Arlo Technologies, Inc. (ARLO) 2024年10-K年度報告「NYSE」.pdf

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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended December 31,2024 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934.For the

2、transition period from_to_ Commission file number:001-38618_ARLO TECHNOLOGIES,INC.(Exact name of registrant as specified in its charter)Delaware38-4061754(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification Number)5770 Fleet StreetCarlsbad,California92008(Addr

3、ess of principal executive offices)(Zip Code)Registrants telephone number including area code(408)890-3900Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which registeredCommon Stock,par value$0.001 per shareARLONew York Stock E

4、xchangeSecurities registered pursuant to 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of

5、 the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subje

6、ct to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter

7、 period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growthcompany.See the definitions of“large accelerated filer,”“acce

8、lerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not

9、 to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of i

10、ts internal control over financialreporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial st

11、atements of the registrant included in the filing reflect thecorrection of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of theregistr

12、ants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act.)Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Regist

13、rant as of June 30,2024 was$1,262 million.Such aggregatemarket value was computed by reference to the closing price of the common stock as reported on the New York Stock Exchange on June 28,2024(the last business day of theRegistrants most recently completed fiscal second quarter).Shares of the regi

14、strants common stock held by each executive officer and director and certain entities that own15%or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates.The determination of affiliate status is not necessarily aconclusive determination for other

15、 purposes.The number of outstanding shares of the registrants Common Stock,$0.001 par value,was 102,437,935 shares as of February 25,2025.2025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm1/115DOCUMENTS INCORPORATED BY REFERENCEPortions of

16、 the registrants definitive proxy statement for its 2025 annual meeting of stockholders,which will be filed within 120 days of the registrants fiscal year end,are incorporated by reference into Part III of this Annual Report on Form 10-K.2025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/

17、data/1736946/000173694625000014/arlo-20241231.htm2/115Table of ContentsArlo Technologies,Inc.Form 10-KFor the Fiscal Year Ended December 31,2024TABLE OF CONTENTSPageNote About Forward-Looking Statements3PART IItem 1.Business5Item 1A.Risk Factors16Item 1B.Unresolved Staff Comments55Item 1C.Cybersecur

18、ity55Item 2.Properties57Item 3.Legal Proceedings57Item 4.Mine Safety Disclosures57PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities58Item 6.Reserved59Item 7.Managements Discussion and Analysis of Financial Condition and Results o

19、f Operations60Item 7A.Quantitative and Qualitative Disclosures About Market Risk71Item 8.Financial Statements and Supplementary Data72Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure106Item 9A.Controls and Procedures106Item 9B.Other Information108Item 9C.Di

20、sclosure Regarding Foreign Jurisdictions that Prevent Inspections108PART IIIItem 10.Directors,Executive Officers and Corporate Governance109Item 11.Executive Compensation109Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters109Item 13.Certain Relati

21、onships and Related Transactions,and Director Independence109Item 14.Principal Accountant Fees and Services109PART IVItem 15.Exhibit and Financial Statement Schedules110Item 16.Form 10-K Summary112Signatures11322025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/00017369462500

22、0014/arlo-20241231.htm3/115Table of ContentsNote About Forward-Looking StatementsThis Annual Report on Form 10-K(“Form 10-K”),including the Managements Discussion and Analysis of Financial Conditionand Results of Operations in Part II,Item 7 below,includes forward-looking statements within the meani

23、ng of Section 27A of the SecuritiesAct of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,as amended(the“Exchange Act”).All statements otherthan statements of historical facts contained in this Form 10-K,including statements regarding our future financial position,businessstra

24、tegy and plans and objectives of management for future operations,are forward-looking statements.The words“believe,”“may,”“will,”“estimate,”“continue,”“anticipate,”“intend,”“should,”“plan,”“expect”and similar expressions,as they relate to us,areintended to identify forward-looking statements.We have

25、 based these forward-looking statements largely on our current expectations andprojections about future events and financial trends that we believe may affect our financial condition,results of operations,businessstrategy and financial needs.These forward-looking statements are subject to a number o

26、f risks,uncertainties and assumptions described in“Risk Factors”in Part I,Item 1A below,and elsewhere in this Annual Report on Form 10-K,including,among other things:future demandfor our products may be lower than anticipated;consumers may choose not to adopt our new product offerings or adopt compe

27、tingproducts;the actual price,performance and ease of use of our products may not meet the price,performance and ease of use requirementsof consumers;our dependence on certain significant customers;our reliance on a limited number of third-party suppliers andmanufacturers;new cyber threats may chall

28、enge the effectiveness or threaten the security of our products;the collaboration with Verisuremay not continue to be successful;we may overestimate our ability to maintain,protect,and enhance our intellectual property;our efforts toretain key personnel and to attract,retain and motivate qualified p

29、ersonnel with technical,operational and leadership expertise may not besuccessful;health epidemics and other outbreaks could significantly disrupt our operations;and our business strategies and developmentplans may not be successful.In light of these risks,uncertainties and assumptions,the forward-l

30、ooking events and circumstances discussedin this Annual Report on Form 10-K may not occur and actual results could differ materially from those anticipated or implied in theforward-looking statements.All forward-looking statements in this Annual Report on Form 10-K are based on information available

31、 to us asof the date hereof,such information may be limited or incomplete,and we assume no obligation to update any such forward-lookingstatements.These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.The followingdiscussion should be read in

32、conjunction with our consolidated financial statements and the accompanying notes contained in this AnnualReport on Form 10-K.Summary of Risk FactorsBelow is a summary of the principal factors that make an investment in our common stock speculative or risky.This summary doesnot address all of the ri

33、sks that we face.The risks are discussed more fully below and included,but are not limited to,risks related to:We obtain several key components from limited or sole source suppliers,and if these suppliers fail to satisfy our supplyrequirements or we are unable to properly manage our supply requireme

34、nts with our third-party manufacturers,we may lose salesand experience increased component costs.We depend on a limited number of third-party manufacturers for substantially all of our manufacturing needs.If these third-partymanufacturers experience any delay,disruption,or quality control problems i

35、n their operations,we could lose or fail to grow ourmarket share and our brand may suffer.If disruptions in our transportation network occur or our shipping costs substantially increase,we may be unable to sell or timelydeliver our products,and our operating expenses could increase.If we lose the se

36、rvices of key personnel,we may not be able to execute our business strategy effectively.We expect our results of operations to fluctuate on a quarterly and annual basis,which could cause our stock price to decline.32025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/0001736946

37、25000014/arlo-20241231.htm4/115Table of ContentsIf we fail to continue to introduce or acquire new products or services that achieve broad market acceptance on a timely basis,or ifour products or services are not adopted as expected,we will not be able to compete effectively and we will be unable to

38、 increase ormaintain revenue and gross margin.We may need additional financing to meet our future long-term capital requirements and may be unable to raise sufficient capital onfavorable terms or at all.Some of our competitors have substantially greater resources than we do,and to be competitive we

39、may be required to lower ourprices or increase our sales and marketing expenses,which could result in reduced margins and loss of market share.We entered into an asset purchase agreement(the“Asset Purchase Agreement”)and supply agreement(the“Supply Agreement”)with Verisure Srl(“Verisure”)that gives

40、Verisure exclusive marketing and distribution rights for our products in Europe as well asthe ability to sell our products through their direct channel globally.We cannot provide assurance that the arrangement withVerisure will continue to be a successful collaboration.We are dependent on informatio

41、n technology systems,infrastructure and data.If our information technology systems or data,orthose of third parties upon which we rely,are or were compromised,we could experience adverse consequences resulting from suchcompromise,including but not limited to regulatory investigations or actions;liti

42、gation;fines and penalties;disruptions of ourbusiness operations;reputational harm;loss of customers or sales;reduced revenue or profits;increased expenses;significantdecline in our stock price;and other adverse consequences.Our future success depends on our ability to increase sales of our paid sub

43、scription services.Interruptions with the cloud-based systems that we use in our operations provided by an affiliate of A,Inc.(“Amazon”),which is also one of our primary competitors,may materially and adversely affect our business,results of operations,and financialcondition.Our current and future p

44、roducts may experience quality problems,including defects or errors,from time to time that can result inadverse publicity,product recalls,litigation,regulatory proceedings,and warranty claims and could lead to significant direct orindirect costs,decreased revenue,and operating margin,and harm to our

45、 brand.We rely on a limited number of traditional and online retailers and wholesale distributors for a substantial portion of our sales,andour revenue could decline if they refuse to pay our requested prices or reduce their level of purchases or if there is significantconsolidation in our sales cha

46、nnels,which results in fewer sales channels for our products.42025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm5/115Table of ContentsPART IItem 1.BusinessOverviewArlo Technologies,Inc.(“we”or“Arlo”)is transforming the ways in which people

47、 can protect everything that matters to them withadvanced home,business,and personal security services that combine a globally scaled cloud platform,advanced monitoring and analyticscapabilities,and award-winning app-controlled devices to create a personalized security ecosystem.Arlos deep expertise

48、 in cloud services,cutting-edge artificial intelligence(“AI”)and computer vision analytics,wireless connectivity and intuitive user experience design deliversseamless,smart home security for Arlo users that is easy to setup and engage with every day.Our highly secure,cloud-based platformprovides use

49、rs with visibility,insight and a powerful means to help protect and connect in real-time with the people and things that mattermost,from any location with a Wi-Fi or a cellular connection all rooted in a commitment to safeguard privacy for our users and theirpersonal data.To date,we have launched su

50、bscription services such as Arlo Secure,Arlo Total Security,and Arlo Safe,and several categories ofaward-winning smart security devices,including smart Wi-Fi and LTE-enabled cameras,video doorbells,floodlight cameras and homesecurity systems.In addition,Arlos broad compatibility allows the platform

51、to seamlessly integrate with third-party internet-of-things(“IoT”)products and protocols,such as Amazon Alexa,Apple HomeKit,Apple TV,Google Assistant,and Samsung SmartThings.We planto continue to introduce new smart security devices to the Arlo platform both in cameras and other categories,increase

52、the number ofregistered accounts on our platform,keep them highly engaged through our mobile app and generate incremental recurring revenue byoffering them paid subscription services.MarketOur total addressable market consists of individuals and business owners who use smart security devices to prot

53、ect their loved onesand property.Outside of the home,we have seen adoption of our cellular-enabled products in a variety of use cases,such as neighborhoodwatch,construction site monitoring,wildlife and outdoor trail surveillance and event monitoring.We believe the small business,governmentand direct

54、 home monitoring channels provide growth areas for us in addition to our retail and e-commerce presence.Our Software as aService(“SaaS”)solution includes Arlo Secure,a subscription service with coverage for unlimited cameras and an enhanced EmergencyResponse solution,Arlo Total Security,a comprehens

55、ive subscription service with professional monitoring and security hardware,Arlo Safe,a personal safety service with panic button accessory,as well as Arlo SmartCloud,a solution that delivers highly efficient and secure cloudservices at scale.We believe we are well-positioned to extend our current r

56、each to the broader IoT market both within and beyond the homeas we continue to launch new products and services within our smart security platform.ServicesArlo SecureArlo Secure is our subscription service that provides advanced AI-based detection,DIY home security as well as professionalmonitoring

57、,and an enhanced Emergency Response capability.These premium services boast support for unlimited household securitydevices,along with advanced AI object detection,and smarter,more interactive notifications.Additionally,the 24/7,one-touch EmergencyResponse is available with the Secure Plus and Premi

58、um plans,enabling Arlo users to directly dispatch first responders during an emergencyfor quicker action.A trial period of Arlo Secure is provided with various Arlo cameras,home security,and doorbell products.The features ofArlo Secure subscriptions include:52025/5/19 13:57arlo-20241231https:/www.se

59、c.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm6/115Table of ContentsAI-powered Recognition and Detection Leveraging advanced computer vision AI and recognition engines,Arlo Secure 5 providesmore meaningful,detailed alerts so users can make informed decisions about their secur

60、ity and safety.Users can train Arlo AI tocreate personalized,custom detections to protect what matters most and can teach Arlo camera to recognize certain objects orchanges in view to trigger custom notifications.Emergency Response With one touch in the Arlo Secure App,users can directly dispatch fi

61、re,police,or medical responders to thecameras location.If directed by the user,Arlos Emergency Response team can also provide critical location information toresponders en route to better prepare them,such as gate codes,medical conditions of family members,and pet details.2K and 4K Cloud-based Video

62、 Recording View 30 days of recordings securely stored on Arlos SmartCloud platform,for ultimatepeace of mind and protection even if the device is damaged or stolen in a break-in,storm or other physical incident.Unlimited Cameras Users can enjoy Arlo Secure service for all cameras in their home with

63、one all-encompassing plan and canadd newly purchased Arlo cameras for no additional service charge.Advanced Object Detection Arlo processes and filters approximately 195 million events each day through advanced objectdetection backed by visual AI,allowing for better recognition of people,packages,ve

64、hicles,and animals to add key context tonotifications and reduce unwanted alerts.Smart Interactive Notifications Users can take quicker action by responding to rich notifications or viewing an animated previewof a notification video through the lock screen on their smartphone.Smoke and CO Alarm Dete

65、ction Users can get notified when the camera hears a smoke or CO alarm triggered.Cloud-based Activity Zones Users can reduce unwanted notifications by highlighting specific areas on their property where theywant motion to be detected.Call a Friend Users can instantly call a friend through the Arlo A

66、pp from their notification screen with one tap.24/7 Priority Support Users get priority technical support through the in-app Help Center with omnichannel access to phone,chat,Community or self-help articles.24/7 Professional Monitoring Users have access to Live Security Experts who swiftly assist in

67、 an emergency,regardless ofwhether a user is home or away.Through Emergency Response,live agents can access authorized camera video to verifyemergencies,potentially reducing false alarms,expediting response from emergency personnel in a crisis.Arlo Total SecurityArlo Total Security is a comprehensiv

68、e subscription service that offers 24/7 professional monitoring and security hardware withaffordable monthly pricing and no upfront costs.At the heart of this innovative subscription service is Arlos Home Security System,whichuses a first-of-its-kind,all-in-one multi-sensor capable of eight differen

69、t sensing functions.With its all-in-one design,the Arlo multi-sensorcan be placed anywherefrom walls to windows and doors,to underneath sinks and water heatersto detect motion,door/windowopenings and tilt,water leaks,freezing temperatures,lighting changes and T3/T4 smoke/CO alarm audio sirens.Manage

70、d through the ArloSecure App,the award-winning security system pairs with Arlos advanced video security cameras,such as the Arlo Pro 5s,to enable videoverification by 24/7 Professional Monitoring security experts of an emergency situation a growing requirement across municipalities toreduce false al

71、arms and unnecessary utilization of emergency services.62025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm7/115Table of ContentsArlo SafeArlo Safe is a personal safety service with a panic button accessory featuring one-tap,24/7 Emergency

72、Response,family safety,automatic crash detection and more.Ideal for everyone from city dwellers walking home at night,to college students out with friends,teenagers walking to/from school,daily commuters,or even elderly family members,Arlo Safe is an all-encompassing 24/7 personal safetysolution for

73、 ultimate peace of mind while on the go.Features including 24/7 live agent emergency support,location sharing,family check-ins,and safety alerts provide on-the-go protection to keep the user safe in a time of need.Working in tandem with the Arlo Safe app,the ArloSafe button can be used to alert safe

74、ty experts and rapidly send emergency responders to the users location anytime,day or night.Thefeatures of Arlo Safe subscriptions include:One-Touch Emergency Response Access live safety experts 24/7 to rapidly send fire,police,or medical responders directly to theusers exact location.Family Safety

75、Never miss a moment with the ability to know where opt-in family members have been,see their current location,or send help directly to them in an emergency situation.Crash Detection and Response Advanced impact detection can expedite emergency response in the event of a vehicle accident bysharing ap

76、propriate location and medical information with first responders.Other ServicesArlo SmartCloud is a SaaS solution that delivers scalable security cloud services for business.Its comprehensive offering includescomputer vision,multi-object detection,audio analysis,security services,scaled storage and

77、numerous ecosystem integrations.ArloSmartCloud is a fully managed robust global platform built for security,scalability,and reliability that can be deployed as part of advancedsubscription services for hardware companies,automotive companies,service providers,insurance companies,home builders,smartc

78、ommunities,smart cities,traditional security companies,and other related verticals.ProductsSmart Security DevicesArlo Essential Cameras and Doorbells(2nd Generation),released in the third quarter of 2023,deliver smart home protection foreveryone at an incredible value.The new lineup features the Arl

79、o Essential XL Outdoor Camera with 4X the battery life of the new standardEssential Outdoor Camera,as well as a new Essential Indoor Camera with an automated privacy shield.A new Video Doorbell with head-to-toe 180-degree field of view is also available.The all-new second generation Essential camera

80、s and doorbells offer several newadvancements,with up to 2K video resolution,providing customers with powerful smart home security solutions at affordable price points.Additionally,each device features USB-C connections for easy re-charging,and a new quick set-up process using Bluetooth for a faster

81、,easier onboarding experience.Arlo Home Security System,released in the fourth quarter of 2022,is a first-of-its-kind smart security system featuring the ArloAll-in-One Multi-Sensor capable of eight different sensing functions.The system,which is managed through the Arlo Secure App,pairs withArlos 2

82、4/7 Professional Monitoring service,granting one-tap access to highly trained Security Experts who monitor and respond toemergency situations.Able to be placed anywhere,from walls to windows and doors,to under sinks and water heaters,the simple-to-installwireless multi-sensor can detect motion,door/

83、window openings and tilt,water leaks,freezing temperatures,lighting changes and T3/T4smoke/CO alarm audio sirens.Arlo Pro 5S,released in the fourth quarter of 2022,is an all-new wireless security camera with advanced 2K video resolution.Thelatest addition to the award-winning Pro series,Pro 5S boast

84、s tri-band connectivity-operating via dual-band Wi-Fi and Arlo SecureLinktechnology.Pro 5S is backed by the Arlo Secure App which features an all-new,72025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm8/115Table of Contentshighly intuitive

85、 interface that streamlines access to critical tools like Emergency Response.Since Pro 5S operates on the lowest power bandwhen in sleep mode,users will appreciate significant battery life improvements.Additionally,tri-band connectivity provides longer Wi-Firange,and mitigates RF interference and ac

86、tive jamming attempts while maximizing picture quality.Pro 5S seamlessly pairs with otherSecureLink devices for continuous security and connectivity,even during power and internet outages.Arlo Go 2,released in the second quarter of 2022,is designed for monitoring remote areas,large properties,constr

87、uction sites,vacation homes,boat or RV slips and hard-to-access areas.Go 2 works with a 4G LTE cellular data plan to provide continuous connectivityand uninterrupted security.Arlo Go 2 features a 100%wire-free,weather-resistant design,swappable,rechargeable battery and the ability todirectly connect

88、 to Wi-Fi,when in range.Users can view and record 1080p full HD video day and night,capturing important details withcolor night vision thanks to an integrated spotlight.Two-way,full-duplex audio ensures clear communication with visitors,while a built-insiren can be triggered remotely or automaticall

89、y to ward off intruders.Additionally,Arlo Go 2 is equipped with GPS positioning to track thecameras whereabouts,allowing users to locate devices across an expansive area,or in the event of theft.Arlo Ultra 2,released in the second quarter of 2020,is designed to deliver an enhanced user experience wi

90、th improved range,building on advanced features such as 4K video with HDR,an ultra-wide,180-degree field of view,auto zoom and tracking on movingobjects with clarity and detail,color night vision allowing the user to see video in color rather than traditional black and white,built-in sirenthat is au

91、tomatically triggered by motion or audio,or manually triggered via the Arlo App and more.Arlo Ultra 2 works with Amazon Alexa,Google Assistant,and Apple Homekit for easy interaction,automation and control.Arlo Floodlight Camera,released in the first quarter of 2020,is the first wire-free floodlight

92、camera on the market.The floodlightcamera brings powerful LEDs,an integrated 2K HDR camera,160-degree field of view,two-way audio,custom lighting configurations anda built-in siren to any home or small business.The floodlight camera can automatically measure the amount of surrounding light to allow

93、fortrue customization for when the floodlight automatically turns on.The floodlight camera also offers three different light patterns constant,flashing,and pulsating which users can control manually on-demand or via automation rules.In the third quarter of 2024,we also released the all-new wired flo

94、odlight camera,which brings crystal clear details with 2K HDRvideo and a 160-degree field of view.It has an adjustable camera and ultra-bright 2000 lumen articulating floodlights for flexible coveragewhere it is needed.The wired floodlight works with Amazon Alexa and Google Home for easy interaction

95、,automation,and control.Arlo Accessories Security System Accessories provide added functionality to the Arlo Security System for greater peace of mind.The Wire-FreeOutdoor Siren extends protection outside of the home with a loud wire-free siren featuring a weather-resistant design,built-in strobe an

96、dadjustable volume settings.The Arlo Cellular and Battery Backup module gives the Arlo Security System up to 12 hours of power duringoutages and stacks discretely beneath the Security System hub for a sleek all-in-on design.Charging Accessories are designed to offer additional convenient ways to kee

97、p Arlo wire-free cameras up and running even longer.With the Arlo Charging Station,users can charge up to two batteries with fast-charging technology so there is always a battery ready to go.For those looking to eliminate battery swaps entirely,the mountable and weather-resistant Arlo Solar Panel co

98、nnects to various Arlo camerasto keep batteries charged with just a few hours of direct sunlight.Mounts feature innovative designs that allow users to mount their cameras outdoors or indoors,on ceilings or countertops.TheArlo Anti-Theft Mount enables users to lock their Arlo camera in place to preve

99、nt tampering and theft.Additional outdoor,tabletop,andother adjustable mounts give users added flexibility to customize their camera position to suit any unique location they need to monitor.82025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.

100、htm9/115Table of Contents Sales ChannelsWe sell our products through multiple sales channels worldwide,including traditional and online retailers,wholesale distributors,broadcast channels,wireless carriers,security solution providers as well as directly to consumers through our own online store.Reta

101、ilers.We sell to traditional and online retailers,either directly or through wholesale distributors.We work directly with ourretail channels on market development activities,such as co-advertising,including digital and traditional media,online promotions andvideo demonstrations,instant rebate progra

102、ms,event sponsorship and sales associate training.We sell a substantial portion of our productsthrough traditional and online retailers,including Amazon,Best Buy Co.,Inc.,Walmart,Inc.,and Costco Wholesale Corporation and theiraffiliates.Wholesale Distributors.Our distribution channel supplies our pr

103、oducts to retailers,e-commerce resellers,wireless carriers andbroadcast channels.We sell directly to our distributors,including Ingram Micro,Inc.,D&H Distributing Company and Synnex Corporation.Broadcast Channels.We also sell our products through TV shopping networks such as HSN and QVC.Wireless Car

104、riers.We supply our products to major wireless carriers around the world,including AT&T,T-Mobile,Verizon,Telstra and Vodafone.This sales channel is and will continue to be the key route-to-market for our current portable LTE-enabled camera andany future cellular-enabled security solutions.Security S

105、olution Providers.We sell our products and services to security solution providers,including Verisure,from which wederived 43.2%of our revenue in 2024.A.In the third quarter of 2019,we launched our online direct to consumer store to sell our products directly to ourcustomers.We also sell our subscri

106、ption services,such as Arlo Secure,Arlo Total Security,and Arlo Safe,directly to consumers.Agreement with VerisureVerisure is the exclusive distributor of our products in Europe for all retail channels and direct channels in connection withVerisures security business.On April 25,2024,Verisure notifi

107、ed us that it was exercising its right under the Supply Agreement to extend theterm for another five years(through November 2029)with no minimum purchase obligations.Under the Supply Agreement,a purchaseobligation is not deemed to exist until we receive and accept Verisures purchase order.As of Dece

108、mber 31,2024,we had a backlog of$33.5 million which represents performance obligations that will be recognized as revenue once fulfilled,which is expected to occur overthe next six months.CompetitionWe believe we are well-positioned to compete within the broader smart security market,both within and

109、 beyond the home as wecontinue to launch new product lines and services on our highly secure,globally-scaled platform.However,our market is highly competitiveand evolving,and we expect competition to increase in the future.We believe the principal competitive factors impacting the market for ourprod

110、ucts and services include price,service offerings,functionality,brand,technology,design,distribution channels and customer service.We believe that we compete favorably in these areas based on our market position in the U.S.consumer network connectedcamera systems market,best-in-class technology,dire

111、ct relationship with users and user engagement,trusted Arlo platform,strong Arlobrand and channel partners and deep strategic partnerships with key suppliers,such as Infineon Technologies AG,OmniVision TechnologiesInc.,Realtek and Qualcomm Incorporated.Moreover,our focus on building a smart security

112、 platform,combined with our leadership ininnovation in the consumer network connected camera systems market,has led to the strength of our Arlo brand worldwide.We believe thisfocus allows us to compete favorably with92025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/00017369

113、4625000014/arlo-20241231.htm10/115Table of Contentscompanies that have introduced or have announced plans to introduce smart security devices or services.Nevertheless,the smart securitymarket remains highly competitive,and has a multitude of participants,including:large global technology companies,s

114、uch as Amazon(Ring and Blink)and Google(Nest);security service vendors,such as ADT;telecom service providers,such as AT&T,Verizon and Comcast;and other companies,such as TP Link,Eufy and Wyze.Many of our existing and potential competitors have longer operating histories,greater name recognition and

115、substantially greaterfinancial,technical,sales,marketing and other resources than we do.We anticipate that current and potential competitors will also intensifytheir efforts to penetrate our target markets.For additional information,see“Risk Factors-Risks Related to Our Business-Some of ourcompetito

116、rs have substantially greater resources than we do,and to be competitive we may be required to lower our prices or increase oursales and marketing expenses,which could result in reduced margins and loss of market share.”Research and DevelopmentWe are passionate about developing new and innovative pr

117、oducts and services that enhance the smart security experience.Ourresearch and development team collaborates with our product team to design and build differentiated new products and improve upon ourexisting products and services.Our goal is to create unique user experiences within the smart securit

118、y market.For example,our original Arlocamera was the worlds first commercially available 100%battery-operated Wi-Fi security camera with 720p HD video,IP65-rated weatherresistance and night vision.The groundbreaking nature of the product,first launched in December 2014,gathered critical acclaim andm

119、arket success.Our research and development team has taken this same approach to all of our subsequent product releases,constantlyinnovating to stay competitive.As of December 31,2024,our research and development staff consisted of 148 employees,located in our offices worldwide,andwas comprised of fr

120、ont-end and back-end software engineers,radio frequency engineers,electrical engineers,mechanical engineers,systemtest engineers,computer vision scientists and data analysis engineers,UX and industrial design engineers and mobile app developers.Wealso engage and contract with certain third parties,s

121、uch as ITS Partner LLC,e-Infochips Ltd.,and Elinext Software Ltd.on research anddevelopment.We intend to continue to invest in research and development to expand our platform and capabilities in the future.ManufacturingWhile all of our products are primarily designed in North America,we currently ou

122、tsource manufacturing to Foxconn CloudNetwork Technology Singapore Pte.Ltd.,Alpha Networks Inc.,Pegatron Corporation,and Chicony Electronics Co.,Ltd.,which are allheadquartered in Asia.Although we do not have any long-term purchase contracts,we have executed master product supply agreements withthes

123、e manufacturers,which typically provide indemnification for intellectual property infringement,epidemic failure clauses,agreed-uponprice concessions,division of each partys intellectual property and product quality requirements.As we expand our product portfolio,wecontinue to explore new potential m

124、anufacturing partners that may provide us with competitive advantages on technology and cost.Since weoutsource our manufacturing,we have the flexibility and ability to adapt to market changes,product supply and component pricing whilekeeping our costs low.In addition to their responsibility for the

125、manufacturing of our products,our manufacturers typically purchase allnecessary parts and materials to produce finished goods.To maintain quality standards for our suppliers,we have established our ownproduct quality organization based in Vietnam and Taiwan,which is responsible for auditing and insp

126、ecting process and product quality onthe premises of our manufacturers.Our strategic relationships with our manufacturers are an important component of our ability to introducenew products and grow our business.We focus on driving alignment of our product roadmaps with our manufacturers and determin

127、ing what we can do collectively toreduce costs across the supply chain.Our operations teams based in the United States,Ireland,Taiwan,and Vietnam coordinate with ourmanufacturers engineering,manufacturing and quality control personnel to develop the requisite manufacturing processes,quality checksan

128、d testing and general oversight of the manufacturing activities.We believe this model has enabled us to quickly and efficiently deliverhigh-quality and innovative products,while enabling us to minimize costs and manage inventory.102025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/17

129、36946/000173694625000014/arlo-20241231.htm11/115Table of ContentsOur products are manufactured and packaged for retail sale by our manufacturers mostly in Vietnam,Thailand,and Indonesia,andshipped to our logistics hubs located in the United States,Hong Kong,and Australia.Our operations team coordina

130、tes with ourmanufacturers to ensure that the shipment of our products from the manufacturers to these logistics hubs meets customer demand.Arlo Cloud Engineering OperationsWe currently serve our users from third-party data center hosting facilities.Our cloud platform runs in data centers in the Unit

131、edStates and a data center in Ireland to serve our European Union users.We also utilize data centers in Singapore and Australia.We havedesigned our cloud environments to be highly resilient with built-in redundancy and provide failover to other data centers in our network.MarketingOur marketing prog

132、rams are focused on building global brand awareness,increasing product adoption and driving sales.Ourmarketing efforts target individuals interested in a smart security solution.We also increase brand awareness by augmenting word-of-mouthrecommendations from Arlo customers and key influencers,intera

133、ct digitally with current and prospective customers and maintain anddevelop our strong channel partnerships and strong shelf presence.We collaborate with our retail partners on market development activitiesto drive in-store and online engagement with the brand and drive purchases.Customer CareWe pro

134、vide customer care to Arlo users globally through a variety of communication channels,including phone,chat,email,socialmedia and our Arlo Community,as well as self-guided resources such as knowledge-base articles,how-to videos and technicaldocumentation on our website.We believe that providing timel

135、y,responsive customer support and educational content to our users helpsfoster an ongoing engagement that builds loyalty to our brand and also enables us to understand user needs as they evolve.The online ArloCommunity in particular serves as an efficient and engaging platform through which we can d

136、eliver customer care and receive feedbackfrom users.We gather and analyze user feedback from all platforms to help inform our design and engineering teams about futureenhancements to our products and services.In order to best serve our users globally,we manage and continually adjust our resources wo

137、rldwide through a mixture ofpermanent employees and subcontracted,outsourced resources.As our installed base continues to grow in new geographies,categories andtechnologies,we will continue to focus on building a scalable support infrastructure that enables our users to engage with us through thecha

138、nnel that is most convenient and efficient for their needs.Fiscal PeriodsOur fiscal year begins on January 1 of the year stated and ends on December 31 of the same year.We report our results on a fiscalquarter basis rather than on a calendar quarter basis.Under the fiscal quarter basis,each of the f

139、irst three fiscal quarters ends on the Sundayclosest to the calendar quarter end,with the fourth quarter ending on December 31.Intellectual PropertyOur ability to protect our intellectual property will be an important factor in the success and continued growth of our business.Werely upon a combinati

140、on of patent,copyright,trade secret,and trademark laws and contractual restrictions,such as confidentialityagreements and licenses,to establish and protect our proprietary rights.Some of our technology relies upon third-party licensed intellectualproperty.112025/5/19 13:57arlo-20241231https:/www.sec

141、.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm12/115Table of ContentsWe currently hold 135 issued United States patents,50 pending United States patent applications,66 international patents,including patents issued by China and the EU,43 pending patent applications outside of

142、the United States.All the patents and patentapplications generally relate to certain aspects of our hardware devices,accessories,software and services.We continually review ourdevelopment efforts to assess the existence and patentability of new intellectual property.We also pursue the registration o

143、f our domain names and trademarks and service marks in the United States and in certainlocations outside the United States.We currently have six registered trademarks and six pending trademark applications in the United States,as well as 82 registered trademarks and 25 pending trademark applications

144、 outside of the United States.We currently hold trademarkregistrations for“ARLO”in 13 countries:the United States,Argentina,Australia,Brazil,Canada,Chile,China,Japan,Mexico,NewZealand,Peru,Singapore,and Trinidad and Tobago,as well as the World Intellectual Property Organization.For more information,

145、see“RiskFactors-Risks Related to Our Business-If we are unable to secure and protect our intellectual property rights,our ability to compete couldbe harmed.”Environmental LawsOur products and manufacturing processes are subject to numerous governmental regulations,which cover both the use of various

146、materials and environmental concerns.Environmental issues such as pollution and climate change have had significant legislative andregulatory efforts on a global basis,and there are additional changes to the regulations in these areas in the upcoming years.These changescould directly increase the co

147、st of energy,which may have an impact on the way we manufacture products.In addition,any new regulationsor laws in the environmental area might increase the cost of the raw materials we use in our products and the cost of compliance.Otherregulations in the environmental area may require us to contin

148、ue to monitor and ensure proper disposal or recycling of our products.To thebest of our knowledge,we maintain compliance with all current government regulations concerning our production processes for alllocations in which we operate.Since we operate on a global basis,this is also a complex process

149、that requires continual monitoring ofregulations and we have an internal group focused on monitoring our compliance process to ensure that we and our suppliers are incompliance with all existing regulations.Environmental,Social,and GovernanceWe believe that responsible and sustainable business pract

150、ices support our long-term success.As a company,we are deeplycommitted to protecting all stakeholders including support of our employees,our environment,and our communities.That commitment isreflected through various corporate initiatives as well as day-to-day activities,including our adoption of su

151、stainability-focused policies andprocedures,our publicly recognized and award-winning focus on fostering an inclusive workplace,our constant drive toward more efficientuse of materials and energy,our careful and active management of our supply chain,our services and products which help reduce carbon

152、footprints and enhance road safety,and our impactful and globally integrated ethics and compliance program.Our adoption of environmental,social and governance(“ESG”)practices is based on several principles that help position ourbusiness for long-term,sustainable success.We believe a holistic ESG app

153、roach creates competitive advantage over business rivals as ourpartners,suppliers,and customers increasingly require relationships with companies that boast sustainable and adaptable businessoperations.EnvironmentalWe are committed to providing customers with high quality products,conducting operati

154、ons in a socially responsible,ethical,andsustainable manner to protect the environment and promoting compliance with all relevant regulations,customer specifications,andenvironmental legislation.This commitment continues to be a driving force at our company,and a principle that is deeply ingrained i

155、n ourvalues.As we continue to further expand our ESG and Sustainability program,we have driven an improvement in our management of ourenvironmental practices.We strive for continuous improvement by establishing internal targets and122025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/

156、1736946/000173694625000014/arlo-20241231.htm13/115Table of Contentstimelines to improve our carbon footprint which we expect will help improve our risk ratings even further.Additionally,our engagementwith the various stakeholders including ESG rating agencies,have enabled us to expand the scope of a

157、nalysis in our annual ESG reporting toour external stakeholders.SocialWe believe in fostering a culture of fairness and inclusion within our company and with our partners.We prioritize opencommunication and collaboration with our employees and partners to address any concerns related to recruitment,

158、working hours,compensation,discrimination,and the freedom to associate.By collaborating closely,we have created a welcoming and respectful workenvironment at Arlo and beyond,promoting equal and humane treatment within our company as well as at our partners.We believe we can play a crucial role in dr

159、iving positive social change and,in our commitment to humane treatment globally,wehave continued to administer our Conflict Mineral Program.All of our employees and our Original Design Manufacturers(“ODMs”)areexpected to follow the requirements of the Conflict Minerals Program,improve employee pract

160、ices,and maintain tight control over supplychain relationships to ensure compliance in accordance with the Organization for Economic Co-operation and Development(“OECD”).In addition,we have a zero tolerance policy for both forced labor and human trafficking.In an effort to support the CaliforniaTran

161、sparency in Supply Chains Act of 2010(“SB657”)and to confront slavery,we have committed to assess risks related to our supplychain and our direct commercial suppliers and to evaluate suppliers compliance with the Arlo Technologies Supplier Code of Conduct viaperiodic audits.We are committed to foste

162、ring an inclusive workplace by implementing policies,norms,and programs that reflect the voice of allof our employees.We provide equal opportunities for career advancement with access available to all employees.Our work environment issupportive with many well-being initiatives aimed at creating a sa

163、fe workplace for all.We continue to seek opportunities to ensure we areincorporating a wide range of viewpoints to decision making,because we believe those efforts support a long-term and sustainable trackrecord of operational success.We prioritize the well-being of employees by offering comprehensi

164、ve benefits,promoting work-life balance,providing mental health support,and fostering a culture that values employee health and professional development.We strive to have a positive impact on the local communities where we have offices.Our leadership team and employees havecommitted to work closely

165、with local charities in their communities to support philanthropic initiatives,such as fundraising for humanitariancrises and working with young people with autism and other learning difficulties.Charitable giving is a core part of our communityoutreach.We make a purposeful effort to support local s

166、mall businesses and local suppliers in certain of our purchasing decisions.GovernanceWe are committed to providing customers with high quality products that comply with regulatory laws,directives,standards andindustry regulations.Our products,including Verisures Arlo branded products,go through rigo

167、rous testing and certification processes toachieve regulatory compliance.Ethics is a key foundational element in our Corporate Social Responsibility Program.Our Code of Ethics is at the core of ourcorporate governance policy and provides guidance on standard business conduct for all of our employees

168、 and partners.We demonstratetransparency and accountability,which are core components of our business,in our corporate governance,decision-making processes,andreporting practices,including regular disclosure of social and environmental impact metrics and engagement with stakeholders.All of our emplo

169、yees are required to take and pass yearly training courses on Anti-Bribery and Anti-Corruption to ensure theyunderstand the importance of following local laws and regulations with respect to those topics.132025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/

170、arlo-20241231.htm14/115Table of ContentsIn addition,we and our manufacturing partners are committed to meeting ISO standards and maintaining ISO 9001 and/or ISO14001 certifications.We are committed to ethical practices in the development and deployment of technology,including responsible data handli

171、ng,protection of user privacy,and avoidance of harmful applications such as surveillance or discrimination algorithms.Data privacy is a pointof emphasis within our organization and is critical to our competitive differentiation.We believe the customer data belongs to the customer,and we only use tha

172、t data to improve their safety and security.Without an effective and efficient management system,we would not be able to optimize the value of the Corporate SocialResponsibility Program and fulfill our responsibility as a loyal global citizen.Our program includes review of management system in thear

173、eas of Ethics,Labor and Environment,and Health and Safety to help establish an organized framework for identifying,evaluating andremediating issues as they arise.Our Nominating and Corporate Governance Committee has oversight over reviewing our practices and initiatives with respect toESG matters th

174、at are expected to have a significant impact on us.Human Capital ResourcesThe human capital measures and objectives we employ to drive our business results focus primarily on our talent and culture as welook to develop the Arlo workforce for the future.We nurture and develop our talent through caref

175、ully crafted processes and developmentopportunities that drive culture and performance at Arlo.This then translates into our performance management and compensation andreward systems.We aim to have the right people in the right roles at the right time to drive our business outcomes,ensuring top tale

176、nt for ourcritical roles.We embed fairness,equity and inclusion into our culture strategy.Building a healthy workplace for our employees is key to ourculture as we engage all of our employees who together are redefining how people protect and connect with what matters most.We believe in leadership e

177、xcellence as we connect our group success with individual performance.We strive to attract and retainexceptionally talented and ethical employees from all backgrounds,and we are proud of the culture that we have built.We continue to shapeour desired experience,in line with the promised employee valu

178、e proposition and desired culture to drive engagement and high performance.We believe that great teams make great products and as such,our talented employees,located throughout the United States,Canada,Australia,Taiwan,India,and Ireland,communicate,connect and work together to deliver a world-class

179、end-to-end smart security solution.We believe that we maintain a great working relationship with our employees,as evidenced by our regular employee engagement surveys,and we have not experienced any labor disputes.We want our employees voices to be heard and believe that when our workplace encourage

180、s employees to fully participate in aninclusive environment,we can provide high quality outcomes for our customers.Arlo is proud to be an equal opportunity workplace.Wealways strive to treat all employees and job applicants based on merit,qualifications,personality,and talent,and to draw from a dive

181、rsecandidate pool as we recruit new talent across all levels.We aim to connect people from all backgrounds and beliefs and strive for a trulyinclusive and collaborative working environment.Arlo has built a healthy and fair workplace in which all of our employees can thrive.We believe that high quali

182、ty securitysolutions are developed by inclusive representative teams that are empowered to innovate responsibly.We connect people from allbackgrounds and beliefs and strive for an inclusive and collaborative working environment.We host a number of events and days of observance with guest and interna

183、l speakers at Arlo.Each year,we hold a“Month ofUnderstanding”with speakers on a wide variety of topics.These events provide a platform for dialogue and an opportunity for everyemployee to learn,discuss,and appreciate differences between colleagues as we grow to drive greater inclusion at Arlo and tr

184、uly reflect thecustomers we serve.We continually strive to be a deeply inclusive employer with diversity reflected in our teams.We encourage employees to truly bethemselves and thrive in an environment where their voices matter,differences are understood and142025/5/19 13:57arlo-20241231https:/www.s

185、ec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm15/115Table of Contentsvalued,and where they are supported to express their unique ideas openly.We aim to foster a highly engaged and energized workplace,where everyone is treated with dignity and respect and is excited to achiev

186、e more.As of December 31,2024,we had a total of 360 full-time employees,of which approximately 63%were based in the UnitedStates,and approximately 37%were based in other global regions.Compensation and BenefitsWe strive to provide our employees with compensation that is market-competitive and intern

187、ally equitable.We recognize ourpeople are most likely to thrive when they have the resources to meet their needs and the time and support to succeed in their professionaland personal lives.In support of this,we offer a wide variety of benefits for employees around the world and invest in tools and r

188、esourcesthat are designed to support our employees individual growth and development.Health and SafetyWe strive to protect the health and safety of our employees.We identify potential workplace risks in order to develop measures tomitigate possible hazards.We support employees with general safety,se

189、curity and crisis management training,and by putting specificprograms in place for those working in potentially high-hazard environments.Employee EngagementWe believe that open and honest communication among team members,managers and leaders helps create an open,collaborativework environment where e

190、veryone can contribute,grow and succeed.Team members are encouraged to come to their managers withquestions,feedback or concerns,and we conduct surveys that gauge employee sentiment in areas like career development,managerperformance and inclusivity.Company InformationWe were incorporated in Delawar

191、e in January 2018.Our principal executive offices are located at 5770 Fleet Street,Carlsbad,California 92008,and our telephone number is(408)890-3900.Our website is http:/.Our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,and amendments to reports filed pursu

192、ant to Sections 13(a)and 15(d)of theSecurities Exchange Act of 1934,as amended(the“Exchange Act”)are available free of charge on our website as soon as reasonablypracticable after we electronically file such material with,or furnish it to,the Securities Exchange Commission(the“SEC”).The contents ofo

193、r accessible through our website are not incorporated into this Annual Report.Further,our references to the URLs for these websites areintended to be inactive textual reference only.Available InformationOur Annual Report on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,and ame

194、ndments to reportsfiled pursuant to Sections 13(a)and 15(d)of the Exchange Act are filed with the SEC.We are subject to the informational requirements ofthe Exchange Act and file or furnish reports,proxy statements,and other information with the SEC.Our filings are also available to thepublic over t

195、he Internet at the SECs website at http:/www.sec.gov.Our website provides a link to our SEC filings,which are available free of charge on the same day such filings are made.Thespecific location on the website where these reports can be found is http:/.Our website also provides a link to Section 16fi

196、lings which are available free of charge on the same day as such filings are made.Information contained on or accessible through thesewebsites is not a part of this Annual Report on Form 10-K.152025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-2024123

197、1.htm16/115Table of ContentsItem 1A.Risk FactorsInvesting in our common stock involves substantial risk.You should consider carefully the risks and uncertainties described below,together with all of the other information in this Annual Report on Form 10-K,including our financial statements and the r

198、elated notes and“Managements Discussion and Analysis of Financial Condition and Results of Operations,”when evaluating our business and beforedeciding whether to invest in shares of our common stock.We describe below what we believe are currently the material risks anduncertainties we face,but they

199、are not the only risks and uncertainties we face.Additional risks and uncertainties that we are unaware of,orthat we currently believe are not material,may also become important factors that adversely affect our business.If any of the following risksactually occur,our business,financial condition,re

200、sults of operations,and future prospects could be materially and adversely affected.Inthat event,the market price of our common stock could decline and you could lose part or all of your investment.Risks Related to Our BusinessWe obtain several key components from limited or sole source suppliers,an

201、d if these suppliers fail to satisfy our supply requirementsor we are unable to properly manage our supply requirements with our third-party manufacturers,we may lose sales and experienceincreased component costs.Any shortage or delay in the supply of key product components would harm our ability to

202、 meet scheduled product deliveries.Many of the components used in our products are specifically designed for use in our products,some of which are obtained from sole sourcesuppliers.These components include lens,lens-sensors,and passive infrared sensors that have been customized for the Arlo applica

203、tion,aswell as custom-made batteries that provide power conservation and safety features.In addition,the components used in our end productshave been optimized to extend battery life.Our third-party manufacturers generally purchase these components on our behalf,and we do nothave any contractual com

204、mitments or guaranteed supply arrangements with our suppliers.If demand for a specific component increases,wemay not be able to obtain an adequate number of that component in a timely manner or at all.In addition,if worldwide demand for thecomponents increases significantly,the availability of these

205、 components could be limited.Further,our suppliers may experience financial orother difficulties as a result of uncertain and weak worldwide economic conditions.Other factors that may affect our suppliers ability orwillingness to supply components to us include internal management or reorganizationa

206、l issues,such as roll-out of new equipment whichmay delay or disrupt supply of previously forecasted components,or industry consolidation and divestitures,which may result in changedbusiness and product priorities among certain suppliers.It could be difficult,costly,and time consuming to obtain alte

207、rnative sources forthese components,or to change product designs to make use of alternative components.In addition,difficulties in transitioning from anexisting supplier to a new supplier could create delays in component availability that would have a significant impact on our ability to fulfillorde

208、rs for our products.We generally provide our third-party manufacturers with a rolling forecast of demand,which they use to determine our materialand component requirements.Lead times for ordering materials and components vary significantly and depend on various factors,such asthe specific supplier,c

209、ontract terms,and demand and supply for a component at a given time.Some of our components have long lead times,such as wireless local area network chipsets,physical layer transceivers,connector jacks,and metal and plastic enclosures.If our forecastsare not timely provided or are lower than our actu

210、al requirements,our third-party manufacturers may be unable to manufacture products in atimely manner or at all.If our forecasts are too high,our third-party manufacturers will be unable to use the components they havepurchased on our behalf.The cost of the components used in our products tends to d

211、rop rapidly as volumes increase and the technologiesmature.Therefore,if our third-party manufacturers are unable to promptly use components purchased on our behalf,our cost of producingproducts may be higher than our competitors due to an oversupply of higher-priced components.Moreover,if they are u

212、nable to usecomponents ordered at our direction,we will need to reimburse them for any losses they incur.If we are unable to obtain a sufficient supply of components,or if we experience any interruption in the supply of components,ourproduct shipments could be reduced or delayed or our cost of obtai

213、ning these components may increase.162025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm17/115Table of ContentsIn addition,sole suppliers of highly specialized components may provide,or have provided components that were either defective or

214、 did notmeet the criteria required by us or our manufacturers,retailers,distributors,or other channel partners,resulting in delays,lost revenueopportunities,and potentially substantial write-offs.We depend on a limited number of third-party manufacturers for substantially all of our manufacturing ne

215、eds.If these third-partymanufacturers experience any delay,disruption,or quality control problems in their operations,we could lose or fail to grow our marketshare and our brand may suffer.All of our products are manufactured,assembled,tested and generally packaged by a limited number of third-party

216、 original designmanufacturers(“ODMs”).In most cases,we rely on these manufacturers to procure components and,in some cases,subcontract engineeringwork.We currently outsource manufacturing to Foxconn Cloud Network Technology Singapore Pte.Ltd.,Pegatron Corporation,AlphaNetworks,Inc.,and Chicony Elect

217、ronics Co.,Ltd.We do not have any long-term contracts with any of these third-party manufacturers,although we have executed product supply agreements with these manufacturers,which typically provide indemnification for intellectualproperty infringement,epidemic failure clauses,agreed-upon price conc

218、essions,and certain product quality requirements.Some of thesethird-party manufacturers produce products for our competitors.Due to changing economic conditions,the viability of some of these third-party manufacturers may be at risk.The loss of the services of any of our primary third-party manufact

219、urers could cause a significantdisruption in operations and delays in product shipments.Qualifying a new manufacturer and commencing volume production is expensiveand time consuming.Ensuring that a contract manufacturer is qualified to manufacture our products to our standards is time consuming.Inad

220、dition,there is no assurance that a contract manufacturer can scale its production of our products at the volumes and in the quality that werequire.If a contract manufacturer is unable to do these things,we may have to move production for the products to a new or existing third-party manufacturer,wh

221、ich would take significant effort and our business,results of operations,and financial condition could be materiallyand adversely affected.In addition,as we contemplate moving manufacturing into different jurisdictions,we may be subject to additionalsignificant challenges in ensuring that quality,pr

222、ocesses,and costs,among other issues,are consistent with our expectations.For example,while we expect our manufacturers to be responsible for penalties assessed on us because of excessive failures of the products,there is noassurance that we will be able to collect such reimbursements from these man

223、ufacturers,which causes us to take on additional risk forpotential failures of our products.Our reliance on third-party manufacturers also exposes us to the following risks over which we have limited control:unexpected increases in manufacturing and repair costs;inability to control the quality and

224、reliability of finished products;inability to control delivery schedules;potential liability for expenses incurred by third-party manufacturers in reliance on our forecasts that later prove to beinaccurate;potential lack of adequate capacity to manufacture all or a part of the products we require;an

225、dpotential labor unrest affecting the ability of the third-party manufacturers to produce our products.All of our products must satisfy safety and regulatory standards and some of our products must also receive governmentcertifications.Our third-party manufacturers are primarily responsible for cond

226、ucting the tests that support our applications for mostregulatory approvals for our products.If our third-party manufacturers fail to timely and accurately conduct these tests,we would be unableto obtain the necessary domestic or foreign regulatory approvals or certificates to sell our products in c

227、ertain jurisdictions.As a result,wewould be unable to sell our products and our sales and profitability could be reduced,our relationships with our sales channel could beharmed,and our reputation and brand would suffer.172025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/0001

228、73694625000014/arlo-20241231.htm18/115Table of ContentsSpecifically,substantially all of our manufacturing and assembly occurs in the Asia Pacific region,primarily in Vietnam,and anydisruptions due to natural disasters,health epidemics,and political,social,and economic instability in the region woul

229、d affect the ability ofour third-party manufacturers to manufacture our products.In particular,in the event the labor market in Vietnam becomes saturated,ourthird-party manufacturers in that region may increase our costs of production.If these costs increase,it may affect our margins and ability tol

230、ower prices for our products to stay competitive.Labor unrest may also affect our third-party manufacturers,as workers may strike andcause production delays.If our third-party manufacturers fail to maintain good relations with their employees or contractors,and productionand manufacturing of our pro

231、ducts are affected,then we may be subject to shortages of products and the quality of products delivered maybe affected.Further,if our manufacturers or warehousing facilities are disrupted or destroyed,we could have no other readily availablealternatives for manufacturing and assembling our products

232、,and our business,results of operations,and financial condition could bematerially and adversely affected.In the future,we may work with more third-party manufacturers on a contract manufacturing basis,which could result in ourexposure to additional risks not inherent in a typical ODM arrangement.Su

233、ch risks may include our inability to properly source and qualifycomponents for the products,lack of software expertise resulting in increased software defects,and lack of resources to properly monitor themanufacturing process.In our typical ODM arrangement,our ODMs are generally responsible for sou

234、rcing the components of the productsand warranting that the products will work according to a products specification,including any software specifications.In a contractmanufacturing arrangement,we would take on much more,if not all,of the responsibility around these areas.If we are unable to properl

235、ymanage these risks,our products may be more susceptible to defects,and our business,results of operations,and financial condition couldbe materially and adversely affected.If disruptions in our transportation network occur or our shipping costs substantially increase,we may be unable to sell or tim

236、elydeliver our products,and our operating expenses could increase.We are highly dependent upon the transportation systems we use to ship our products,including surface,ocean and air freight.Ourattempts to closely match our inventory levels to our product demand intensify the need for our transportat

237、ion systems to function effectivelyand without delay.On a quarterly basis,our shipping volume also tends to steadily increase as the quarter progresses,which means that anydisruption in our transportation network in the latter half of a quarter will likely have a more material effect on our business

238、 than a disruptionat the beginning of a quarter.The transportation network is subject to disruption or congestion from a variety of causes,including labor disputes or port strikes,international conflicts,such as the ongoing escalating conflict between Russia and Ukraine,hostilities in the Middle-Eas

239、t,attacks onshipping vessels in Red Sea,acts of war or terrorism,natural disasters,and congestion resulting from higher shipping volumes.Labordisputes among freight carriers and at ports of entry are common,particularly in Europe,and we expect labor unrest and its effects onshipping our products to

240、be a continuing challenge for us.A port worker strike,work slow-down,or other transportation disruption in LongBeach,California,where we import our products to fulfill our American orders,could significantly disrupt our business.Our internationalfreight is regularly subject to inspection by governme

241、ntal entities.If our delivery times increase unexpectedly for these or any other reasons,our ability to deliver products on time would be materially and adversely affected and result in delayed or lost revenue as well as customerimposed penalties.In addition,if increases in fuel prices occur,our tra

242、nsportation costs would likely increase.Moreover,the cost of shippingour products by air freight is greater than by other methods.From time to time in the past,we have shipped products using extensive airfreight to meet unexpected spikes in demand and shifts in demand between product categories,to b

243、ring new product introductions to marketquickly and to timely ship products previously ordered.If we continue to rely more heavily upon air freight to deliver our products,ouroverall shipping costs will increase.A prolonged transportation disruption or a significant increase in the cost of freight c

244、ould materially andadversely affect our business,results of operations,and financial condition.182025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm19/115Table of ContentsIf we lose the services of key personnel,we may not be able to execut

245、e our business strategy effectively.Our future success depends in large part upon the continued services of our key technical,engineering,sales,marketing,finance,and senior management personnel.The competition for qualified personnel with significant experience in the design,development,manufacturin

246、g,marketing,and sales in the markets in which we operate is intense,both where our U.S.operations are based,includingSilicon Valley,and in global markets in which we operate.Our inability to attract qualified personnel,including hardware and softwareengineers and sales and marketing personnel,could

247、delay the development and introduction of,and harm our ability to sell,our products andservices.Decreases in our stock price may negatively affect our efforts to attract and retain qualified personnel.Changes to U.S.immigrationpolicies that restrict our ability to attract and retain technical person

248、nel may negatively affect our research and development efforts.We willcontinue to replace key personnel,from within or looking outside,wherever we find the best candidates.We do not maintain any key person life insurance policies.Our business model requires extremely skilled and experienced seniorma

249、nagement who are able to withstand the rigorous requirements and expectations of our business.Our success depends on seniormanagement being able to execute at a very high level.The loss of any of our senior management or other key engineering,research,development,sales,or marketing personnel,particu

250、larly if lost to competitors,could harm our ability to implement our business strategy andrespond to the rapidly changing needs of our business.If we suffer the loss of services of any key executive or key personnel,our business,results of operations,and financial condition could be materially and a

251、dversely affected.In addition,we may not be able to have the properpersonnel in place to effectively execute our long-term business strategy if key personnel retire,resign or are otherwise terminated.We expect our results of operations to fluctuate on a quarterly and annual basis,which could cause o

252、ur stock price to decline.Our results of operations are difficult to predict and may fluctuate substantially from quarter-to-quarter or year-to-year for avariety of reasons,many of which are beyond our control.If our actual results were to fall below our estimates or the expectations of publicmarket

253、 analysts or investors,our quarterly and annual results would be negatively impacted and the price of our stock could decline.Otherfactors that could affect our quarterly and annual operating results include,but are not limited to:changes in the pricing policies of,or the introduction of new product

254、s by,us or our competitors;delays in the introduction of new products by us or market acceptance of these products;health epidemics and other outbreaks,which could significantly disrupt our operations;introductions of new technologies and changes in consumer preferences that result in either unantic

255、ipated or unexpectedlyrapid product category shifts;competition with greater resources may cause us to lower prices and in turn could result in reduced margins and loss ofmarket share;epidemic or widespread product failure,or unanticipated safety issues,in one or more of our products;slow or negativ

256、e growth in the smart security,home electronics,and related technology markets;seasonal shifts in end-market demand for our products;unanticipated decreases or delays in purchases of our products by our significant retailers,distributors,and other channelpartners;component supply constraints from ou

257、r vendors;192025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm20/115Table of Contentsunanticipated increases in costs,including air freight,associated with shipping and delivery of our products;the inability to maintain stable operations b

258、y our suppliers and other parties with whom we have commercial relationships;discovery of security vulnerabilities in our products,services or systems,leading to negative publicity,decreased demand,or potential liability;foreign currency exchange rate fluctuations in the jurisdictions where we trans

259、act sales and expenditures in local currency;excess levels of inventory and low turns;changes in or consolidation of our sales channels and wholesale distributor relationships or failure to manage our saleschannel inventory and warehousing requirements;delay or failure to fulfill orders for our prod

260、ucts on a timely basis;delay or failure of our retailers,distributors,and other channel partners to purchase at their historic volumes or at thevolumes that they or we forecast;changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities;changes in U.S.and

261、international tax policy,including changes that adversely affect customs,tax or duty rates such astariffs on product imports,as well as income tax legislation and regulations that affect the countries where we conductbusiness;operational disruptions,such as transportation delays or failure of our or

262、der processing system,particularly if they occur atthe end of a fiscal quarter;disruptions or delays related to our financial and enterprise resource planning systems;our inability to accurately forecast product demand,resulting in increased inventory exposure;allowance for credit losses exposure wi

263、th our existing retailers,distributors and other channel partners and new retailers,distributors and other channel partners,particularly as we expand into new international markets;geopolitical disruption,including sudden changes in immigration policies,leading to disruption in our workforce or dela

264、yor even stoppage of our operations in manufacturing,transportation,technical support,and research and development;terms of our contracts with channel partners or suppliers that cause us to incur additional expenses or assume additionalliabilities;an increase in price protection claims,redemptions o

265、f marketing rebates,product warranty and stock rotation returns orallowance for credit losses;litigation involving alleged patent infringement;202025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm21/115Table of Contentsfailure to effectivel

266、y manage our third-party customer support partners,which may result in customer complaints and/orharm to the Arlo brand;our inability to monitor and ensure compliance with our code of ethics,our anti-corruption compliance program,anddomestic and international anti-corruption laws and regulations,whe

267、ther in relation to our employees or with our suppliersor retailers,distributors,or other channel partners;labor unrest at facilities managed by our third-party manufacturers;workplace or human rights violations in certain countries in which our third-party manufacturers or suppliers operate,whichma

268、y affect the Arlo brand and negatively affect our products acceptance by consumers;unanticipated shifts or declines in profit by geographical region that would adversely impact our tax rate;failure to implement and maintain the appropriate internal controls over financial reporting,which may result

269、inrestatements of our financial statements;andany changes in accounting rules.As a result,period-to-period comparisons of our results of operations may not be meaningful,and you should not rely on them asan indication of our future performance.If we fail to continue to introduce or acquire new produ

270、cts or services that achieve broad market acceptance on a timely basis,or ifour products or services are not adopted as expected,we will not be able to compete effectively and we will be unable to increase ormaintain revenue and gross margin.We operate in a highly competitive,quickly changing enviro

271、nment,and our future success depends on our ability to develop oracquire and introduce new products and services that achieve broad market acceptance.Our future success will depend in large part upon ourability to identify demand trends in the smart security market and quickly develop or acquire,and

272、 design,manufacture and sell,products andservices that satisfy these demands in a cost-effective manner.In order to differentiate our products and services from our competitors products,we must continue to increase our focus andcapital investment in research and development,including software develo

273、pment.We have committed a substantial amount of resources tothe manufacture,development and sale of our Arlo Secure services and our wire-free smart Wi-Fi cameras,advanced baby monitors,andsmart lights,and to introducing additional and improved models in these lines.In addition,we plan to continue t

274、o introduce new categoriesof smart security devices to the Arlo platform in the near future.If our existing products and services do not continue,or if our new productsor services fail,to achieve widespread market acceptance,if existing customers do not subscribe to our paid subscription services su

275、ch asArlo Secure or Arlo Total Security,if those services do not achieve widespread market acceptance,or if we are unsuccessful in capitalizingon opportunities in the smart security market,as well as in the related market in the small business segment,our future growth may beslowed and our business,

276、results of operations,and financial condition could be materially and adversely affected.Successfully predictingdemand trends is difficult,and it is very difficult to predict the effect that introducing a new product or service will have on existing productor service sales.It is possible that Arlo m

277、ay not be as successful with its new products and services,and as a result our future growth may beslowed and our business,results of operations and financial condition could be materially and adversely affected.Also,we may not be ableto respond effectively to new product or service announcements by

278、 our competitors by quickly introducing competitive products andservices.In addition,we may acquire companies and technologies in the future and,consistent with our vision for Arlo,introduce newproduct and service lines in the smart security market.In these circumstances,we may not be able to succes

279、sfully manage integration of thenew product and service lines with our existing suite of products and services.If we212025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm22/115Table of Contentsare unable to effectively and successfully furth

280、er develop these new product and service lines,we may not be able to increase or maintainour sales,and our gross margin may be adversely affected.We may experience delays and quality issues in releasing new products and services,which may result in lower quarterly revenuethan expected.In addition,we

281、 may in the future experience product or service introductions that fall short of our projected rates of marketadoption.Currently,reviews of our products and services are a significant factor in the success of our new product and service launches.Ifwe are unable to generate a high number of positive

282、 reviews or quickly respond to negative reviews,including end-user reviews posted onvarious prominent online retailers,or combat fake,AI-generated or bot negative reviews,our ability to sell our products and services will beharmed.Any future delays in product and service development and introduction

283、,or product and service introductions that do not meet broadmarket acceptance,or unsuccessful launches of new product and service lines could result in:loss of or delay in revenue and loss of market share;negative publicity and damage to our reputation and brand;a decline in the average selling pric

284、e of our products and services;adverse reactions in our sales channels,such as reduced shelf space,reduced online product visibility,or loss of saleschannels;andincreased levels of product returns.Throughout the past few years,Arlo has significantly increased the rate of new product and service intr

285、oductions,with theintroduction of new lines of Arlo camera,home security system,and doorbell products,as well as the introduction of Arlo Secure,Arlo TotalSecurity,and Arlo Safe.If we cannot sustain that pace of product and service introductions,either through rapid innovation or acquisition ofnew p

286、roducts and services or product and service lines,we may not be able to maintain or increase the market share of our products andservices or expand further into the smart security market in accordance with our current plans.In addition,if we are unable to successfullyintroduce or acquire new product

287、s and services with higher gross margin,our revenue and overall gross margin would likely decline.We may need additional financing to meet our future long-term capital requirements and may be unable to raise sufficient capital onfavorable terms or at all.We have recorded a net loss of$30.5 million f

288、or the year ended December 31,2024,and we have a history of losses and maycontinue to incur operating and net losses for the foreseeable future.As of December 31,2024,our accumulated deficit was$398.0 million.We had historically maintained a Loan and Security Agreement with Bank of America,N.A.,whic

289、h expired and automatically terminated onOctober 27,2024.On November 14,2024,we entered into a new credit agreement(the“Credit Agreement”)with HSBC Bank USA,National Association,as administrative agent,issuing bank,and lender.The Credit Agreement provides for a three-year revolving creditfacility(th

290、e“Credit Facility”)of up to$45.0 million that matures on November 14,2027,which also includes a$10.0 million sublimit forthe issuance thereunder of letters of credit.As of December 31,2024,we had unused borrowing capacity of$45.0 million based on the termsand conditions of the Credit Agreement.In ad

291、dition,the Credit Agreement includes an uncommitted accordion feature that allows us to,from time to time,request an increase to the aggregate revolving loan commitments by up to an additional$30.0 million in the aggregate,subject to the satisfaction of certain conditions.The proceeds of the borrowi

292、ngs under the Credit Facility may be used for working capitaland general corporate purposes.Refer to Note 7,Revolving Credit Facility in the Notes to Consolidated Financial Statements in Item 8 ofPart II of this Annual Report on Form 10-K for further details on the Credit Agreement.While,based on ou

293、r current plans,the Credit Agreement,and market conditions,we believe that such sources of liquidity will besufficient to satisfy our anticipated cash requirements for at least the next 12 months,we may require additional funds,either through equityor debt financings or collaborative agreements or f

294、rom other sources.We have no222025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm23/115Table of Contentscommitments to obtain such additional financing,and we may not be able to obtain any such additional financing on terms favorable to us,

295、or at all.If adequate financing is not available,we may further delay,postpone or terminate product and service expansion and curtail certainselling,general and administrative operations.The inability to raise additional financing may have a material adverse effect on our futureperformance.Some of o

296、ur competitors have substantially greater resources than we do,and to be competitive we may be required to lower ourprices or increase our sales and marketing expenses,which could result in reduced margins and loss of market share.We compete in a rapidly evolving and fiercely competitive market,and

297、we expect competition to continue to be intense,includingprice competition.Our principal competitors include Amazon(Blink and Ring),Canary,D-Link,Eufy,Google(Nest),Foxconn Corporation(Belkin),Night Owl,Samsung,SimpliSafe,Swann,and Wyze.Other competitors include numerous local vendors such as Netatmo

298、,Logitech,Bosch,Instar,and Uniden.In addition,these local vendors may target markets outside of their local regions and may increasinglycompete with us in other regions worldwide.Many of our existing and potential competitors have longer operating histories,greater brandrecognition,and substantially

299、 greater financial,technical,sales,marketing,and other resources.These competitors may,among other things,undertake more extensive marketing campaigns,adopt more aggressive pricing policies,obtain more favorable pricing from suppliers andmanufacturers,and exert more influence on sales channels than

300、we can.In addition,certain competitors may have different business models,such as integrated manufacturing capabilities,that may allow them to achieve cost savings and to compete on the basis of price.Othercompetitors may have fewer resources,but may be more nimble in developing new or disruptive te

301、chnology or in entering new markets.We anticipate that current and potential competitors will also intensify their efforts to penetrate our target markets.For example,price competition is intense in our industry in certain geographical regions and product categories.Many of our competitors price the

302、irproducts significantly below our product costs.Average sales prices have declined in the past and may again decline in the future.Thesecompetitors may have more advanced technology,more extensive distribution channels,stronger brand names,greater access to shelf spacein retail locations,bigger pro

303、motional budgets,and larger retailers,distributors,and other channel partners,and end-user bases than we do.In addition,many of these competitors leverage a broader product portfolio and offer lower pricing as part of a morecomprehensive end-to-end solution.These companies could devote more capital

304、resources to develop,manufacture,and market competingproducts than we could.A is both a competitor and a distribution channel for our products as well as a provider of services to support ourcloud-based storage.If Amazon decided to end our distribution channel relationship or ceased providing cloud

305、storage services to us,oursales and product performance could be harmed,which could seriously harm our business,financial condition,results of operations,andcash flows.Our competitors may also acquire other companies in the market or establish cooperative relationships among themselves or withothers

306、 and leverage combined resources to gain market share.If any of these companies are successful in competing against us,our salescould decline,our margins could be negatively impacted,and we could lose,or fail to grow,our market share,any of which could seriouslyharm our business,financial condition,

307、and results of operations.We entered into an asset purchase agreement(the“Asset Purchase Agreement”)and supply agreement(the“Supply Agreement”)with Verisure Srl(“Verisure”)that gives Verisure exclusive marketing and distribution rights for our products in Europe as well as theability to sell our pro

308、ducts through their direct channel globally.We cannot provide assurance that the arrangement with Verisure willcontinue to be a successful collaboration.Verisure has the exclusive right to market and distribute our products in Europe.Our results of operations may be negativelyimpacted if Verisure is

309、 not successful in continuing to sell our products in Europe.In addition,if Verisure fails to pay us on a timely basis,orat all,or otherwise does not perform under the Supply Agreement,our cash flow would be232025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/0001736946250000

310、14/arlo-20241231.htm24/115Table of Contentsreduced.We are also exposed to increased credit risk if Verisure fails or becomes insolvent.We also cannot provide any assurance that wewill successfully develop custom products as specified by Verisure under the Supply Agreement.The Asset Purchase Agreemen

311、t and Supply Agreement with Verisure contain customary representations and warranties regarding,the Business and the Assets(each as defined in the Asset Purchase Agreement),indemnification provisions,termination rights,certainfinancial covenants and other customary provisions.Our failure to comply w

312、ith these provisions may have a material adverse effect on ourfuture performance.We are dependent on information technology systems,infrastructure and data.If our information technology systems or data,orthose of third parties upon which we rely,are or were compromised,we could experience adverse co

313、nsequences resulting from suchcompromise,including but not limited to regulatory investigations or actions;litigation;fines and penalties;disruptions of our businessoperations;reputational harm;loss of customers or sales;reduced revenue or profits;increased expenses;significant decline in ourstock p

314、rice;and other adverse consequences.In the ordinary course of our business,we and the third parties upon which we rely,collect,receive,store,process,generate,use,transfer,disclose,make accessible,protect,secure,dispose of,transmit,and share(collectively,“processing”)proprietary,confidential,andsensi

315、tive data,including personal data about our customers,employees,and others,intellectual property,and trade secrets(collectively,“sensitive information”).Cyber-attacks,malicious internet-based activity,online and offline fraud,and other similar activities threaten the confidentiality,integrity,and av

316、ailability of our sensitive information and information technology systems,and those of the third parties upon which we rely.These information security risks have significantly increased in recent years in part due to the proliferation of new technologies and theincreased sophistication and activiti

317、es of organized crime,hackers,terrorists,threat actors,“hacktivists,”personnel(such as through theft ormisuse),sophisticated nation states,and nation-state-supported actors and other external parties.Some actors now engage and are expectedto continue to engage in cyber-attacks,including without limi

318、tation nation-state actors for geopolitical reasons and in conjunction withmilitary conflicts and defense activities.During times of war and other major conflicts,we,the third parties upon which we rely may bevulnerable to a heightened risk of these attacks,including retaliatory cyber-attacks,that c

319、ould materially disrupt our systems and operations,supply chain,and ability to produce,sell and distribute our products and services.We and the third parties upon which we rely are subject to a variety of evolving threats,including but not limited to social-engineering attacks(including through deep

320、 fakes,which may be increasingly more difficult to identify as fake,and phishing attacks),malicious code(such as viruses and worms),malware(including as a result of advanced persistent threat intrusions),denial-of-serviceattacks,credential stuffing attacks,credential harvesting,personnel misconduct

321、or error,ransomware attacks,supply-chain attacks,softwarebugs,server malfunctions,software or hardware failures,loss of data or other information technology assets,adware,telecommunicationsfailures,earthquakes,fires,floods,attacks enhanced or facilitated by AI,and other similar threats.In particular

322、,severe ransomware attacksare becoming increasingly prevalent and can lead to significant interruptions in our operations,ability to provide our products or services,loss of sensitive data and income,reputational harm,and diversion of funds.Extortion payments may alleviate the negative impact of ara

323、nsomware attack,but we may be unwilling or unable to make such payments due to,for example,applicable laws or regulationsprohibiting such payments.Remote work has increased risks to our information technology systems and data,as more of our employees utilize networkconnections,computers and devices

324、outside our premises or network,including working at home,while in transit and in public locations.Future or past business transactions(such as acquisitions or integrations)could expose us to additional cybersecurity risks andvulnerabilities,as our systems could be negatively affected by vulnerabili

325、ties present in acquired or integrated entities systems andtechnologies.Furthermore,we may discover security issues that were not found during due diligence of such acquired or integrated entities,and it may be difficult to integrate companies into our information technology environment and security

326、 program.242025/5/19 13:57arlo-20241231https:/www.sec.gov/Archives/edgar/data/1736946/000173694625000014/arlo-20241231.htm25/115Table of ContentsWe employ a shared responsibility model where our customers are responsible for using,configuring and otherwise implementingsecurity measures related to ou

327、r platform,services and products in a manner that meets applicable cybersecurity standards,complies withlaws,and addresses their information security risk.As part of this shared responsibility security model,we make certain security featuresavailable to our customers that can be implemented at our c

328、ustomers discretion or identify security areas or measures for which ourcustomers are responsible.In certain cases where our customers choose not to implement,or incorrectly implement,those features ormeasures,misuse our services,or otherwise experience their own vulnerabilities,policy violations,cr

329、edential exposure or security incidents,even if we are not the cause of a resulting customer security issue or incident,our customer relationships reputation,and revenue have beenand in the future may be adversely impacted.We may rely on third-party service providers and technologies to operate crit

330、ical business systems to process sensitive informationin a variety of contexts,including,without limitation,cloud-based infrastructure,data center facilities,encryption and authenticationtechnology,employee email,content delivery to customers,and other functions.We may also rely on third-party servi

331、ce providers to provideother products,services,parts,or otherwise to operate our business.Our ability to monitor these third parties information security practicesis limited,and these third parties may not have adequate information security measures in place.If our third-party service providersexper

332、ience a security incident or other interruption,we could experience adverse consequences.While we may be entitled to damages if ourthird-party service providers fail to satisfy their privacy or security-related obligations to us,any award may be insufficient to cover ourdamages,or we may be unable t

333、o recover such award.In addition,supply-chain attacks have increased in frequency and severity,and wecannot guarantee that third parties infrastructure in our supply chain or our third-party partners supply chains have not been compromised.Any of the previously identified or similar threats could cause a security incident or other interruption that could result inunauthorized,unlawful,or accidenta