Arlo Technologies Inc (ARLO) 2023 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. (Operator Instructions) I would now like to turn the conference over to Erik Bylin. Please go ahead, sir.

女士們先生們，感謝你們的支持。 （操作員指示）我現在想將會議轉交給 Erik Bylin。請繼續，先生。

Thank you, operator. Good afternoon, and welcome to Arlo Technologies Second Quarter 2023 Financial Results Conference Call. Joining us from the company are Mr. Matthew McRae, CEO; and Mr. Kurt Binder, CFO. The format of the call will start with an introduction and commentary on the business provided by Matt, followed by a review of the financials for the second quarter, along with guidance for the third quarter and full year provided by Kurt. We will then have time for any questions. If you've not received a copy of today's release, please visit Arlo's Investor Relations website at investor.arlo.com.

謝謝你，接線員。下午好，歡迎參加 Arlo Technologies 2023 年第二季度財務業績電話會議。加入我們公司的還有首席執行官 Matthew McRae 先生；和首席財務官 Kurt Binder 先生。電話會議的形式將首先由馬特提供對業務的介紹和評論，然後是對第二季度財務狀況的回顧，以及庫爾特提供的第三季度和全年的指導。然後我們將有時間回答任何問題。如果您尚未收到今天發布的副本，請訪問 Arlo 的投資者關係網站 Investor.arlo.com。

Before we begin the formal remarks, we advise you that today's conference call contains forward-looking statements. Forward-looking statements include statements regarding our potential future business; operating results and financial condition, including descriptions of our revenue, gross margins, operating margins, earnings per share, expenses, cash outlook, free cash flow and free cash flow margin; guidance for the third quarter and full year of 2023; the rate and timing of paid subscriber growth; the transition to a services-first business model; the commercial launch and momentum of new products and services; strategic objectives and initiatives; market expansion and future growth; the effect of our brand awareness campaign on future growth; partnerships with various market leaders and strategic collaborators; continued new product and service differentiation; and the impact of general macroeconomic conditions on our business, operating results and financial condition. Actual results or trends could differ materially from those contemplated by these forward-looking statements. For more information, please refer to the risk factors discussed in Arlo's periodic filings with the SEC, including the most recent annual report on Form 10-K and quarterly report on Form 10-Q. Any forward-looking statements that we make on this call are based on assumptions as of today, and Arlo undertakes no obligation to update these statements as a result of new information or future events.

在我們開始正式發言之前，我們建議您今天的電話會議包含前瞻性陳述。前瞻性陳述包括有關我們未來潛在業務的陳述；經營業績和財務狀況，包括對我們的收入、毛利率、營業利潤率、每股收益、費用、現金前景、自由現金流和自由現金流利潤率的描述； 2023 年第三季度和全年指引；付費用戶增長的速度和時間；向服務第一的商業模式過渡；新產品和服務的商業發布和勢頭；戰略目標和舉措；市場擴張和未來增長；我們的品牌知名度活動對未來增長的影響；與各種市場領導者和戰略合作夥伴建立夥伴關係；持續的新產品和服務差異化；以及總體宏觀經濟狀況對我們的業務、經營業績和財務狀況的影響。實際結果或趨勢可能與這些前瞻性陳述預期的結果或趨勢存在重大差異。如需了解更多信息，請參閱 Arlo 向 SEC 定期提交的文件中討論的風險因素，包括最新的 10-K 表年度報告和 10-Q 表季度報告。我們在本次電話會議中所做的任何前瞻性陳述均基於截至目前的假設，Arlo 不承擔因新信息或未來事件而更新這些陳述的義務。

In addition, several non-GAAP financial items will be discussed on this call. A reconciliation of the GAAP to non-GAAP measures can be found in today's press release on our Investor Relations website.

此外，本次電話會議還將討論幾個非公認會計準則財務項目。公認會計原則與非公認會計原則措施的調節可以在我們投資者關係網站上今天的新聞稿中找到。

At this time, I would now like to turn the call over to Matt.

現在，我想把電話轉給馬特。

Thank you, Erik, and thank you, everyone, for joining us today on Arlo's Second Quarter 2023 Earnings Call. Arlo has completed the transformation to a service business, as evidenced by the underlying drivers of our outstanding financial performance. Paid accounts grew 55% year-over-year to 2.3 million subscribers. Service revenue grew 54% year-over-year, reaching a record $50 million and our annual recurring revenue grew 66% year-over-year to $194 million.

謝謝 Erik，也謝謝大家今天參加我們的 Arlo 2023 年第二季度財報電話會議。 Arlo 已完成向服務業務的轉型，我們出色的財務業績的根本驅動力就證明了這一點。付費賬戶訂閱者數量同比增長 55%，達到 230 萬。服務收入同比增長 54%，達到創紀錄的 5000 萬美元，年度經常性收入同比增長 66%，達到 1.94 億美元。

We also achieved a record service gross margin of 75%. All of these metrics are substantially ahead of where we hoped to be when we rolled out our long-range plan a little more than a year ago. This service acceleration is partially attributable to the pricing strategy Arlo implemented in Q4 where we brought down hardware pricing and raised subscription service pricing.

我們還創下了 75% 的服務毛利率紀錄。所有這些指標都遠遠超出了我們一年多前推出長期計劃時的預期。這種服務加速部分歸因於 Arlo 在第四季度實施的定價策略，我們降低了硬件定價並提高了訂閱服務定價。

While this rebalancing of value reduces product revenue and gross margin, it generates incremental product demand by lowering the barrier of entry for the Arlo solution and substantially increases service revenue with no material impact on churn. This inelasticity in the subscription pricing is the truest testament to the value our services provide our customers.

雖然這種價值的重新平衡會降低產品收入和毛利率，但它通過降低 Arlo 解決方案的進入門檻來產生增量產品需求，並大幅增加服務收入，而對客戶流失沒有重大影響。訂閱定價的缺乏彈性最真實地證明了我們的服務為客戶提供的價值。

Diving in a bit deeper, average revenue per user for retail and direct paid accounts is up roughly 24% when compared to a year ago. This, in turn, has pushed the lifetime value of a retail and direct paid account over $700. What's more, even though the current number is small, households that have the new Arlo Security System show an ARPU that is an additional 60% higher, which highlights a clear avenue to drive ARPU up over time.

更深入地說，零售和直接付費賬戶的每位用戶平均收入與一年前相比增長了約 24%。這反過來又使零售和直接付費賬戶的生命週期價值超過 700 美元。更重要的是，儘管目前的數量很少，但擁有新 Arlo 安全系統的家庭的 ARPU 卻高出 60%，這凸顯了隨著時間的推移推動 ARPU 上升的明顯途徑。

This services performance and the excellent execution by the Arlo team drove our overall results for the quarter. Revenue came in at $115.1 million, which was at the top end of our guidance, and we delivered a record non-GAAP earnings per share of $0.06. Arlo achieved record company gross margin of 37% and record operating margin of 5%. And with great working capital management, Arlo produced 10% free cash flow margin.

Arlo 團隊的服務表現和出色的執行力推動了我們本季度的整體業績。收入為 1.151 億美元，處於我們指導的最高水平，並且我們實現了創紀錄的非 GAAP 每股收益 0.06 美元。 Arlo 實現了創紀錄的 37% 的毛利率和創紀錄的 5% 的營業利潤率。憑藉出色的營運資本管理，Arlo 創造了 10% 的自由現金流利潤率。

Comparing the first half of 2023 with the first half of 2022, Arlo improved its cash from operating activities by $52 million. And for the first time in company history, our non-GAAP gross profit from services alone exceeded our non-GAAP operating expenses. This is a huge crossover point for Arlo and highlights the exciting trajectory we are on.

2023年上半年與2022年上半年相比，Arlo的經營活動現金增加了5200萬美元。在公司歷史上，我們的非 GAAP 服務毛利潤首次超過了我們的非 GAAP 運營費用。對於 Arlo 來說，這是一個巨大的交叉點，凸顯了我們所處的激動人心的發展軌跡。

Our strategy and execution are driving these results and generating significant shareholder value. Despite the macroeconomic conditions, we are seeing strong demand as is evidenced by our key metrics and our inventory levels.

我們的戰略和執行正在推動這些成果並產生顯著的股東價值。儘管宏觀經濟狀況不佳，但我們的關鍵指標和庫存水平證明了需求強勁。

Most recently, we saw that demand carried through to a successful Prime Day, which gives us a glimpse into the current consumer mindset ahead of the second half. This upcoming holiday season, Arlo will lean further into our successful pricing strategy by launching a totally new low-cost security camera platform, and we have secured substantial placement in promotional vehicles across our major channels. Customer acquisition drives paid accounts, which drives the expansion of Arlo's profitability.

最近，我們看到這種需求一直延續到了 Prime Day 的成功舉辦，這讓我們了解了下半年之前的當前消費者心態。在即將到來的假期季節，愛洛將通過推出全新的低成本安全攝像頭平台，進一步依靠我們成功的定價策略，並且我們已經在主要渠道的促銷車輛中獲得了大量的位置。客戶獲取推動了付費賬戶的增長，從而推動了 Arlo 盈利能力的擴大。

With this backdrop, we expect full year service revenue to grow nearly 50% year-over-year and now exceed our $200 million target. Our non-GAAP service gross margin for the full year will be roughly 75% and should propel us to our target of 5% non-GAAP operating margin for the full year, a more than 6 percentage point improvement compared to 2022.

在此背景下，我們預計全年服務收入將同比增長近 50%，現已超過我們 2 億美元的目標。我們全年的非 GAAP 服務毛利率約為 75%，這將推動我們實現全年 5% 的非 GAAP 營業利潤率目標，與 2022 年相比提高了 6 個百分點以上。

It is an exciting time at Arlo as we witnessed the years of hard work begin to materialize in a meaningful way across the business. Congratulations and thank you to the whole Arlo team for the milestones we passed and the ones we are focused on next.

這是阿洛激動人心的時刻，我們見證了多年來的辛勤工作開始在整個企業中以有意義的方式實現。祝賀並感謝整個 Arlo 團隊為我們所實現的里程碑以及我們下一步關注的目標。

And with that, I'll turn it over to Kurt.

有了這個，我會把它交給庫爾特。

Thank you, Matt, and thank you, everyone, for joining us today. I will start by sharing some financial details and an overview of the business for Q2 2023. Revenue for the second quarter came in at the top end of our guidance at $115.1 million, roughly flat sequentially and slightly down year-over-year. While revenue was relatively consistent year-over-year, the composition of that revenue changed dramatically.

謝謝馬特，也謝謝大家今天加入我們。首先，我將分享一些財務細節和 2023 年第二季度的業務概述。第二季度的收入達到我們指導的上限，為 1.151 億美元，與上一季度大致持平，同比略有下降。雖然收入同比相對穩定，但收入的構成發生了巨大變化。

In the most recent quarter, service revenue was 44% of total revenue, while last year, it only accounted for 28% of the total revenue. This shift is reflective of our services-first strategy as well as our new pricing strategy. We are extremely pleased with our services revenue and ARR growth, which helped deliver revenue at the top end of our guidance range and contributed to Arlo generating non-GAAP operating profit in Q2 of $5.4 million or 5% operating margin and $11.5 million in free cash flow or 10% free cash flow margin.

最近一個季度，服務收入佔總收入的44%，而去年僅佔總收入的28%。這一轉變反映了我們的服務第一戰略以及新的定價戰略。我們對我們的服務收入和ARR 增長感到非常滿意，這有助於實現收入達到我們指導範圍的上限，並有助於Arlo 在第二季度實現540 萬美元的非GAAP 營業利潤（即5% 的營業利潤率）和1,150 萬美元的自由現金流動或 10% 自由現金流保證金。

Our service revenue for Q2 was another record at $50.3 million, an increase of $17.5 million or 53% year-over-year and an increase of $6.4 million or 15% quarter-over-quarter. This growth was driven by our subscription price increases and the addition of 245,000 paid accounts in the quarter. This number reflects a catch-up in the number of paid accounts in our European region, which was being underreported by Verisure in previous quarters.

第二季度我們的服務收入再創紀錄，達到 5030 萬美元，同比增長 1750 萬美元，增長 53%，環比增長 640 萬美元，增長 15%。這一增長是由我們的訂閱價格上漲和本季度新增 245,000 個付費帳戶推動的。這一數字反映了我們歐洲地區付費賬戶數量的追趕，而 Verisure 在前幾個季度低估了這一數字。

Our normal net paid account run rate remains in the 170,000 to 190,000 range. But we expect this catch-up to continue over the next couple of quarters as Verisure works through their system correction. This does not impact any related financial metric and is limited to the net paid account number only.

我們正常的淨付費賬戶運行率保持在 170,000 至 190,000 範圍內。但我們預計，隨著 Verisure 進行系統修正，這種追趕將在接下來的幾個季度繼續下去。這不會影響任何相關的財務指標，並且僅限於淨付費帳號。

Our installed base continued its growth trajectory and reached 2.3 million paid accounts in Q2. As mentioned earlier, service revenue accounted for 44% of our Q2 2023 revenue and importantly, represented 88% of our total gross profit. Additionally, our quarter end ARR was $194 million, up more than 66% year-over-year and providing another proof point of the tremendous growth of our services business. Product revenue for Q2 was $64.7 million, which was down about 3% sequentially and 25% year-over-year.

我們的安裝基礎繼續保持增長勢頭，第二季度付費賬戶達到 230 萬。如前所述，服務收入占我們 2023 年第二季度收入的 44%，更重要的是，占我們總毛利潤的 88%。此外，我們的季度末 ARR 為 1.94 億美元，同比增長超過 66%，這再次證明了我們服務業務的巨大增長。第二季度產品收入為 6470 萬美元，環比下降約 3%，同比下降 25%。

During the quarter, we shipped a total 954,000 cameras worldwide compared to 1.1 million in the prior year period. Product revenue was impacted by a slight decline in shipment volume but more so due to declines in average selling prices driven by a deliberate shift in our pricing strategy and mix in global product assortment.

本季度，我們在全球範圍內總共售出了 954,000 台相機，而去年同期為 110 萬台。產品收入受到出貨量略有下降的影響，但更重要的是由於我們的定價策略和全球產品種類組合的故意轉變導致平均售價下降。

In the quarter, approximately 32% of our revenue originated from our international customers. Our EMEA results were impacted in Q2 as our largest partner continues to constrain inventory levels, a cycle other channel partners went through in previous quarters.

本季度，我們約 32% 的收入來自國際客戶。我們的歐洲、中東和非洲地區業績在第二季度受到了影響，因為我們最大的合作夥伴繼續限制庫存水平，其他渠道合作夥伴在前幾個季度也經歷過同樣的情況。

We are confident this is not an end market demand issue and expect this near-term response to macro conditions in the region to moderate over time. From this point on, my discussion points will focus on non-GAAP numbers. The reconciliation from GAAP to non-GAAP figures is detailed in our earnings release distributed earlier today.

我們相信這不是終端市場需求問題，並預計該地區宏觀狀況的近期反應將隨著時間的推移而緩和。從現在開始，我的討論點將集中在非公認會計原則數字上。我們今天早些時候發布的財報中詳細介紹了 GAAP 與非 GAAP 數據的調節情況。

Our non-GAAP gross profit for the second quarter was $43 million, up 23% year-over-year. This resulted in a non-GAAP gross margin of 37%, up 470 basis points from 33% in Q1 of 2023. The year-over-year increase in non-GAAP gross profit in Q2 was attributable to the growth in our service business. The improvement in non-GAAP service gross profit was driven by growth in our subscriptions and planned pricing coupled with cost optimizations.

我們第二季度的非 GAAP 毛利潤為 4300 萬美元，同比增長 23%。這導致非 GAAP 毛利率為 37%，較 2023 年第一季度的 33% 上升 470 個基點。第二季度非 GAAP 毛利潤同比增長歸因於我們服務業務的增長。非公認會計原則服務毛利潤的改善是由我們的訂閱量增長、計劃定價以及成本優化推動的。

Non-GAAP service gross margin for the quarter was 75%, slightly up from 74% in Q1 of 2023 and significantly up from 66% in Q2 of 2022. Non-GAAP product gross margin for the quarter was 8% and consistent with our guidance provided in March of this year.

本季度非GAAP 服務毛利率為75%，略高於2023 年第一季度的74%，顯著高於2022 年第二季度的66%。本季度非GAAP 產品毛利率為8%，與我們的指導一致今年3月提供。

Furthermore, we are very pleased that our services non-GAAP gross profit exceeded our non-GAAP operating expenses in the quarter. This was an important achievement for the Arlo team, thereby validating our ability to transform into a sustainable operating model around our services business now and well into the foreseeable future.

此外，我們非常高興我們的服務非 GAAP 毛利潤超過了本季度的非 GAAP 運營費用。這對 Arlo 團隊來說是一項重要成就，從而驗證了我們在現在和可預見的未來圍繞服務業務轉變為可持續運營模式的能力。

Total non-GAAP operating expenses for the second quarter were $37.5 million, up sequentially and year-over-year by less than $3.5 million. The year-over-year increase is attributable to continued investment in sales and marketing expenses to help drive household acquisition and paid account growth. The non-GAAP operating expenses for the first half of 2023 were slightly better than our expectations and reflect the cost savings initiatives implemented in Q4 of last year.

第二季度非 GAAP 運營支出總額為 3750 萬美元，環比和同比增長不到 350 萬美元。同比增長歸因於對銷售和營銷費用的持續投資，以幫助推動家庭購買和付費賬戶增長。 2023 年上半年的非 GAAP 運營費用略好於我們的預期，反映了去年第四季度實施的成本節約舉措。

Our head count at the end of Q2 was 345, which represents a slight change from 334 team members at the end of Q1 and 354 team members in the same period last year. In Q2, we posted non-GAAP net income of $6.1 million. Our non-GAAP net income translates to earnings per diluted share of $0.06 and at the top end of our guidance range provided last quarter. The marked improvement in non-GAAP operating margin was driven by a combination of service revenue growth and gross margin expansion coupled with a disciplined approach to cost management.

第二季度末我們的員工人數為 345 人，與第一季度末的 334 名團隊成員和去年同期的 354 名團隊成員相比略有變化。第二季度，我們公佈的非 GAAP 淨利潤為 610 萬美元。我們的非 GAAP 淨利潤折算後每股攤薄收益為 0.06 美元，處於我們上季度提供的指導範圍的上限。非公認會計原則營業利潤率的顯著改善是由服務收入增長和毛利率擴張以及嚴格的成本管理方法共同推動的。

Regarding our balance sheet and liquidity position. We ended the quarter with $123.7 million in available cash, cash equivalents and short-term investments. This balance was up $5 million sequentially and is trending in line with our expectations. We are pleased to report that we generated approximately $11.5 million in free cash flow in Q2, which represents free cash flow margin of 10% and improvement driven by our increased profitability and solid working capital management. Additionally, our Q2 inventory balance ended at $39.4 million, representing a slight decrease from Q1 of 2023 with inventory turns at 6.1x and relatively consistent with last quarter. As Matt mentioned, we are launching a broad assortment of new products in the second half of 2023, which will enable us to remain highly aggressive with our product pricing strategy, particularly through the seasonally strong holiday season and into 2024.

關於我們的資產負債表和流動性狀況。截至本季度末，我們的可用現金、現金等價物和短期投資為 1.237 億美元。該餘額比上一季度增加了 500 萬美元，趨勢符合我們的預期。我們很高興地報告，第二季度我們產生了約1150 萬美元的自由現金流，這意味著自由現金流利潤率為10%，並且在我們盈利能力的提高和穩健的營運資金管理的推動下得到了改善。此外，我們第二季度的庫存餘額為 3940 萬美元，較 2023 年第一季度略有下降，庫存周轉率為 6.1 倍，與上季度相對一致。正如 Matt 提到的，我們將在 2023 年下半年推出各種各樣的新產品，這將使我們能夠保持高度積極的產品定價策略，特別是在季節性旺季和 2024 年之前。

We remain focused on maintaining appropriate inventory levels to effectuate a smooth product transition with retailers and partners while being able to meet any potential upside in consumer demand that may be experienced. These factors may impact our inventory balance and thereby our ability to generate similar levels of free cash flow as working capital may fluctuate.

我們仍然專注於維持適當的庫存水平，以實現與零售商和合作夥伴的順利產品過渡，同時能夠滿足消費者可能遇到的任何潛在的上行需求。這些因素可能會影響我們的庫存平衡，從而影響我們在營運資本波動時產生類似水平的自由現金流的能力。

And finally, our accounts receivable balance was $57.3 million as of July 2, with Q2 DSOs at 45 days, down from 57 days from the same period last year. We will continue to monitor our working capital balances in line with our revenue and forecasted consumer demand levels with a focus on maintaining a solid balance sheet and liquidity position in the future.

最後，截至 7 月 2 日，我們的應收賬款餘額為 5730 萬美元，第二季度 DSO 為 45 天，低於去年同期的 57 天。我們將繼續根據我們的收入和預測的消費者需求水平監控我們的營運資本餘額，重點是保持未來穩健的資產負債表和流動性狀況。

Now turning to our outlook. While we remain cautious about our product revenue outlook for the year, we expect the third quarter revenue for 2023 to be in the range of $122 million to $132 million. We expect our GAAP net loss per diluted share to be between $0.07 and $0.01, and our non-GAAP net income per diluted share to be between $0.04 and $0.10 per share.

現在轉向我們的展望。雖然我們對今年的產品收入前景保持謹慎態度，但我們預計 2023 年第三季度收入將在 1.22 億美元至 1.32 億美元之間。我們預計 GAAP 攤薄後每股淨虧損將在 0.07 至 0.01 美元之間，非 GAAP 攤薄後每股淨收益將在 0.04 至 0.10 美元之間。

We reiterate our 2023 full year revenue guidance range to be between $470 million and $500 million and that our service revenue is forecasted to grow at roughly 48% year-over-year to approximately $200 million. We estimate non-GAAP product gross margin will be in the mid-single digits as we pursue promotional activities and sales models that prioritize the acquisition of new paid accounts. However, we expect non-GAAP service gross margin to be at or above 75% in 2023.

我們重申 2023 年全年收入指導範圍為 4.7 億美元至 5 億美元之間，我們的服務收入預計將同比增長約 48%，達到約 2 億美元。我們預計，隨著我們推行優先收購新付費賬戶的促銷活動和銷售模式，非公認會計原則產品毛利率將達到中個位數。不過，我們預計 2023 年非 GAAP 服務毛利率將達到或超過 75%。

And now I'll open it up for questions.

現在我將打開它來提問。

Your question comes from the line of Hamed Khorsand with BWS.

你的問題來自 Hamed Khorsand 與 BWS 的對話。

So first question I had was -- could you just talk about this inventory issue with Verisure? How much inventory do they have? And why are they being so cautionary? And then also, if you could also provide a little bit more understanding as to what this catch-up is and why is it noncash and how do you find out about it?

我的第一個問題是——您能否與 Verisure 談談這個庫存問題？他們有多少庫存？為什麼他們如此謹慎？另外，您能否進一步了解這種追趕是什麼？為什麼它是非現金的？您是如何找到它的？

Yes. I think what we're seeing with Verisure is very similar to what we saw with retailers in the retail channel, as an example, at the end of last year, where they're really managing their inventory to a target number; and Verisure, we see doing that this year. The exact amount, we don't know, but we can see them managing their inventory down. And we have visibility into a much longer forecast with them.

是的。我認為我們在 Verisure 上看到的情況與我們在零售渠道中看到的零售商非常相似，例如，去年年底，他們實際上將庫存管理到了目標數量；和 Verisure，我們預計今年會這樣做。確切的數量，我們不知道，但我們可以看到他們在管理庫存。我們可以通過他們了解更長期的預測。

As you know, we have a great long-term partnership with them. So we can see that recovering after they're going to hit whatever target they're trying to hit internally. So I think it's very similar to what we saw the retailers do at the end of last year and now they're going through that same cycle today, this year.

如您所知，我們與他們建立了良好的長期合作夥伴關係。所以我們可以看到，在他們要達到他們試圖達到的內部目標之後，他們就會恢復。所以我認為這與我們去年年底看到的零售商的做法非常相似，現在他們今年也正在經歷同樣的周期。

On the catch-up, it was roughly October of last year. That's not when we saw it, but that's when it started. The product, meaning the cameras that are being installed or being installed at the location, at the household, which means, for us, the cost -- we do a cost-plus model, so the cost in our cloud are accurate. We mark that up. We charge them like we've talked about in our pricing model with B2B customers.

追起來，時間大約是去年十月份。那不是我們看到它的時候，但那是它開始的時候。產品，意味著正在安裝或正在安裝在家庭位置的攝像機，這對我們來說意味著成本——我們採用成本加成模型，因此云中的成本是準確的。我們對此進行標記。我們向他們收費，就像我們在與 B2B 客戶的定價模型中討論的那樣。

But the actual count of the household or the paid accounts was not being incremented correctly. So Verisure is pushing firmware updates out to what they call their central units to fix that over time. And so that's where you can see some of the catch-up this quarter. And we think that they'll continue to roll that out through the end of the year. So we'll see a little bit more catch-up each quarter.

但家庭或付費賬戶的實際數量並未正確增加。因此，Verisure 正在將固件更新推送到他們所謂的中央單元，以隨著時間的推移解決該問題。因此，您可以看到本季度的一些追趕。我們認為他們將在今年年底繼續推出這一服務。因此，每個季度我們都會看到更多的追趕。

If you back out -- just to give you an example, if you back out the catch-up we saw this quarter, we were at kind of the high range of our normal range of adds for the quarter anyway, so call it 185-plus thousand accounts for the quarter before Verisure's catch up as they deploy firmware and roll that out.

如果你退出——舉個例子，如果你退出我們本季度看到的追趕，無論如何，我們都處於本季度正常增加範圍的較高範圍，所以稱之為 185-在Verisure 趕上之前的這個季度，他們部署了固件並推出了數千個帳戶。

And the follow-up I had was in Q2 as far as hardware is concerned. How much of the revenue was sell-in as far as the Prime Day is concerned? And what are you seeing as far as activity-wise now that Prime Day is over? Are you seeing the attach rates still stay at around that 50% mark you've been talking about for a while?

就硬件而言，我的後續行動是在第二季度。就 Prime Day 而言，有多少收入來自銷售？黃金日結束後，您對活動有何看法？您是否發現附加率仍然停留在您已經談論了一段時間的 50% 左右？

So the first part, I'll answer that, Hamed. We saw that there was a couple of factors impacting this quarter. First, we did see sell-in fairly strong as a result of the promotional activity that we've been embarking on for the better part of the last 6 or 7 months. As a result of that, the natural seasonality played in our favor for Q2, but compounding that was the fact that we did have a fairly significant load-in for Prime Day.

所以第一部分，我會回答這個問題，哈米德。我們發現有幾個因素影響了本季度。首先，由於我們在過去六七個月的大部分時間裡一直在開展促銷活動，我們確實看到銷售相當強勁。因此，自然季節性對我們第二季度有利，但更複雜的是，我們在 Prime Day 確實有相當大的加載量。

I'm sure Matt will touch on this a bit more, but Prime Day was a great success for us. And we've also seen similar load-in for a couple of other key retailers like, for instance, Costco. So it was a relatively strong quarter as it relates to the load-in for those retailers. The retailers are -- for the most part, had a good inventory level here in the U.S. And so we do expect, especially in the second half, that the demand will continue as we become -- continue to be promotional.

我相信馬特會更多地談到這一點，但 Prime Day 對我們來說是一個巨大的成功。我們還看到其他一些主要零售商（例如好市多）也有類似的加載。因此，這是一個相對強勁的季度，因為這與這些零售商的裝載有關。大多數情況下，美國的零售商擁有良好的庫存水平，因此我們確實預計，尤其是在下半年，隨著我們繼續促銷，需求將持續下去。

Yes. And just a follow-up on the second part of your question around customer sentiment. Kurt touched on it, and we touched on it in the script. Prime Day was strong, and that is a kind of continuation of what we've described as, I think, resilience in the last couple of quarters around consumer demand. Our pricing strategy is definitely driving consumer demand. I think demand is relatively strong. We do have good inventory levels in the channel. You can see our inventory actually came down. So we're bringing in more product.

是的。只是對您關於客戶情緒的問題的第二部分進行跟進。科特談到了這一點，我們也在劇本中談到了這一點。黃金日表現強勁，我認為這是我們所描述的過去幾個季度圍繞消費者需求的彈性的延續。我們的定價策略無疑會推動消費者需求。我認為需求還是比較旺盛的。我們在渠道中確實擁有良好的庫存水平。你可以看到我們的庫存實際上下降了。因此，我們正在引進更多產品。

So we're feeling pretty strong around how the consumer is reacting to our pricing strategy, our value proposition across multiple channels. Prime Day was a great example of that. And we have a very robust plan across multiple channel partners in the second half. So we're excited about the household formation we're going to see going into Q3, really Q4 going into 2024 around what that's going to mean for future service revenue.

因此，我們對消費者對我們的定價策略和跨多個渠道的價值主張的反應感到非常強烈。黃金日就是一個很好的例子。我們在下半年針對多個渠道合作夥伴制定了非常穩健的計劃。因此，我們對進入 2024 年第三季度、實際上是第四季度的家庭形成感到興奮，這對未來的服務收入意味著什麼。

Your next question comes from the line of Jacob Stephan with Lake Street.

你的下一個問題來自雅各布·斯蒂芬（Jacob Stephan）與湖街（Lake Street）的路線。

Congrats on the results. So I'm just kind of wondering, when I think about the holiday stocking period coming up here, inventory levels stable sequentially, what have those initial conversations been with kind of the U.S. big box retailers, the Best Buys, the Costcos? And just any color on that would be helpful.

祝賀結果。所以我只是想知道，當我想到即將到來的假日備貨期、庫存水平連續穩定時，與美國大型零售商、百思買、好市多的最初對話是怎樣的？任何顏色都會有幫助。

Yes. So planning for a second half promotional period actually starts at nearly the end of last year and gets a little bit more specific, and I would say, detailed as we go into Q1. So a lot of the planning for this has been in Q1, and we've been in, obviously, execution mode. We commented -- I think both Kurt and I commented that we have a new product line launching that we're very excited about coming in this time frame. And so some of that will load in Q4. Some of that may load in -- a lot of it may load in, in Q3. And some of them, when we look ahead and how much of that lands in Q3 versus Q4, that has to do with freight and other things.

是的。因此，下半年促銷期的規劃實際上是從去年年底開始的，並且變得更加具體，我想說，在我們進入第一季度時會更加詳細。因此，很多計劃都是在第一季度進行的，顯然我們一直處於執行模式。我們評論說——我和庫爾特都評論說，我們推出了一條新產品線，我們對在這個時間範圍內推出感到非常興奮。其中一些將在第四季度加載。其中一些可能會在第三季度加載——其中很多可能會加載。其中一些，當我們展望未來，以及其中有多少落在第三季度與第四季度時，這與貨運和其他事情有關。

In speaking with the retailers, the sentiment right now is relative optimism, I would say, for the second half. And that's around both, I would say, in general, despite some concern about consumers. They're seeing relatively good foot traffic, and we're seeing relatively good sales.

在與零售商交談時，我想說，目前的情緒是對下半年相對樂觀。我想說的是，總體而言，儘管對消費者有些擔憂，但兩者都是如此。他們看到了相對良好的人流量，我們也看到了相對良好的銷售情況。

And then I would say, specifically around Arlo, the success we've had in the first half of this year, our pricing strategy generating additional sales for them in the segment. And I can tell you, it's pretty clear that Arlo is actually capturing share in the market. So I would say there's a relative maybe cautious optimism in just the general consumer market from the big box retailers as we planned for the second half together over the last 6 months. But I think there's specific excitement around Arlo, what we're doing, our pricing strategy, our new products that are coming out and the plans that we have, both on a placement level but also a promotional level in the second half.

然後我想說，特別是圍繞 Arlo，我們在今年上半年取得了成功，我們的定價策略為他們在該領域帶來了額外的銷售額。我可以告訴你，很明顯 Arlo 實際上正在佔領市場份額。因此，我想說的是，正如我們在過去 6 個月中共同計劃的下半年那樣，大型零售商對一般消費市場持相對謹慎的樂觀態度。但我認為，圍繞 Arlo，我們正在做的事情、我們的定價策略、我們即將推出的新產品以及我們的計劃，無論是在投放層面還是在下半年的促銷層面，都令人興奮不已。

Okay. Got it. And maybe just touching on kind of the Verisure channel destocking. So the 10-Q had roughly $39 million in backlog as of June 30. So is this destocking coming after kind of what we -- the quarter end here so that maybe that $39 million in backlog might be lower than that? Or was that incorporated into the Q2?

好的。知道了。也許只是觸及 Verisure 渠道去庫存的情況。因此，截至6 月30 日，10-Q 的積壓訂單大約為3900 萬美元。那麼，這次去庫存是否是在我們季度末之後進行的，因此也許3900 萬美元的積壓訂單可能會低於這個數字？還是將其納入第二季度？

Yes. No, I wouldn't read into that too much, Jacob. I think that right now, from what we're hearing, and we're working with Verisure on a week-to-week basis, but they have a clear inventory target that they are going to hit for the end of this year. And that's been factored into the PO placement that you're currently seeing.

是的。不，我不會對此有過多的解讀，雅各布。我認為，從我們所聽到的情況來看，我們正在與 Verisure 每週進行合作，但他們有一個明確的庫存目標，他們將在今年年底達到這一目標。這已被納入您當前看到的採購訂單展示位置中。

Just to give you an overview of what we're seeing, right now, we have the $500 million commitment from Verisure. We're about $400 million sitting as of today. And we do see a path to exceeding that -- well exceeding that almost by the second quarter of next year.

只是為了讓您大致了解一下我們所看到的情況，目前，我們已獲得 Verisure 的 5 億美元承諾。截至今天，我們的資金約為 4 億美元。我們確實看到了一條超越這一目標的道路——幾乎到明年第二季度就將遠遠超過這一目標。

So we also see that the end market demand in the EMEA region is still pretty resilient. So although they're kind of destocking and working to hit a specific inventory target for the end of the year, the demand still looks to be very healthy and resilient, especially going into Q1 of next year. So we don't feel like there's any major concerns around the end market demand that's out there.

因此，我們還看到歐洲、中東和非洲地區的終端市場需求仍然相當有彈性。因此，儘管他們正在去庫存並努力達到年底的具體庫存目標，但需求看起來仍然非常健康和有彈性，特別是進入明年第一季度。因此，我們認為終端市場需求並不存在任何重大擔憂。

(Operator Instructions) Your next question comes from the line of Jake Norrison with Raymond James.

（操作員說明）您的下一個問題來自傑克·諾里森（Jake Norrison）和雷蒙德·詹姆斯（Raymond James）的線路。

Good quarter. Firstly, I just want to start from a higher level. Can you talk about and give us a sense internally where you're seeing mix of products versus services, particularly as we look to fiscal '24? How high do you think this can go? And maybe any visibility as to when that might cross over the 50% mark?

好季度。首先，我只是想從更高的層次開始。您能否談談並讓我們了解一下您所看到的產品與服務組合的內部情況，特別是在我們展望 24 財年時？你認為這能達到多高？也許什麼時候可以跨越 50% 的大關？

Yes, great question. So we've been focused on driving the overall percent of our services revenue higher with the overall combined revenue. And as you -- as we pointed out in our prepared comments, this quarter, we hit the 44% mark, which was fantastic. As you know, that revenue -- that service revenue is generating around the 75% gross margin. And we were super pleased with the fact that, that overall, on an absolute dollar basis, gross margin covered our entire operating expense for the -- non-GAAP operating expense for the quarter. So that was a big milestone and a milestone I think we had kind of communicated before, but it was probably positioned to be more of a Q3 or Q4 event. So we were super pleased we were able to do that in this quarter.

是的，很好的問題。因此，我們一直致力於提高服務收入在總體合併收入中的總體百分比。正如我們在準備好的評論中指出的那樣，本季度我們達到了 44%，這太棒了。如您所知，服務收入產生的毛利率約為 75%。我們非常高興的是，總體而言，以絕對美元計算，毛利率覆蓋了我們本季度非公認會計準則運營費用的全部運營費用。所以這是一個重要的里程碑，我認為我們之前已經進行過溝通，但它可能更像是第三季度或第四季度的活動。所以我們非常高興能夠在本季度做到這一點。

As we look forward in terms of our overall revenue mix, we think, for the full year, we will be at or above that 40% target. And then going into 2024, we will be moving rapidly up towards 50%. Our goal over the long term is probably somewhere between 50% and 60%, and we have a clear line of path to that. But it will take us a little time, ending this year at, say, plus 40% and then moving quickly from 40% to 50% towards the end of next year.

當我們展望整體收入組合時，我們認為全年將達到或高於 40% 的目標。進入 2024 年，我們將迅速向 50% 邁進。我們的長期目標可能在 50% 到 60% 之間，並且我們有一條明確的路徑來實現這一目標。但這需要一些時間，比如今年結束時增加 40%，然後在明年年底從 40% 迅速提高到 50%。

Okay. That was very helpful. And then last one for me, another sort of high level. How are you guys thinking about channel mix as we enter 2024? And maybe just any guardrails around how low retail and e-commerce is -- you're willing to go there?

好的。這非常有幫助。最後一個對我來說是另一種高水平。進入 2024 年，你們如何看待渠道組合？也許只是關於零售和電子商務的低水平的任何護欄——你願意去那裡嗎？

Yes. It's more a question of the relative growth between the 2. So give you a little history. When we spun from NETGEAR a while back, 83% roughly of our revenue was from what we would call traditional retail. So retail e-com and the like. Now it's closer to maybe 50% -- 45% -- 40%, 45%. So a lot of that was a strategic initiative internally to diversify our revenue base, and we saw some significant opportunity in what we call strategic accounts or B2B partners, obviously, Verisure being the largest of those partners.

是的。這更多的是兩者之間相對增長的問題。所以給你一些歷史。不久前，當我們從 NETGEAR 剝離出來時，我們大約 83% 的收入來自我們所謂的傳統零售。所以零售電子商務之類的。現在可能更接近 50%、45%、40%、45%。因此，其中很多都是內部戰略舉措，旨在使我們的收入基礎多樣化，我們在所謂的戰略客戶或 B2B 合作夥伴中看到了一些重大機會，顯然，Verisure 是這些合作夥伴中最大的。

So it's, to me, both will grow. We are seeing growth in the retail channel now. As we mentioned earlier on the call, we feel we're capturing share in some of those traditional retail channels and our pricing strategy is working. And we're seeing growth across in the long term across new strategic accounts and existing strategic accounts.

所以，對我來說，兩者都會成長。我們現在看到零售渠道的增長。正如我們之前在電話會議中提到的，我們認為我們正在奪取一些傳統零售渠道的份額，並且我們的定價策略正在發揮作用。從長遠來看，我們看到新戰略客戶和現有戰略客戶的增長。

So as far as what the balance will be, it's a question around relative growth between the 2. And I would say there's significant opportunities on the strategic account basis, and that might drive additional growth or higher growth on a relative basis as you look out over the next 12 to 24 months.

因此，就平衡而言，這是圍繞兩者之間的相對增長的問題。我想說，戰略客戶基礎上存在重大機會，當你觀察時，這可能會推動額外增長或相對基礎上更高的增長在接下來的 12 至 24 個月內。

But on the retail side, again, the market is actually flat to down right now, and we're growing. So we always try and grow our retail and direct account markets faster than the market, and we're being very successful at that. So I don't have a hard number for you, but I would say there's additional upside on the strategic accounts just because there are so many potential opportunities over the next 12 to 24 months.

但在零售方面，市場目前實際上持平甚至下跌，而我們正在增長。因此，我們總是嘗試以比市場更快的速度發展我們的零售和直接客戶市場，並且我們在這方面非常成功。所以我沒有給你一個確切的數字，但我想說戰略賬戶還有額外的好處，因為未來 12 到 24 個月有很多潛在的機會。

Awesome. Appreciate the color. Congrats on the quarter, guys.

驚人的。欣賞顏色。伙計們，恭喜這個季度。

Thank you.

謝謝。

Your next question comes from the line of Rian Bisson with Craig-Hallum.

你的下一個問題來自 Rian Bisson 和 Craig-Hallum 的對話。

Rian on for Tony. Just to kind of clarify on the subscriber add with the Verisure catch-up. I guess kind of netting out that Verisure catch-up and looking kind of throughout the year, are you still -- I mean, for next quarter and for Q4, are you still expecting kind of that 185,000 paid subscriber adds per quarter? I guess, how does that look going forward?

萊恩替下托尼。只是為了澄清訂閱者添加 Verisure 的追趕。我想，在消除 Verisure 的追趕和全年的情況下，您是否仍然 - 我的意思是，對於下個季度和第四季度，您是否仍然期望每季度增加 185,000 名付費用戶？我想，未來情況如何？

Yes. So our normal runway, I think, stays the same. And what I mean by that is what we're organically generating from multiple channels is somewhere between 170,000 and 190,000 paid accounts a quarter. And that's kind of the range that we've communicated. I think that's still true. Although like I said in this quarter, I think we were probably on the high end of that range. We had a successful quarter on paid accounts.

是的。所以我認為我們的正常跑道保持不變。我的意思是，我們每個季度從多個渠道有機生成 170,000 到 190,000 個付費帳戶。這就是我們溝通過的範圍。我認為這仍然是事實。儘管就像我在本季度所說的那樣，我認為我們可能處於該範圍的高端。我們在付費賬戶方面度過了一個成功的季度。

Then you add on additional catch-up. So this quarter, we were closer to 240,000, 245,000 paid accounts. I think we'll see similar catch-up. Again, it can be plus or minus as we go into quarters and depending on how many firmware upgrades they do as we roll through the rest of the year. But again, those aren't adding financial metrics like service revenue. It's just a catch-up of the absolute value of number of accounts because of under accounting of those paid accounts.

然後你添加額外的追趕。所以本季度，我們的付費賬戶接近 240,000 個、245,000 個。我認為我們會看到類似的追趕。同樣，當我們進入季度時，它可能是正數或負數，具體取決於我們在今年剩餘時間裡進行的固件升級次數。但同樣，這些並沒有增加服務收入等財務指標。這只是賬戶數量絕對值的追趕，因為這些付費賬戶的核算不足。

So I think when you're modeling it from a financial perspective and service revenue, that 170,000 to 190,000 range is the right way to think about it. And then just know there's some catch-up happening on the paid account number, but it's not affecting the underlying financials.

因此，我認為當您從財務角度和服務收入對其進行建模時，170,000 到 190,000 的範圍是正確的考慮方式。然後只需知道付費帳號發生了一些追趕，但這不會影響基礎財務狀況。

There are no further questions at this time. And this concludes today's conference call. Thank you for attending. You may now disconnect.

目前沒有其他問題。今天的電話會議到此結束。感謝您的出席。您現在可以斷開連接。