Revenue Recognition (Tables)

6 Months Ended

Jul. 01, 2018

Revenue from Contract with Customer [Abstract]

The following table summarizes the impacts of adopting ASC 606 on the Company’s unaudited condensed consolidated balance sheet for the fiscal year beginning January 1, 2018 as an adjustment to the opening balances:



	As of		Adjustments			As of
	December 31, 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 July 1, 2018:



	As of July 1, 2018
	As reported		Adjustments			Balance without adoption of ASC 606
	(In thousands)
Assets
Accounts receivable, net	$	343,883	$	(14,167	)	$	329,716
Inventories	$	291,459	$	1,923		$	293,382
Other non-current assets	$	86,149	$	(4,677	)	$	81,472
Liabilities:
Accounts payable	$	107,704	$	136		$	107,840
Other accrued liabilities	$	265,990	$	(48,237	)	$	217,753
Deferred revenue	$	30,674	$	15,763		$	46,437
Income taxes payable	$	1,359	$	(294	)	$	1,065
Other non-current liabilities	$	24,144	$	721		$	24,865
Stockholders’ equity:
Retained earnings	$	129,953	$	14,990		$	144,943

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



	Three Months Ended July 1, 2018
	As reported			Adjustments		Balance without adoption of ASC 606
	(In thousands)
Net revenue	$	366,820		$	1,423	$	368,243
Cost of revenue	$	257,648		$	243	$	257,891
Gross profit	$	109,172		$	1,180	$	110,352
Provision for income taxes	$	4,368		$	406	$	4,774
Net income	$	(5,230	)	$	774	$	(4,456	)

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



	Six Months Ended July 1, 2018
	As reported		Adjustments		Balance without adoption of ASC 606
	(In thousands)
Net revenue	$	711,793	$	3,696	$	715,489
Cost of revenue	$	498,116	$	446	$	498,562
Gross profit	$	213,677	$	3,250	$	216,927
Provision for income taxes	$	6,761	$	763	$	7,524
Net income	$	360	$	2,487	$	2,847

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 July 1, 2018:



	1 year		2 years		Greater than 2 years		Total
Performance obligations	$	90,374	$	10,763	$	7,900	$	109,037

Schedule of Changes in Contract Balances

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



	Balance Sheet Location	July 1, 2018		January 1, 2018 ^(*)		$ change			% change
		(In thousands)
Accounts receivable, net	Accounts receivable, net	$	343,883	$	418,911	$	(75,028	)	(17.9	)%
Contract liabilities - current	Deferred revenue	$	30,674	$	30,103	$	571		1.9	%
Contract liabilities - non-current	Other non-current liabilities	$	17,293	$	13,839	$	3,454		25.0	%

_________________________

* Includes the adjustments made to the contracts which were not completed 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 tables, 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 tables also include reconciliations 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
	July 1, 2018								July 2, 2017^(*)
	Arlo		Connected Home		SMB		Total		Arlo		Connected Home		SMB		Total
	(In thousands)
Geographic regions:
Americas	$	80,877	$	149,271	$	29,678	$	259,826	$	66,485	$	131,674	$	28,790	$	226,949
EMEA	19,149		21,027		28,505		68,681		9,937		18,901		26,366		55,204
APAC	4,787		20,866		12,660		38,313		2,310		35,330		10,930		48,570
Total net revenue	$	104,813	$	191,164	$	70,843	$	366,820	$	78,732	$	185,905	$	66,086	$	330,723
Sales channels:
Service provider	$	7,591	$	46,333	$	700	$	54,624	$	7,972	$	48,485	$	588	$	57,045
Non-service provider	97,222		144,831		70,143		312,196		70,760		137,420		65,498		273,678
Total net revenue	$	104,813	$	191,164	$	70,843	$	366,820	$	78,732	$	185,905	$	66,086	$	330,723

_________________________

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



	Six Months Ended
	July 1, 2018								July 2, 2017^(*)
	Arlo		Connected Home		SMB		Total		Arlo		Connected Home		SMB		Total
	(In thousands)
Geographic regions:
Americas	$	151,877	$	280,875	$	60,694	$	493,446	$	109,157	$	267,878	$	61,543	$	438,578
EMEA	37,890		42,454		54,966		135,310		22,407		40,903		50,339		113,649
APAC	11,255		45,616		26,166		83,037		7,880		71,485		22,788		102,153
Total net revenue	$	201,022	$	368,945	$	141,826	$	711,793	$	139,444	$	380,266	$	134,670	$	654,380
Sales channels:
Service provider	$	15,978	$	88,130	$	1,763	$	105,871	$	9,949	$	101,678	$	1,378	$	113,005
Non-service provider	185,044		280,815		140,063		605,922		129,495		278,588		133,292		541,375
Total net revenue	$	201,022	$	368,945	$	141,826	$	711,793	$	139,444	$	380,266	$	134,670	$	654,380

_________________________

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