Arlo Technologies

2018

Entry into the exchange: capitalization of $1.6 billion, growth of stock from $16 to $22.1

In August, 2018 Netgear brought Arlo Technologies company which was constructed based on division on release of wireless cameras to the exchange. Shares are placed on the New York Stock Exchange under a ticker of ARLO.

Netgear established the IPO price at the level of $16 that below initially called range in $18-20. According to the results of the first day as the public company securities of Arlo Technologies rose in price up to $22.1. However in the next weeks the quotations of Arlo Technologies fell. On November 9, 2018 the cost of one stock of the company was $12.72 that is 7.8% less, than a day earlier.

Netgear created issuer of wireless cameras and brought her to the exchange

Within listing of Arlo Technologies sold 10.2 million shares and attracted in total $170.2 million. In the first day of biddings market capitalization of the company made $1.6 billion, and on November 9 — $944.43 million.

During primary public placement of securities of Netgear sold only 15.8% of the shares Arlo Technologies, and retained the lion share. It is going to be distributed between shareholders until the end of the first quarter 2019. After that financial results of Arlo Technologies will be specified in the column "Discontinued operation".

In the report for the third quarter 2018 indicators of Arlo Technologies were considered, as if the company formally is division of Netgear. For this period revenue of Arlo Technologies made $131.2 million against $104.8 million the previous year.

More than 90% of turnover of Arlo Technologies are created by sale of cameras for house security with function of remote access. 8% are the share of services of security, but they grow quicker (+43% in July-September, 2018 of rather same period of the 2017th).^[1]

 The analyst Robert Cihra from Guggenheim Securities  says that it likes Arlo business, but he would prefer to have a share in it through Netgear.

Creation of the company and plans for the IPO

On February 6, 2018 the American producer of network equipment Netgear announced creation of new company Arlo Technologies to which it transferred the business on release of surveillance cameras.

Netgear is going to make initial public offering of Arlo Technologies at the exchange. The IPO is planned on the second half of 2018, and in the first half of the year the relevant documents will be filed to Securities and Exchange Commission (SEC).

Camera Arlo

Netgear intends to sell not less than 20% of ordinary shares of the new company and to distribute the remained securities among investors of Netgear. The Board of Directors of vendor unanimously approved the transaction.

Matthew McRae who joined Netgear in the fourth quarter 2017 is appointed the CEO of Arlo Technologies, having held a position of the senior vice president for strategy.

Netgear began to develop family of the Arlo video cameras intended for observation of the dwelling, children and (or) animals at the end of 2014. These devices helping users to control far off the houses via mobile devices allowed the company to expand the business outside routers and other traditional network equipment, demand for which decreases.

In 2017 revenue of the business connected with Arlo reached $378.4 million against $188.5 million in the 2016th.

We consider that now suitable time has come in order that the division of Arlo and Netgear is sent in the different ways and used different trajectories of growth. Arlo will actively attract new users whereas Netgear continues to expand interaction with extensive base of the acting clients. Both businesses are rather strong for independent work and will earn from concentration, flexibility and financial resources which will come with separation — the head of Netgear Patrick Lo said.[2]

Notes