QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||
| ||||||||
(Address of principal executive offices) | (Zip Code) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large Accelerated filer | ☐ | ☒ | ||||||||||||||||||
Non-Accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Page | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
(In thousands, except share and per share data) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets, net | |||||||||||
Goodwill | |||||||||||
Restricted cash | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Deferred revenue | |||||||||||
Accrued liabilities | |||||||||||
Total current liabilities | |||||||||||
Non-current operating lease liabilities | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 8) | |||||||||||
Stockholders’ Equity: | |||||||||||
Preferred stock: $ | |||||||||||
Common stock: $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
Accumulated deficit | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Products | $ | $ | $ | $ | |||||||||||||||||||
Services | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||
Products | |||||||||||||||||||||||
Services | |||||||||||||||||||||||
Total cost of revenue | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Others | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
Interest income, net | |||||||||||||||||||||||
Other income (expense), net | ( | ||||||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss per share: | |||||||||||||||||||||||
Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted average shares used to compute net loss per share: | |||||||||||||||||||||||
Basic and diluted | |||||||||||||||||||||||
Comprehensive loss: | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Total stockholders’ equity, beginning balances | $ | $ | $ | $ | |||||||||||||||||||
Common stock: | |||||||||||||||||||||||
Beginning balances | $ | $ | $ | $ | |||||||||||||||||||
Issuance of common stock under stock-based compensation plans | |||||||||||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | |||||||||||||||||||||||
Restricted stock unit withholdings | ( | ( | ( | ( | |||||||||||||||||||
Ending balances | $ | $ | $ | $ | |||||||||||||||||||
Additional paid-in capital: | |||||||||||||||||||||||
Beginning balances | $ | $ | $ | $ | |||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||
Settlement of liability classified restricted stock units | |||||||||||||||||||||||
Issuance of common stock under stock-based compensation plans | |||||||||||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | |||||||||||||||||||||||
Restricted stock unit withholdings | ( | ( | ( | ( | |||||||||||||||||||
Ending balances | $ | $ | $ | $ | |||||||||||||||||||
Accumulated deficit: | |||||||||||||||||||||||
Beginning balances | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss | ( | ( | ( | ( | |||||||||||||||||||
Ending balances | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Accumulated other comprehensive income (loss): | |||||||||||||||||||||||
Beginning balances | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
Ending balances | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Total stockholders’ equity, ending balances | $ | $ | $ | $ | |||||||||||||||||||
Common stock shares: | |||||||||||||||||||||||
Beginning balances | |||||||||||||||||||||||
Issuance of common stock under stock-based compensation plans | |||||||||||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | |||||||||||||||||||||||
Restricted stock unit withholdings | ( | ( | ( | ( | |||||||||||||||||||
Ending balances |
Six Months Ended | |||||||||||
July 2, 2023 | July 3, 2022 | ||||||||||
(In thousands) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Stock-based compensation expense | |||||||||||
Depreciation and amortization | |||||||||||
Allowance for credit losses and inventory reserves | ( | ||||||||||
Deferred income taxes | |||||||||||
Others | ( | ||||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable, net | |||||||||||
Inventories | ( | ||||||||||
Prepaid expenses and other assets | ( | ||||||||||
Accounts payable | ( | ||||||||||
Deferred revenue | ( | ||||||||||
Accrued and other liabilities | ( | ( | |||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Purchases of short-term investments | ( | ( | |||||||||
Proceeds from maturities of short-term investments | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds related to employee benefit plans | |||||||||||
Restricted stock unit withholdings | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net decrease in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
Cash, cash equivalents, and restricted cash, at beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash, at end of period | $ | $ | |||||||||
Reconciliation of cash, cash equivalents, and restricted cash to Unaudited Condensed Consolidated Balance Sheets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ | |||||||||
Supplemental cash flow information: | |||||||||||
Non-cash investing activities: | |||||||||||
Purchases of property and equipment included in accounts payable and accrued liabilities | $ | $ |
1 year | 2 years | Greater than 2 years | Total | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Performance obligations | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Americas | $ | $ | $ | $ | |||||||||||||||||||
EMEA | |||||||||||||||||||||||
APAC | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
As of July 2, 2023 | As of December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasuries | $ | $ | $ | ( | $ | $ | $ | $ | ( | $ |
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
(In thousands) | |||||||||||
Gross accounts receivable | $ | $ | |||||||||
Allowance for credit losses | ( | ( | |||||||||
Total | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Balance at the beginning of the period | $ | $ | $ | $ | |||||||||||||||||||
Provision for (release of) expected credit losses | ( | ( | |||||||||||||||||||||
Balance at the end of the period | $ | $ | $ | $ |
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
(In thousands) | |||||||||||
Machinery and equipment | $ | $ | |||||||||
Software | |||||||||||
Computer equipment | |||||||||||
Leasehold improvements | |||||||||||
Furniture and fixtures | |||||||||||
Total property and equipment, gross | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Total property and equipment, net (1) | $ | $ |
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
(In thousands) | |||||||||||
Deferred income taxes | $ | $ | |||||||||
Sublease initial direct cost and adjustments | |||||||||||
Other | |||||||||||
Total | $ | $ |
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
(In thousands) | |||||||||||
Sales incentives | $ | $ | |||||||||
Sales returns | |||||||||||
Compensation | |||||||||||
Cloud and other costs | |||||||||||
Professional services | |||||||||||
Warranty obligations | |||||||||||
Freight cost | |||||||||||
Service cost | |||||||||||
Restructuring charges | |||||||||||
Other | |||||||||||
Total | $ | $ |
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
(In thousands) | |||||||||||
Non-current service cost | $ | $ | |||||||||
Non-current compensation | |||||||||||
Non-current deferred revenue | |||||||||||
Non-current income taxes payable | |||||||||||
Other | |||||||||||
Total | $ | $ |
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
(In thousands) | |||||||||||
Cash equivalents: money-market funds (<90 days) | $ | $ | |||||||||
Cash equivalents: U.S. Treasuries (<90 days) | |||||||||||
Available-for-sale securities: U.S. Treasuries (1) | |||||||||||
Total | $ | $ |
Total | Severance Expense | Office Exit Expense | Other Exit Expense | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | $ | $ | |||||||||||||||||||
Restructuring charges | |||||||||||||||||||||||
Cash payments | ( | ( | ( | ( | |||||||||||||||||||
Non-cash and other adjustments | ( | ( | ( | ||||||||||||||||||||
Balance as of July 2, 2023 | $ | $ | $ | $ | |||||||||||||||||||
Total costs incurred inception to date | $ | $ | $ | $ | |||||||||||||||||||
Six Months Ended | |||||||||||
July 2, 2023 | July 3, 2022 | ||||||||||
(In thousands) | |||||||||||
Cash paid for amounts included in the measurement of lease liabilities | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
Right-of-use assets obtained in exchange for lease liabilities | |||||||||||
Operating leases | $ | $ |
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
Weighted average remaining lease term | |||||||||||
Weighted average discount rate | % | % |
Operating Lease Payments | Sublease Payments | Net | |||||||||||||||
(In thousands) | |||||||||||||||||
2023 (Remaining six months) | $ | $ | ( | $ | |||||||||||||
2024 | ( | ||||||||||||||||
2025 | ( | ||||||||||||||||
2026 | ( | ||||||||||||||||
2027 | ( | ||||||||||||||||
Thereafter | ( | ||||||||||||||||
Total future lease payments | $ | ( | $ | ||||||||||||||
Less: interest | ( | ||||||||||||||||
Present value of future minimum lease payments | $ | ||||||||||||||||
Accrued liabilities | $ | ||||||||||||||||
Non-current operating lease liabilities | |||||||||||||||||
Total lease liabilities | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Balance at the beginning of the period | $ | $ | $ | $ | |||||||||||||||||||
Provision for warranty obligations | |||||||||||||||||||||||
Settlements | ( | ( | ( | ( | |||||||||||||||||||
Balance at the end of the period | $ | $ | $ | $ |
Number of Shares | |||||
(In thousands) | |||||
Shares available for grants as of December 31, 2022 | |||||
Additional authorized shares | |||||
Granted | ( | ||||
Forfeited / cancelled | |||||
Shares traded for taxes | |||||
Shares available for grants as of July 2, 2023 |
Number of Shares | Weighted Average Exercise Price Per Share | ||||||||||
(In thousands) | (In dollars) | ||||||||||
Outstanding as of December 31, 2022 | $ | ||||||||||
Granted | $ | ||||||||||
Exercised | ( | $ | |||||||||
Forfeited / cancelled | $ | ||||||||||
Expired | ( | $ | |||||||||
Outstanding as of July 2, 2023 | $ | ||||||||||
Vested and expected to vest as of July 2, 2023 | $ | ||||||||||
Exercisable Options as of July 2, 2023 | $ |
Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||||||||
(In thousands) | (In dollars) | ||||||||||
Outstanding as of December 31, 2022 | $ | ||||||||||
Granted | $ | ||||||||||
Vested | ( | $ | |||||||||
Forfeited | ( | $ | |||||||||
Outstanding as of July 2, 2023 | $ |
Number of Shares | Weighted Average Grant Date Fair Value Per Share | ||||||||||
(In thousands) | (In dollars) | ||||||||||
Outstanding as of December 31, 2022 | $ | ||||||||||
Granted | $ | ||||||||||
Vested | ( | $ | |||||||||
Forfeited | ( | $ | |||||||||
Outstanding as of July 2, 2023 | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average common shares - basic and dilutive | |||||||||||||||||||||||
Basic and diluted net loss per share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Anti-dilutive employee stock-based awards, excluded |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Spain | |||||||||||||||||||||||
Ireland | |||||||||||||||||||||||
Other countries | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
As of | |||||||||||
July 2, 2023 | December 31, 2022 | ||||||||||
(In thousands) | |||||||||||
United States | $ | $ | |||||||||
Other countries | |||||||||||
Total | $ | $ |
As of and for the Three Months Ended | |||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | |||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||
Cumulative registered accounts | 7,860 | 18.4 | % | 6,640 | |||||||||||||
Cumulative paid accounts (1) | 2,289 | 54.9 | % | 1,478 | |||||||||||||
Annual recurring revenue | $ | 193,633 | 66.1 | % | $ | 116,601 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||||||||||||||
Products | $ | 64,749 | 56.3 | % | $ | 86,191 | 72.4 | % | $ | 131,809 | 58.3 | % | $ | 181,016 | 74.3 | % | |||||||||||||||||||||||||||||||
Services | 50,327 | 43.7 | % | 32,788 | 27.6 | % | 94,271 | 41.7 | % | 62,714 | 25.7 | % | |||||||||||||||||||||||||||||||||||
Total revenue | 115,076 | 100.0 | % | 118,979 | 100.0 | % | 226,080 | 100.0 | % | 243,730 | 100.0 | % | |||||||||||||||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||||||||||||||||||||||||||
Products | 60,446 | 52.5 | % | 73,829 | 62.0 | % | 124,487 | 55.1 | % | 154,606 | 63.4 | % | |||||||||||||||||||||||||||||||||||
Services | 12,772 | 11.1 | % | 11,410 | 9.6 | % | 24,518 | 10.8 | % | 21,809 | 8.9 | % | |||||||||||||||||||||||||||||||||||
Total cost of revenue | 73,218 | 63.6 | % | 85,239 | 71.6 | % | 149,005 | 65.9 | % | 176,415 | 72.4 | % | |||||||||||||||||||||||||||||||||||
Gross profit | 41,858 | 36.4 | % | 33,740 | 28.4 | % | 77,075 | 34.1 | % | 67,315 | 27.6 | % | |||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Research and development | 17,618 | 15.3 | % | 17,402 | 14.6 | % | 35,368 | 15.6 | % | 33,781 | 13.9 | % | |||||||||||||||||||||||||||||||||||
Sales and marketing | 16,921 | 14.7 | % | 14,506 | 12.2 | % | 32,274 | 14.3 | % | 27,674 | 11.4 | % | |||||||||||||||||||||||||||||||||||
General and administrative | 15,007 | 13.0 | % | 13,149 | 11.1 | % | 30,629 | 13.5 | % | 25,770 | 10.6 | % | |||||||||||||||||||||||||||||||||||
Others | 341 | 0.4 | % | 25 | — | % | 973 | 0.5 | % | 104 | — | % | |||||||||||||||||||||||||||||||||||
Total operating expenses | 49,887 | 43.4 | % | 45,082 | 37.9 | % | 99,244 | 43.9 | % | 87,329 | 35.8 | % | |||||||||||||||||||||||||||||||||||
Loss from operations | (8,029) | (7.0) | % | (11,342) | (9.5) | % | (22,169) | (9.8) | % | (20,014) | (8.2) | % | |||||||||||||||||||||||||||||||||||
Interest income, net | 835 | 0.8 | % | 129 | 0.1 | % | 1,561 | 0.7 | % | 124 | 0.1 | % | |||||||||||||||||||||||||||||||||||
Other income (expense), net | 52 | — | % | (116) | (0.1) | % | 13 | — | % | 295 | 0.1 | % | |||||||||||||||||||||||||||||||||||
Loss before income taxes | (7,142) | (6.2) | % | (11,329) | (9.5) | % | (20,595) | (9.1) | % | (19,595) | (8.0) | % | |||||||||||||||||||||||||||||||||||
Provision for income taxes | 221 | 0.2 | % | 228 | 0.2 | % | 1,013 | 0.5 | % | 441 | 0.2 | % | |||||||||||||||||||||||||||||||||||
Net loss | $ | (7,363) | (6.4) | % | $ | (11,557) | (9.7) | % | $ | (21,608) | (9.6) | % | $ | (20,036) | (8.2) | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | July 2, 2023 | % Change | July 3, 2022 | ||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||
Americas | $ | 78,136 | 29.5 | % | $ | 60,345 | $ | 134,768 | 4.6 | % | $ | 128,811 | |||||||||||||||||||||||
Percentage of revenue | 67.9 | % | 50.7 | % | 59.6 | % | 52.8 | % | |||||||||||||||||||||||||||
EMEA | 30,958 | (43.2) | % | 54,483 | 79,430 | (24.0) | % | 104,458 | |||||||||||||||||||||||||||
Percentage of revenue | 26.9 | % | 45.8 | % | 35.1 | % | 42.9 | % | |||||||||||||||||||||||||||
APAC | 5,982 | 44.1 | % | 4,151 | 11,882 | 13.6 | % | 10,461 | |||||||||||||||||||||||||||
Percentage of revenue | 5.2 | % | 3.5 | % | 5.3 | % | 4.3 | % | |||||||||||||||||||||||||||
Total revenue | $ | 115,076 | (3.3) | % | $ | 118,979 | $ | 226,080 | (7.2) | % | $ | 243,730 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | July 2, 2023 | % Change | July 3, 2022 | ||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||||||||||||||
Products | $ | 60,446 | (18.1) | % | $ | 73,829 | $ | 124,487 | (19.5) | % | $ | 154,606 | |||||||||||||||||||||||
Services | 12,772 | 11.9 | % | 11,410 | 24,518 | 12.4 | % | 21,809 | |||||||||||||||||||||||||||
Total cost of revenue | $ | 73,218 | (14.1) | % | $ | 85,239 | $ | 149,005 | (15.5) | % | $ | 176,415 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | July 2, 2023 | % Change | July 3, 2022 | ||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||
Gross profit: | |||||||||||||||||||||||||||||||||||
Products | $ | 4,303 | (65.2) | % | $ | 12,362 | $ | 7,322 | (72.3) | % | $ | 26,410 | |||||||||||||||||||||||
Services | 37,555 | 75.7 | % | 21,378 | 69,753 | 70.5 | % | 40,905 | |||||||||||||||||||||||||||
Total gross profit | $ | 41,858 | 24.1 | % | $ | 33,740 | $ | 77,075 | 14.5 | % | $ | 67,315 | |||||||||||||||||||||||
Gross margin percentage: | |||||||||||||||||||||||||||||||||||
Products | 6.6 | % | 14.3 | % | 5.6 | % | 14.6 | % | |||||||||||||||||||||||||||
Services | 74.6 | % | 65.2 | % | 74.0 | % | 65.2 | % | |||||||||||||||||||||||||||
Total gross margin | 36.4 | % | 28.4 | % | 34.1 | % | 27.6 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | July 2, 2023 | % Change | July 3, 2022 | ||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||
Research and development expense | $ | 17,618 | 1.2 | % | $ | 17,402 | $ | 35,368 | 4.7 | % | $ | 33,781 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | July 2, 2023 | % Change | July 3, 2022 | ||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||
Sales and marketing expense | $ | 16,921 | 16.6 | % | $ | 14,506 | $ | 32,274 | 16.6 | % | $ | 27,674 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | July 2, 2023 | % Change | July 3, 2022 | ||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||
General and administrative expense | $ | 15,007 | 14.1 | % | $ | 13,149 | $ | 30,629 | 18.9 | % | $ | 25,770 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | July 2, 2023 | % Change | July 3, 2022 | ||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||
Interest income, net | $ | 835 | ** | $ | 129 | 1,561 | ** | 124 | |||||||||||||||||||||||||||
Other income (expense), net | $ | 52 | ** | $ | (116) | 13 | (95.6) | % | 295 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
July 2, 2023 | % Change | July 3, 2022 | July 2, 2023 | % Change | July 3, 2022 | ||||||||||||||||||||||||||||||
(In thousands, except percentage data) | |||||||||||||||||||||||||||||||||||
Provision for income taxes | $ | 221 | (3.1) | % | $ | 228 | $ | 1,013 | 129.7 | % | $ | 441 | |||||||||||||||||||||||
Effective tax rate | (3.1) | % | (2.0) | % | (4.9) | % | (2.3) | % |
Six Months Ended | |||||||||||
July 2, 2023 | July 3, 2022 | ||||||||||
(In thousands) | |||||||||||
Net cash provided by (used in) operating activities | $ | 22,908 | $ | (29,381) | |||||||
Net cash used in investing activities | (33,150) | (50,429) | |||||||||
Net cash used in financing activities | (11,951) | (10,384) | |||||||||
Net cash decrease | $ | (22,193) | $ | (90,194) |
Type of Trading Arrangement | ||||||||||||||||||||||||||||||||||||||
Name and Position | Action | Date | Rule 10b5-1 (1) | Non-Rule 10b5-1 (2) | Total Shares to be Sold | Expiration Date | ||||||||||||||||||||||||||||||||
X | September 15, 2023 |
Incorporated by Reference | ||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | Date | Number | Filed Herewith | |||||||||||||||||||||||||||
8-K | 8/7/2018 | 3.1 | ||||||||||||||||||||||||||||||
8-K | 8/7/2018 | 3.2 | ||||||||||||||||||||||||||||||
S-1/A | 7/23/2018 | 4.1 | ||||||||||||||||||||||||||||||
X | ||||||||||||||||||||||||||||||||
X | ||||||||||||||||||||||||||||||||
32.1# | X | |||||||||||||||||||||||||||||||
32.2# | X | |||||||||||||||||||||||||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X | ||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X | ||||||||||||||||||||||||||||||
# | This certification is deemed to accompany this Quarterly Report on Form 10-Q and will not be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section. This certification will not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
ARLO TECHNOLOGIES, INC. | ||
Registrant | ||
/s/ MATTHEW MCRAE | ||
Matthew McRae | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
/s/ KURTIS BINDER | ||
Kurtis Binder | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
/s/ MATTHEW MCRAE | |||||
Matthew McRae | |||||
Chief Executive Officer | |||||
Arlo Technologies, Inc. |
/s/ KURTIS BINDER | |||||
Kurtis Binder | |||||
Chief Financial Officer | |||||
Arlo Technologies, Inc. |
By: | /s/ MATTHEW MCRAE | |||||||
Matthew McRae | ||||||||
Chief Executive Officer | ||||||||
Arlo Technologies, Inc. |
By: | /s/ KURTIS BINDER | |||||||
Kurtis Binder | ||||||||
Chief Financial Officer | ||||||||
Arlo Technologies, Inc. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, issued (in shares) | 93,653,934 | 88,887,139 |
Common stock, outstanding (in shares) | 93,653,934 | 88,887,139 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Total revenue | $ 115,076 | $ 118,979 | $ 226,080 | $ 243,730 |
Total cost of revenue | 73,218 | 85,239 | 149,005 | 176,415 |
Gross profit | 41,858 | 33,740 | 77,075 | 67,315 |
Operating expenses: | ||||
Research and development | 17,618 | 17,402 | 35,368 | 33,781 |
Sales and marketing | 16,921 | 14,506 | 32,274 | 27,674 |
General and administrative | 15,007 | 13,149 | 30,629 | 25,770 |
Others | 341 | 25 | 973 | 104 |
Total operating expenses | 49,887 | 45,082 | 99,244 | 87,329 |
Loss from operations | (8,029) | (11,342) | (22,169) | (20,014) |
Interest income, net | 835 | 129 | 1,561 | 124 |
Other income (expense), net | 52 | (116) | 13 | 295 |
Loss before income taxes | (7,142) | (11,329) | (20,595) | (19,595) |
Provision for income taxes | 221 | 228 | 1,013 | 441 |
Net loss | $ (7,363) | $ (11,557) | $ (21,608) | $ (20,036) |
Net loss per share: | ||||
Basic (in dollars per share) | $ (0.08) | $ (0.13) | $ (0.24) | $ (0.23) |
Diluted (in dollars per share) | $ (0.08) | $ (0.13) | $ (0.24) | $ (0.23) |
Weighted average shares used to compute net loss per share: | ||||
Basic (in shares) | 92,337 | 86,868 | 90,984 | 85,966 |
Diluted (in shares) | 92,337 | 86,868 | 90,984 | 85,966 |
Comprehensive loss: | ||||
Net loss | $ (7,363) | $ (11,557) | $ (21,608) | $ (20,036) |
Other comprehensive income (loss), net of tax | 131 | (122) | 259 | (168) |
Total comprehensive loss | (7,232) | (11,679) | (21,349) | (20,204) |
Products | ||||
Total revenue | 64,749 | 86,191 | 131,809 | 181,016 |
Total cost of revenue | 60,446 | 73,829 | 124,487 | 154,606 |
Services | ||||
Total revenue | 50,327 | 32,788 | 94,271 | 62,714 |
Total cost of revenue | $ 12,772 | $ 11,410 | $ 24,518 | $ 21,809 |
Description of Business and Basis of Presentation |
6 Months Ended |
---|---|
Jul. 02, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Description of Business Arlo Technologies, Inc. (“Arlo”) combines an intelligent cloud infrastructure and mobile app with a variety of smart connected devices that transform the way people experience the connected lifestyle. Our deep expertise in product design, wireless connectivity, cloud infrastructure and cutting-edge AI capabilities focuses on delivering a seamless, smart home experience for Arlo users that is easy to setup and interact with every day. Our cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. We conduct business across three geographic regions—(i) the Americas; (ii) Europe, Middle-East and Africa (“EMEA”); and (iii) Asia Pacific (“APAC”)—and primarily generate revenue by selling devices through retail channels, wholesale distribution, wireless carrier channels, security solution providers, and Arlo’s direct to consumer store and paid subscription services. Our corporate headquarters is located in Carlsbad, California, with other satellite offices across North America and various other global locations. Basis of Presentation We prepare our unaudited condensed consolidated financial statements 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”). The unaudited condensed consolidated financial statements include the accounts of Arlo and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. 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. Fiscal periods Our fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. We report the 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. Reclassification Certain prior periods amounts have been reclassified to conform to the current period’s presentation. None of these reclassifications had a material impact to the unaudited condensed consolidated financial statements. 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 six months ended July 2, 2023 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period.
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Significant Accounting Policies and Recent Accounting Pronouncements |
6 Months Ended |
---|---|
Jul. 02, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Recent Accounting Pronouncements | Significant Accounting Policies and Recent Accounting Pronouncements Our significant accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes to such policies during the six months ended July 2, 2023. Emerging Growth Company Status As an emerging growth company (“EGC”), we may, under the Jumpstart Our Business Startups Act, delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, unless we otherwise irrevocably elect not to avail ourselves of this exemption. We did not make such an irrevocable election and have not delayed the adoption of any applicable accounting standards. We will no longer qualify as an EGC on December 31, 2023. Accordingly, our Annual Report on Form 10-K for the year ending December 31, 2023 will include an attestation report of our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Accounting Pronouncements Recently Adopted There were no accounting pronouncements adopted during the six months ended July 2, 2023. Accounting Pronouncements Not Yet Effective We have considered all recent accounting pronouncements issued, but not yet effective, and do not expect any to have a material effect on our financial statements and related disclosures.
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and partially unsatisfied as of July 2, 2023:
The performance obligation classified as greater than one year pertains to revenue deferral from prepaid services. For the six months ended July 2, 2023 and July 3, 2022, $87.6 million and $53.4 million of revenue was deferred due to unsatisfied performance obligations, primarily relating to over time service revenue, and $81.4 million and $70.1 million of revenue was recognized for the satisfaction of performance obligations over time, respectively. Approximately $9.8 million and $11.9 million of this recognized revenue was included in the contract liability balance at the beginning of the periods. There were no significant changes in estimates during the period that would affect the contract balances. During the five-year period that commenced on January 1, 2020, Verisure Sàrl (“Verisure”) has an aggregate purchase commitment of $500.0 million. As of July 2, 2023, $403.1 million of the purchase commitment has been fulfilled. Based on the Supply Agreement with Verisure, a purchase obligation is not deemed to exist until we receive and accept Verisure’s purchase order. As of July 2, 2023, we had a backlog of $38.7 million which represents performance obligations that will be recognized as revenue once fulfilled, which is expected to occur over the next six months. Disaggregation of Revenue We disaggregate our revenue into three geographic regions: the Americas, EMEA, and APAC, where we conduct our business. The following table presents revenue disaggregated by geographic regions.
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Balance Sheet Components |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components | Balance Sheet Components Short-term investments
Accounts receivable, net
The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.
Property and equipment, net The components of property and equipment are as follows:
_________________________ (1) $1.4 million and $1.7 million property and equipment, net, was included in the sublease arrangement for the San Jose office building as of July 2, 2023 and December 31, 2022, respectively. Depreciation expense pertaining to property and equipment was $1.2 million and $2.4 million for the three and six months ended July 2, 2023, and $1.2 million and $2.5 million for the three and six months ended July 3, 2022. Goodwill We have determined that no event occurred or circumstances changed during the three and six months ended July 2, 2023 that would more likely than not reduce the fair value of goodwill below the carrying amount. No goodwill impairment was recognized in the three and six months ended July 2, 2023 and July 3, 2022. Other non-current assets
Accrued liabilities
Other non-current liabilities
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The following table summarizes assets measured at fair value on a recurring basis:
_________________________ (1)Included in short-term investments on our unaudited condensed consolidated balance sheets. Our 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. As of July 2, 2023 and December 31, 2022, assets and liabilities measured as Level 2 fair value were not material and there were no Level 3 fair value assets or liabilities measured on a recurring basis.
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Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring In November 2022, we initiated a restructuring plan to reduce our cost structure to better align the operational needs of the business to current economic conditions while continuing to support our long-term strategy. This restructuring includes the reduction of headcount as well as the abandonment of certain lease contracts and the cancellation of contractual services arrangements with certain suppliers. As of July 2, 2023, we have substantially incurred all costs pertaining to restructuring activities, with related cash outflows extending until the fourth quarter of 2024. The restructuring liabilities are included in accrued liabilities in our unaudited condensed consolidated balance sheets. Restructuring activities for the six months ended July 2, 2023 are as follows:
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Revolving Credit Facility |
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Line of Credit Facility [Abstract] | |
Revolving Credit Facility | Revolving Credit Facility On October 27, 2021, we entered into a Loan and Security Agreement (the “Credit Agreement”) with Bank of America, N.A., a national banking association, as lender (the “Lender”). The Credit Agreement provides for a three-year revolving credit facility (the “Credit Facility”) that matures on October 27, 2024. 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 the sum of (i) 90% of investment grade eligible receivables and (ii) 85% of non-investment grade eligible accounts, less applicable reserves established by the Lender. The Credit Agreement also includes a $5.0 million sublimit for the issuance by the Lender of letters of credit. In addition, the Credit Agreement includes an uncommitted accordion feature that allows us to request, from time to time, that the Lender increase the aggregate revolving loan commitments by up to an additional $25.0 million in the aggregate, subject to the satisfaction of certain conditions, including obtaining the Lender’s agreement to participate in each increase. The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes. Based on certain terms and conditions including eligible accounts receivable as of July 2, 2023, we had unused borrowing capacity of $13.8 million. Our obligations under the Credit Agreement are secured by substantially all of our domestic working capital assets, including accounts receivable, cash and cash equivalents, inventory, and other assets to the extent related to such working capital assets. At our option, borrowings under the Credit Agreement will bear interest at a floating rate equal to: (i) the Bloomberg Short-Term Bank Yield Index rate plus the applicable rate of 2.0% to 2.5% determined based on our average daily availability for the prior fiscal quarter, or (ii) the base rate plus the applicable rate of 1.0% to 1.5% based on our average daily availability for the prior fiscal quarter. Among other fees, we are required to pay a monthly unused fee of 0.2% per annum on the amount by which the Lender’s aggregate commitment under the Credit Facility exceeds the average daily revolver usage during such month. The Credit Agreement contains events of default, representations and warranties, and affirmative and negative covenants customary for credit facilities of this type. The Credit Agreement also contains financial covenants that require us to (a) until we achieve a fixed charge coverage ratio of at least 1.00 to 1.00 for two consecutive quarters, maintain minimum liquidity of not less than $20.0 million at all times and (b) thereafter, if the Financial Covenant Trigger Period (as defined in the Credit Agreement) is in effect, maintain a fixed charge coverage ratio, tested quarterly on a trailing twelve month basis, of at least 1.00 to 1.00 at any time. As of July 2, 2023, we were in compliance with all the covenants of the Credit Agreement. 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 we file a bankruptcy petition, a bankruptcy petition is filed against us and is not dismissed or stayed within thirty days or we make 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. No amounts had been drawn under the Credit Facility as of July 2, 2023.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Leases Our operating lease obligations mostly include offices, equipment, data centers and distribution centers, with various expiration dates through June 2029. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into our determination of lease payments. The terms of certain leases provide for rental payments on a graduated scale. Gross lease expense was $1.5 million and $3.0 million for the three and six months ended July 2, 2023, respectively, and $1.8 million and $3.6 million for the three and six months ended July 3, 2022, respectively. We recorded sublease income as reduction of lease expense, in the amount of $0.5 million and $1.0 million for the three and six months ended July 2, 2023 and July 3, 2022. Supplemental cash flow information related to operating leases was as follows:
Weighted average remaining lease term and weighted average discount rate related to operating leases were as follows:
The future minimum undiscounted lease payments under operating leases and future non-cancelable rent payments from our subtenants for each of the next five years and thereafter as of July 2, 2023 were as follows:
Letters of Credit In connection with the lease agreement for our office space located in San Jose, California, we executed a letter of credit with the landlord as the beneficiary. As of July 2, 2023, we 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 We have 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 July 2, 2023, we had approximately $50.1 million in non-cancelable purchase commitments with suppliers. As of July 2, 2023, an additional $24.9 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements. Consequently, we may incur expenses for the materials and components, such as chipsets already purchased by the supplier to fulfill our orders if the purchase order is cancelled. Expenses incurred have historically not been significant relative to the original order value. As of July 2, 2023, the loss liability from committed purchases was not material. Warranty Obligations Changes in warranty obligations, which are included in accrued liabilities in the unaudited condensed consolidated balance sheets, were as follows:
Litigation and Other Legal Matters We are involved in disputes, litigation, and other legal actions, including, but not limited to, the matters described below. In all cases, at each reporting period, we evaluate 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, we accrue for the amount or, if a range, we accrue 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 general and administrative expenses. We monitor developments in these legal matters that could affect the estimate we had previously accrued. In relation to such matters, we currently believe that there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position within the next 12 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 us may cause us to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require us to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, our 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 our estimates, which could result in the need to adjust the liability and record additional expenses. Securities Class Action Lawsuits and Derivative Suit On December 11, 2018, purported stockholders of Arlo filed six putative securities class action complaints in the Superior Court of California, County of Santa Clara (the “State Action”), and one complaint in the U.S. District Court for the Northern District of California (the “Federal Action”) against us and certain of our executives and directors. The plaintiffs in the State Action allege that we failed to adequately disclose quality control problems and adverse sales trends ahead of our initial public offering (the “IPO”), violating the Securities Act of 1933, as amended (the “Securities Act”). The complaint seeks unspecified monetary damages and other relief on behalf of investors who purchased Company common stock issued pursuant and/or traceable to the IPO. In the Federal Action, the court appointed a shareholder named Matis Nayman as lead plaintiff. Lead plaintiff alleged violations of the Securities Act and the Securities Exchange Act of 1934, as amended, based on alleged materially false and misleading statements about our sales trends and products. In the amended complaint, lead plaintiff sought to represent a class of persons who purchased or otherwise acquired our common stock (i) during the period between August 3, 2018 through December 3, 2018 and/or (ii) pursuant to or traceable to the IPO. Lead plaintiff sought class certification, an award of unspecified damages, an award of costs and expenses, including attorneys’ fees, and other further relief as the court may deem just and proper. On August 6, 2019, defendants filed a motion to dismiss. The federal court granted that motion, and lead plaintiff filed an amended complaint. On June 12, 2020, lead plaintiff filed an unopposed motion for preliminary approval of a class action settlement for $1.25 million, which was also the amount that we had accrued for loss contingency. In October 2020, we made a $1.25 million payment to an escrow account administered by the court and plaintiff’s counsel (the “Settlement Fund”). The Settlement Fund was deemed to be in the custody of the court and remained subject to the jurisdiction of the court until such time as the Settlement Fund was distributed pursuant to the settlement agreement and/or further order of the court. On February 5, 2021, lead plaintiff filed a motion for final approval of the settlement. In advance of the final approval hearing, three of the named plaintiffs in the State Action requested exclusion from the settlement. The court held a final approval hearing on March 11, 2021, and, on March 25, 2021, entered an order and final judgment approving the settlement and, among other things, dismissed with prejudice all claims of lead plaintiff and the Settlement Class (as defined in the settlement agreement). The Federal Action is now closed. In the State Action, on May 5, 2021, the court held a status conference and instructed plaintiffs Perros, Patel, and Pham (“Plaintiffs”), who were the only Arlo stockholders to opt out of the federal settlement, to file an amended complaint by June 4, 2021. Plaintiffs filed their amended complaint, asserting their individual Securities Act claims, but also purporting to represent a new class of Arlo stockholders who purchased Arlo shares between December 3, 2018 and February 22, 2019. On June 21, 2021, the Arlo defendants filed a motion to dismiss the State Action (for forum non conveniens) based on the federal forum provision in Arlo’s certificate of incorporation. Plaintiffs opposed on July 28, 2021, and the Arlo defendants replied on August 13, 2021. On September 9, 2021, the court issued an order granting the Arlo defendants’ forum non conveniens motion, and on September 17, 2021, the court issued a final judgment dismissing the State Action in its entirety. On November 16, 2021, Plaintiffs filed a Notice of Appeal. The appeal occurred before the California Court of Appeal, Sixth Appellate District. Plaintiffs-Appellants filed their opening brief on May 20, 2022. Defendants-Respondents filed their responding brief on August 18, 2022, and Plaintiffs-Appellants filed their reply brief on September 7, 2022. On April 13, 2023, the court heard oral argument on the appeal and the case was submitted. On May 5, 2023, the Court of Appeal affirmed by written order the trial court’s dismissal of the State Action based on the federal forum provision in Arlo’s certificate of incorporation and awarded costs to Arlo. On June 14, 2023, Plaintiffs filed a petition for review in the Supreme Court of California. Defendants-Respondents filed their answer to the petition for review on July 5, 2023, and Plaintiffs filed their reply in support of the petition for review on July 17, 2023. On July 19, 2023, the Supreme Court of California denied Plaintiffs’ petition for review and closed the case. Indemnifications In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, distributors, resellers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising from breach of such agreements or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with members of our board of directors and certain of our executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments we could be required to make under these indemnification agreements is, in many cases, unlimited. As of July 2, 2023 and December 31, 2022, we have not incurred any material costs as a result of such indemnifications and we are not currently aware of any indemnification claims.
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Employee Benefit Plans |
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Employee Benefit and Share-Based Payment Arrangement, Noncash Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit PlansWe grant options and restricted stock units (“RSUs”) under the 2018 Equity Incentive Plan (the “2018 Plan”), under which awards may be granted to all employees. We also grant performance-based and market-based restricted stock units (“PSUs”) to our executive officers periodically. Award vesting periods for the 2018 Plan are generally On January 20, 2023, we registered an aggregate of up to 4,444,072 shares of common stock on a Registration Statement on Form S-8, including 3,555,258 shares issuable pursuant to the 2018 Plan that were automatically added to the shares authorized for issuance under the 2018 Plan and 888,814 shares issuable pursuant to the Employee Stock Purchase Plan (“ESPP”) that were automatically added to the shares authorized for issuance on January 1, 2023, both pursuant to an “evergreen” provision contained in the respective plans. The following table sets forth the available shares for grants as of July 2, 2023:
Employee Stock Purchase Plan We sponsor the ESPP to eligible employees. As of July 2, 2023, 2.0 million shares were available for issuance under the ESPP. Option Activity Stock option activity during the six months ended July 2, 2023 was as follows:
RSU Activity RSU activity, excluding PSU activity, during the six months ended July 2, 2023 was as follows:
PSU Activity Our executive officers and other senior employees have been granted performance-based awards with vesting occurring at the end of a or five-year period if performance conditions or market conditions are met. The number of units earned and eligible to vest are determined based on the achievement of various performance conditions or market conditions, including the cumulative paid accounts targets, stock price, cash balances at reporting period, and the recipients’ continued services. At the end of each reporting period, we evaluate the probability of achieving the performance or market conditions and record the related stock-based compensation expense based on the achievement over the service period. PSU activity during the six months ended July 2, 2023 was as follows:
Stock-Based Compensation Expense The following table sets forth the stock-based compensation expense included in our unaudited condensed consolidated statements of comprehensive loss:
As of July 2, 2023, there was no unrecognized compensation cost related to stock options. Approximately $71.2 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 2.2 years as of July 2, 2023.
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to four years. As of July 2, 2023, approximately 4.0 million shares were available for future grants. 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.
Income Taxes |
6 Months Ended |
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Jul. 02, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe provision for income taxes for the three and six months ended July 2, 2023 was $0.2 million and $1.0 million, or an effective tax rate of (3.1)% and (4.9)%. The provision for income taxes for the three and six months ended July 3, 2022 was $0.2 million and $0.4 million, or an effective tax rate of (2.0)% and (2.3)%. During the three and six months ended July 2, 2023 and July 3, 2022, we sustained U.S. book losses. Consistent with the prior year periods, we maintained a valuation allowance against our U.S. federal and state deferred tax assets and did not record a tax benefit on these deferred tax assets since it is more likely than not that these deferred tax assets will not be realized. Provision for income taxes decreased slightly for the three months ended July 2, 2023, compared to the prior year period and increased for the six months ended July 2, 2023, compared to the prior year period, primarily due to the higher U.S. earnings and also the application of Section 174 of the Internal Revenue Code requiring capitalization of research and experimental expenses, which increase was recognized mostly in the first quarter of 2023. |
Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share
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Segment and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Geographic Information | Segment and Geographic Information Segment Information We operate as one operating and reportable segment. Our Chief Executive Officer (“CEO”) is identified as the Chief Operating Decision Maker (“CODM”), who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Geographic Information for Revenue Revenue consists of gross product shipments and service revenue, less allowances for estimated sales returns, price protection, end-user customer rebates, net changes in deferred revenue, and other channel sales incentives deemed to be a reduction of revenue per the authoritative guidance. Sales and usage-based taxes are excluded from revenue. 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 presents revenue by geographic area. For comparative purposes, amounts in prior periods have been recast.
Geographic Information for Long-Lived Assets Long-lived assets include property and equipment, net and operating lease right-of-use assets, net. Our long-lived assets are based on the physical location of the assets. The following table presents long-lived assets by geographic area.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
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Pay vs Performance Disclosure | ||||
Net loss | $ (7,363) | $ (11,557) | $ (21,608) | $ (20,036) |
Insider Trading Arrangements |
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Jul. 02, 2023
shares
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Jul. 02, 2023
shares
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Trading Arrangements, by Individual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Rule 10b5-1 Arrangement Adopted | false | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rule 10b5-1 Arrangement Terminated | false | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Rule 10b5-1 Arrangement Terminated | false | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew McRae [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading Arrangements, by Individual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Material Terms of Trading Arrangement | During the quarter ended July 2, 2023, our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated the contracts, instructions or written plans for the purchase or sale of Arlo's securities set forth in the table below:
_________________________ (1)Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. (2)“Non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K under the Exchange Act. (3)Adopted for personal tax planning purposes.
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Name | Matthew McRae | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Title | Chief Executive Officer | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rule 10b5-1 Arrangement Adopted | true | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adoption Date | May 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Arrangement Duration | 107 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate Available | 577,014 | 577,014 |
Significant Accounting Policies and Recent Accounting Pronouncements (Policies) |
6 Months Ended |
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Jul. 02, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation We prepare our unaudited condensed consolidated financial statements 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”). The unaudited condensed consolidated financial statements include the accounts of Arlo and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
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Fiscal Periods | Fiscal periods Our fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. We report the 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.
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Reclassification | Reclassification Certain prior periods amounts have been reclassified to conform to the current period’s presentation. None of these reclassifications had a material impact to the unaudited condensed consolidated financial statements.
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Use of Estimates | 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 six months ended July 2, 2023 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period. |
Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted There were no accounting pronouncements adopted during the six months ended July 2, 2023. Accounting Pronouncements Not Yet Effective We have considered all recent accounting pronouncements issued, but not yet effective, and do not expect any to have a material effect on our financial statements and related disclosures.
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Fair Value Measurements | Our 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. |
Revenue (Tables) |
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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 and partially unsatisfied as of July 2, 2023:
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Schedule of Disaggregation of Revenue | We disaggregate our revenue into three geographic regions: the Americas, EMEA, and APAC, where we conduct our business. The following table presents revenue disaggregated by geographic regions.
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Balance Sheet Components (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-Sale Short-Term Investments | Short-term investments
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Schedule of Accounts Receivable, Net | Accounts receivable, net
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Schedule of Allowance for Credit Losses, Accounts Receivable | The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.
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Schedule of Property and Equipment, Net | The components of property and equipment are as follows:
_________________________ (1) $1.4 million and $1.7 million property and equipment, net, was included in the sublease arrangement for the San Jose office building as of July 2, 2023 and December 31, 2022, respectively.
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Schedule of Other Non-Current Assets | Other non-current assets
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Schedule of Accrued Liabilities | Accrued liabilities
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Schedule of Other Non-Current Liabilities | Other non-current liabilities
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets Measured on Recurring Basis | The following table summarizes assets measured at fair value on a recurring basis:
_________________________ (1)Included in short-term investments on our unaudited condensed consolidated balance sheets.
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Restructuring (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Restructuring and Other Charges Activity | The restructuring liabilities are included in accrued liabilities in our unaudited condensed consolidated balance sheets. Restructuring activities for the six months ended July 2, 2023 are as follows:
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease Supplemental Cash Flow and Balance Sheets Information | Supplemental cash flow information related to operating leases was as follows:
Weighted average remaining lease term and weighted average discount rate related to operating leases were as follows:
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Schedule of Operating Lease Maturity | The future minimum undiscounted lease payments under operating leases and future non-cancelable rent payments from our subtenants for each of the next five years and thereafter as of July 2, 2023 were as follows:
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Schedule of Changes in Warranty Obligation | Changes in warranty obligations, which are included in accrued liabilities in the unaudited condensed consolidated balance sheets, were as follows:
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Employee Benefit Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 grants as of July 2, 2023:
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Schedule of Stock Option Activity | Stock option activity during the six months ended July 2, 2023 was as follows:
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Schedule of RSU Activity | RSU activity, excluding PSU activity, during the six months ended July 2, 2023 was as follows:
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Schedule of PSU Activity | PSU activity during the six months ended July 2, 2023 was as follows:
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Schedule of Stock-Based Compensation Expense | The following table sets forth the stock-based compensation expense included in our unaudited condensed consolidated statements of comprehensive loss:
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Net Loss Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Loss Per Share |
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Segment and Geographic Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Revenue by Geography | The following table presents revenue by geographic area. For comparative purposes, amounts in prior periods have been recast.
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Schedule of Long-Lived Asset by Geographic Areas | The following table presents long-lived assets by geographic area.
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Description of Business and Basis of Presentation - Narrative (Details) |
6 Months Ended |
---|---|
Jul. 02, 2023
region
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of geographic regions in which the company conducts business | 3 |
Revenue - Narrative (Details) $ in Millions |
6 Months Ended | 42 Months Ended | ||
---|---|---|---|---|
Jan. 01, 2020
USD ($)
|
Jul. 02, 2023
USD ($)
region
|
Jul. 03, 2022
USD ($)
|
Jul. 02, 2023
USD ($)
|
|
Disaggregation of Revenue [Line Items] | ||||
Revenue deferred due to unsatisfied performance obligations | $ 87.6 | $ 53.4 | ||
Revenue recognized | 81.4 | 70.1 | ||
Revenue recognized for satisfaction of performance obligations in contract liability balance at start of period | $ 9.8 | $ 11.9 | ||
Number of geographic regions in which the company conducts business | region | 3 | |||
Verisure S.a.r.l | Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Purchase obligation term | 5 years | |||
Unrecorded unconditional purchase obligation | $ 500.0 | $ 38.7 | $ 38.7 | |
Purchase commitment fulfilled | $ 403.1 |
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 115,076 | $ 118,979 | $ 226,080 | $ 243,730 |
Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 78,136 | 60,345 | 134,768 | 128,811 |
EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 30,958 | 54,483 | 79,430 | 104,458 |
APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 5,982 | $ 4,151 | $ 11,882 | $ 10,461 |
Balance Sheet Components - Schedule of Available-for-Sale Short-Term Investments (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jul. 02, 2023 |
Dec. 31, 2022 |
|
Debt Securities, Available-For-Sale [Line Items] | ||
Estimated Fair Value | $ 61,724 | $ 29,700 |
U.S. Treasuries | ||
Debt Securities, Available-For-Sale [Line Items] | ||
Amortized Cost | 61,572 | 29,849 |
Unrealized Gains | 176 | 0 |
Unrealized Losses | (24) | (149) |
Estimated Fair Value | $ 61,724 | $ 29,700 |
Balance Sheet Components - Schedule of Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
Jul. 02, 2023 |
Apr. 02, 2023 |
Dec. 31, 2022 |
Jul. 03, 2022 |
Apr. 03, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||||||
Gross accounts receivable | $ 57,649 | $ 66,383 | ||||
Allowance for credit losses | (322) | $ (329) | (423) | $ (405) | $ (339) | $ (337) |
Total | $ 57,327 | $ 65,960 |
Balance Sheet Components - Schedule of Allowance For Credit Losses, Accounts Receivable (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Balance at the beginning of the period | $ 329 | $ 339 | $ 423 | $ 337 |
Provision for (release of) expected credit losses | (7) | 66 | (101) | 68 |
Balance at the end of the period | $ 322 | $ 405 | $ 322 | $ 405 |
Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 40,669 | $ 39,505 |
Accumulated depreciation | (34,248) | (32,169) |
Total property and equipment, net | 6,421 | 7,336 |
Property, plant, and equipment, lessor asset under operating lease, net | 1,400 | 1,700 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 13,791 | 12,696 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 15,818 | 15,606 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 3,853 | 3,992 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 4,661 | 4,657 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 2,546 | $ 2,554 |
Balance Sheet Components - Property and Equipment, Other Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Balance Sheet Related Disclosures [Abstract] | ||||
Depreciation expense | $ 1.2 | $ 1.2 | $ 2.4 | $ 2.5 |
Balance Sheet Components - Goodwill Impairment Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jul. 02, 2023 |
Jul. 02, 2023 |
|
Balance Sheet Related Disclosures [Abstract] | ||
Goodwill impairment | $ 0 | $ 0 |
Balance Sheet Components - Schedule of Other Non-Current Assets (Details) - USD ($) $ in Thousands |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Deferred income taxes | $ 1,141 | $ 1,384 |
Sublease initial direct cost and adjustments | 896 | 777 |
Other | 1,652 | 1,920 |
Total | $ 3,689 | $ 4,081 |
Balance Sheet Components - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Sales incentives | $ 31,281 | $ 36,271 |
Sales returns | 14,757 | 18,656 |
Compensation | 16,155 | 15,556 |
Cloud and other costs | $ 7,657 | $ 11,154 |
Operating lease, liability statement of financial position | Total accrued liabilities | Total accrued liabilities |
Operating lease liabilities | $ 3,818 | $ 4,190 |
Professional services | 2,496 | 3,703 |
Warranty obligations | 1,093 | 1,174 |
Freight cost | 1,921 | 1,050 |
Service cost | 1,084 | 806 |
Restructuring charges | 628 | 1,265 |
Other | 7,327 | 5,030 |
Total accrued liabilities | $ 88,217 | $ 98,855 |
Balance Sheet Components - Schedule of Other Non-Current Liabilities (Details) - USD ($) $ in Thousands |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Receivables [Abstract] | ||
Non-current service cost | $ 1,202 | $ 1,259 |
Non-current compensation | 872 | 616 |
Non-current deferred revenue | 63 | 212 |
Non-current income taxes payable | 77 | 77 |
Other | 833 | 785 |
Total | $ 3,047 | $ 2,949 |
Fair Value Measurements - Schedule of Valuation of Company's Financial Instruments by Various Levels (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Available-for-sale securities: U.S. treasuries | $ 61,724 | $ 29,700 |
Total | 64,083 | 62,588 |
Money Market Funds | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Cash equivalents | 1,888 | 12,614 |
U.S. Treasuries | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Cash equivalents | $ 471 | $ 20,274 |
Fair Value Measurements - Narrative (Details) - Fair Value, Measurements, Recurring - USD ($) |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Assets measured at fair value | $ 64,083,000 | $ 62,588,000 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Assets measured at fair value | $ 0 | $ 0 |
Commitments and Contingencies - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 3,799 | $ 3,618 |
Right-of-use assets obtained in exchange for lease liabilities | ||
Operating leases | $ 0 | $ 2,670 |
Commitments and Contingencies - Schedule of Weighted Averages Related to Operating Leases (Details) |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Weighted average remaining lease term | 5 years 6 months | 5 years 1 month 6 days |
Weighted average discount rate | 5.69% | 5.69% |
Commitments and Contingencies - Schedule of Operating Lease Maturity (Details) - USD ($) $ in Thousands |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Operating Lease Payments | ||
2023 (Remaining six months) | $ 1,988 | |
2024 | 5,398 | |
2025 | 3,904 | |
2026 | 4,011 | |
2027 | 3,986 | |
Thereafter | 5,130 | |
Total future lease payments | 24,417 | |
Less: interest | (3,458) | |
Present value of future minimum lease payments | 20,959 | |
Accrued liabilities | 3,818 | $ 4,190 |
Non-current operating lease liabilities | 17,141 | $ 19,279 |
Sublease Payments | ||
2023 (Remaining six months) | (1,034) | |
2024 | (1,947) | |
2025 | (2,006) | |
2026 | (2,066) | |
2027 | (2,322) | |
Thereafter | (3,620) | |
Total future lease payments | (12,995) | |
Net | ||
2023 (Remaining six months) | 954 | |
2024 | 3,451 | |
2025 | 1,898 | |
2026 | 1,945 | |
2027 | 1,664 | |
Thereafter | 1,510 | |
Total future lease payments | $ 11,422 |
Commitments and Contingencies - Schedule of Changes in Warranty Obligation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at the beginning of the period | $ 1,119 | $ 1,330 | $ 1,174 | $ 1,330 |
Provision for warranty obligations | 40 | 34 | 55 | 113 |
Settlements | (66) | (79) | (136) | (158) |
Balance at the end of the period | $ 1,093 | $ 1,285 | $ 1,093 | $ 1,285 |
Employee Benefit Plans - Schedule of Available Shares for Future Grants (Details) - 2018 Plan shares in Thousands |
6 Months Ended |
---|---|
Jul. 02, 2023
shares
| |
Number of Shares | |
Beginning balance (in shares) | 4,213 |
Additional authorized shares (in shares) | 3,555 |
Granted (in shares) | (7,023) |
Forfeited/cancelled (in shares) | 377 |
Shares traded for taxes (in shares) | 2,834 |
Ending balance (in shares) | 3,956 |
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 | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | $ 12,973 | $ 12,245 | $ 27,564 | $ 21,834 |
Cost of revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | 967 | 1,335 | 1,828 | 2,245 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | 3,311 | 3,621 | 7,222 | 5,923 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | 1,670 | 1,790 | 3,392 | 3,170 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total | $ 7,025 | $ 5,499 | $ 15,122 | $ 10,496 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 221 | $ 228 | $ 1,013 | $ 441 |
Effective tax rate | (3.10%) | (2.00%) | (4.90%) | (2.30%) |
Net Loss Per Share - Schedule of Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Numerator: | ||||
Net loss | $ (7,363) | $ (11,557) | $ (21,608) | $ (20,036) |
Denominator: | ||||
Weighted average common shares - basic (in shares) | 92,337 | 86,868 | 90,984 | 85,966 |
Weighted average common shares - dilutive (in shares) | 92,337 | 86,868 | 90,984 | 85,966 |
Basic net loss per share (in dollars per share) | $ (0.08) | $ (0.13) | $ (0.24) | $ (0.23) |
Diluted net loss per share (in dollars per share) | $ (0.08) | $ (0.13) | $ (0.24) | $ (0.23) |
Anti-dilutive employee stock-based awards, excluded (in shares) | 1,370 | 4,812 | 3,238 | 1,476 |
Segment and Geographic Information - Narrative (Details) |
6 Months Ended |
---|---|
Jul. 02, 2023
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Number of operating segments | 1 |
Segment and Geographic Information - Schedule of Net Revenue by Geographic Areas (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2023 |
Jul. 03, 2022 |
Jul. 02, 2023 |
Jul. 03, 2022 |
|
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 115,076 | $ 118,979 | $ 226,080 | $ 243,730 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 78,186 | 59,997 | 134,029 | 125,234 |
Spain | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 19,549 | 40,141 | 58,120 | 64,709 |
Ireland | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 4,106 | 10,664 | 8,986 | 32,751 |
Other countries | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 13,235 | $ 8,177 | $ 24,945 | $ 21,036 |
Segment and Geographic Information - Schedule of Long-Lived Asset by Geographic Areas (Details) - USD ($) $ in Thousands |
Jul. 02, 2023 |
Dec. 31, 2022 |
---|---|---|
Long-Lived Assets [Line Items] | ||
Total | $ 17,510 | $ 20,145 |
United States | ||
Long-Lived Assets [Line Items] | ||
Total | 14,961 | 17,762 |
Other countries | ||
Long-Lived Assets [Line Items] | ||
Total | $ 2,549 | $ 2,383 |
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