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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2023
Employee Benefit and Share-Based Payment Arrangement, Noncash Expense [Abstract]  
Employee Benefit Plans Employee Benefit Plans
We grant options and restricted stock units (“RSUs”) under the 2018 Equity Incentive Plan (the “2018 Plan”), under which awards may be granted to all employees. We also grant performance-based and market-based restricted stock units (“PSUs”) to our executive officers periodically. Award vesting periods for the 2018 Plan are generally three to four years. As of December 31, 2023, 3.5 million shares were available for future grants. Options may be granted for periods of up to 10 years or such shorter term as may be provided in the agreement and at prices no less than 100% of the fair market value of Arlo’s common stock on the date of grant. Options granted under the 2018 Plan generally vest over four years, the first tranche at the end of 12 months and the remaining shares underlying the option vesting monthly over the remaining three years.

During the year ended December 31, 2022, the Compensation and Human Capital Committee of the Board of Directors (the “Committee”) unanimously approved amendments to the 2018 Plan to, among other things, reserve an additional 3,000,000 shares of our common stock to be used exclusively for grants of awards to individuals who were not previously employees or non-employee directors (or following a bona fide period of non-employment), as an inducement material to the individual’s entry into employment with us within the meaning of Rule 303A.08 of the New York Stock Exchange (the “NYSE”) Listed Company Manual (“Rule 303A.08”). The 2018 Plan was amended by the Committee without stockholder approval pursuant to Rule 303A.08.
On January 19, 2024, we registered an aggregate of up to 4,759,901 shares of common stock on a Registration Statement on Form S-8, including 3,807,921 shares issuable pursuant to the 2018 Plan that were automatically added to the shares authorized for issuance under the 2018 Plan and 951,980 shares issuable pursuant to the Employee Stock Purchase Plan (“ESPP”) that were automatically added to the shares authorized for issuance on January 1, 2024, both pursuant to an “evergreen” provision contained in the respective plans.

The following table sets forth the available shares for grants as of December 31, 2023:

 Number of Shares
(In thousands)
Shares available for grants at the beginning of the period4,213 
Additional authorized shares3,555 
Granted(8,381)
Forfeited / cancelled
611 
Shares traded for taxes3,518 
Shares available for grants at the end of the period3,516 

Employee Stock Purchase Plan

We sponsor the ESPP to eligible employees. As of December 31, 2023, 1.8 million shares were available for issuance under the ESPP.

The following table sets forth the weighted average assumptions used to estimate the fair value of purchase rights granted under the ESPP.
As of December 31,
202320222021
Expected life (in years)0.50.50.5
Risk-free interest rate4.97 %3.29 %0.07 %
Expected volatility64.0 %69.2 %63.8 %
Option Activity

We granted no options during the years ended December 31, 2023, 2022, and 2021. Stock option activity during the year ended of December 31, 2023 was as follows:
 Number of SharesWeighted Average Exercise Price Per ShareWeighted
Average
Remaining
Contractual
Term		Aggregate
Intrinsic
Value
(In thousands)(In dollars)(In years)(In thousands)
Outstanding as of December 31, 20222,082 $10.24 
Granted— — 
Exercised(974)7.76 
Forfeited/ cancelled— — 
Expired(12)7.55 
Outstanding as of December 31, 20231,096 $12.48 3.48$483 
Vested and expected to vest as of December 31, 20231,096 $12.48 3.48$483 
Exercisable Options as of December 31, 20231,096 $12.48 3.48$483 

Year Ended December 31,
202320222021
(In millions)
Total intrinsic value of options exercised
$1.8 $0.9 $2.2 
Total fair value of options vested$— $2.3 $2.6 

RSU Activity

RSU activity, excluding PSU activity, during the year ended of December 31, 2023 was as follows:

Number of SharesWeighted Average Grant Date Fair Value Per ShareWeighted
Average
Remaining
Contractual
Term		Aggregate
Intrinsic
Value
(In thousands)(In dollars)(In years)(In thousands)
Outstanding as of December 31, 2022
9,487 $6.36 
Granted6,331 5.28 
Vested (6,179)5.58 
Forfeited (596)6.22 
Outstanding as of December 31, 20239,043 $6.15 1.37$86,085 

Year Ended December 31,
202320222021
(In millions, except per share data)
Total intrinsic value of RSUs vested (the release date fair value)
$38.9 $41.4 $36.4 
Total fair value of RSUs vested (the grant date fair value)$34.4 $34.0 $31.3 
RSU granted weighted-average fair value per share
$5.28 $7.23 $7.32 
PSU Activity

Our executive officers and other senior employees have been granted performance-based awards with vesting occurring at the end of a three or five-year period if performance conditions or market conditions are met. The number of units earned and eligible to vest are determined based on the achievement of various performance conditions or market conditions, including the cumulative paid accounts targets, stock price, cash balances at reporting period, and the recipients’ continued services. At the end of each reporting period, we evaluate the probability of achieving the performance or market conditions and record the related stock-based compensation expense based on the achievement over the service period.

PSU activity during the year ended of December 31, 2023 was as follows:


Number of SharesWeighted Average Grant Date Fair Value Per ShareWeighted
Average
Remaining
Contractual
Term		Aggregate
Intrinsic
Value
(In thousands)(In dollars)(In years)(In thousands)
Outstanding as of December 31, 2022
4,041 $6.22 
Granted 2,050 4.56 
Vested (2,237)5.55 
Forfeited (3)8.28 
Outstanding as of December 31, 2023
3,851 $5.72 1.00$36,661 


Year Ended December 31,
2023
2022
2021
(In millions, except per share data)
Total intrinsic value of PSUs vested (the release date fair value)
$17.7 $4.8 $1.4 
Total fair value of PSUs vested (the grant date fair value)$12.4 $2.7 $0.6 
PSU granted weighted-average fair value per share
$4.56 $6.52 $6.74 

Stock-Based Compensation Expense

The following table sets forth the stock-based compensation expense included in our consolidated statements of comprehensive loss:
Year Ended December 31,
202320222021
(In thousands)
Cost of revenue$3,533 $4,841 $3,917 
Research and development12,700 12,317 10,865 
Sales and marketing5,899 6,290 5,392 
General and administrative25,816 25,028 17,856 
Total$47,948 $48,476 $38,030 

As of December 31, 2023, all outstanding options were fully vested, therefore, there was no unrecognized compensation cost related to stock options. Approximately $58.6 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.7 years as of December 31, 2023.
During the years ended December 31, 2023, 2022, and 2021, we settled executive and employee bonuses by granting and issuing restricted stock units (non-cash financing activities) that vested immediately amounting to $13.5 million, $8.7 million, and $15.1 million, respectively.

401(K) Plan

We have a 401(K) Plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. We match 50% of contributions for employees up to a maximum of $2,000 in employee contributions per fiscal year. During the years ended December 31, 2023, 2022 and 2021, we recognized expense of approximately $1.1 million, $1.1 million and $1.1 million, respectively.