$	55,284	$	(25,181	)	$	30,103
Income taxes payable	$	7,015	$	724		$	7,739
Other non-current liabilities	$	22,099	$	(276	)	$	21,823

Stockholders’ equity:
Retained earnings	$	128,168	$	(12,503	)	$	115,665

The following table summarizes the impacts of adopting ASC 606 on the Company’s unaudited consolidated balance sheets as of April 1, 2018:



	As reported		Adjustments			Balance without adoption of ASC 606
	(In thousands)
Assets
Accounts receivable, net	$	317,102	$	(13,258	)	$	303,844
Inventories	$	266,345	$	2,166		$	268,511
Other non-current assets	$	85,953	$	(4,504	)	$	81,449

Liabilities:
Accounts payable	$	96,371	$	286		$	96,657
Other accrued liabilities	$	239,261	$	(48,671	)	$	190,590
Deferred revenue	$	30,985	$	18,825		$	49,810
Income taxes payable	$	9,866	$	(528	)	$	9,338
Other non-current liabilities	$	23,213	$	273		$	23,486

Stockholders’ equity:
Retained earnings	$	140,080	$	14,219		$	154,299

The following table summarizes the impacts of adopting ASC 606 on the Company’s unaudited consolidated statement of operations for the three months ended April 1, 2018:



	As reported		Adjustments		Balance without adoption of ASC 606
	(In thousands)
Net revenue	$	344,973	$	2,273	$	347,246
Cost of revenue	$	240,468	$	203	$	240,671
Gross profit	$	104,505	$	2,070	$	106,575
Provision for income taxes	$	2,393	$	357	$	2,750
Net income	$	5,590	$	1,713	$	7,303

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 April 1, 2018:



	1 year		2 years		Greater than 2 years		Total
Performance obligations	$	81,371	$	10,340	$	6,879	$	98,590

Schedule of Changes in Contract Balances

The following table reflects the changes in contract balances for the three months ended April 1, 2018:



	Balance Sheet Location	April 1, 2018		January 1, 2018^(*)		$ change			% change
		(In thousands)
Accounts Receivable, net	Accounts receivable, net	$	317,102	$	418,911	$	(101,809	)	(24.3	)%
Contract liabilities - current	Deferred revenue	$	30,985	$	30,103	$	882		2.9	%
Contract liabilities - non-current	Other non-current liabilities	$	15,509	$	13,839	$	1,670		12.1	%

_________________________

* Includes the adjustments made to all open contracts at the date of ASC 606 adoption using the modified retrospective method.

Schedule of Net Revenue Disaggregated by Geographical Region and Sales Channel

In the following table, net revenue is disaggregated by geographic region and sales channel. The Company conducts business across three geographic regions: Americas; Europe, Middle-East and Africa (“EMEA”); and Asia Pacific ("APAC"). The table also includes a reconciliation of the disaggregated revenue by reportable segment. The Company operates and reports in three segments: Arlo, Connected Home, and Small and Medium Business ("SMB"). Sales and usage-based taxes are excluded from net revenue.



	Three Months Ended
	April 1, 2018								April 2, 2017^(*)
	Arlo		Connected Home		SMB		Total		Arlo		Connected Home		SMB		Total
	(In thousands)
Geographic regions:
Americas	$	71,000	$	131,604	$	31,016	$	233,620	$	42,672	$	136,204	$	32,753	$	211,629
EMEA	18,741		21,428		26,460		66,629		12,470		22,002		23,973		58,445
APAC	6,468		24,749		13,507		$	44,724	$	5,570	$	36,155	$	11,858	$	53,583
Total net revenue	$	96,209	$	177,781	$	70,983	$	344,973	$	60,712	$	194,361	$	68,584	$	323,657
Sales channels:
Service provider	$	8,387	$	41,797	$	1,063	$	51,247	$	1,977	$	53,193	$	790	$	55,960
Non-service provider	87,822		135,984		69,920		293,726		$	58,735	$	141,168	$	67,794	267,697
Total net revenue	$	96,209	$	177,781	$	70,983	$	344,973	$	60,712	$	194,361	$	68,584	$	323,657

_________________________

* As noted above, prior period amounts have not been adjusted under the modified retrospective method.