Employee Benefit Plans

6 Months Ended

Jun. 29, 2025

Employee Benefit and Share-Based Payment Arrangement, Noncash Expense [Abstract]

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 and other senior employees periodically. Award vesting periods for the 2018 Plan are generally three to five years. As of June 29, 2025, 4.0 million shares were available for future grants. Options may be granted for periods of up to 10 years or such shorter term as may be provided in the agreement and at prices no less than 100% of the fair market value of Arlo’s common stock on the date of grant. Options granted under the 2018 Plan generally vest over four years, the first tranche at the end of 12 months and the remaining shares underlying the option vesting monthly over the remaining three years.

On January 24, 2025, we registered an aggregate of up to 5,050,450 shares of common stock on a Registration Statement on Form S-8, including 4,050,450 shares under the 2018 Plan and 1,000,000 shares under the Employee Stock Purchase Plan (“ESPP”), both pursuant to an “evergreen” provision contained in the respective plans.

The following table sets forth the available shares for grants as of June 29, 2025:


			Number of Shares
			(In thousands)
Shares available for grants as of December 31, 2024			3,356
Additional authorized shares			4,050
Granted			(3,719)
Forfeited / cancelled			361

Shares available for grants as of June 29, 2025			4,048

Employee Stock Purchase Plan

We sponsor the ESPP for eligible employees, under which, employees purchased 155 thousand shares and 233 thousand shares during the six months ended June 29, 2025 and June 30, 2024, respectively. As of June 29, 2025, 3.3 million shares were available for issuance under the ESPP.

Option Activity

We did not grant options during the six months ended June 29, 2025. Stock option activity during the six months ended June 29, 2025 was as follows:


	Number of Shares	Weighted Average Exercise Price Per Share
	(In thousands)	(In dollars)
Outstanding as of December 31, 2024	549	$	13.24
Granted	—	$	—
Exercised	(94)	$	8.55
Forfeited / cancelled	(180)	$	—
Expired	—	$	14.39
Outstanding as of June 29, 2025	275	$	14.10
Vested and exercisable as of June 29, 2025	275	$	14.10

RSU Activity

RSU activity, exclusive of PSU activity, during the six months ended June 29, 2025 was as follows:


	Number of Shares	Weighted Average Grant Date Fair Value Per Share
	(In thousands)	(In dollars)
Outstanding as of December 31, 2024	7,112	$	7.76
Granted	1,854	$	11.46
Vested	(2,470)	$	8.20
Forfeited	(178)	$	8.25
Outstanding as of June 29, 2025	6,318	$	8.66

PSU Activity

Our executive officers and other senior employees have been granted PSUs with some vesting occurring when performance conditions are met and some vesting occurring at the end of a three or five-year period when 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 and record the related stock-based compensation expense based on the estimated achievement over the service period.

PSU activity during the six months ended June 29, 2025 was as follows:


	Number of Shares	Weighted Average Grant Date Fair Value Per Share
	(In thousands)	(In dollars)
Outstanding as of December 31, 2024	4,777	$	9.24
Granted	1,865	$	11.22
Vested	(2,173)	$	8.21
Forfeited	(3)	$	8.28
Outstanding as of June 29, 2025	4,466	$	10.57

Stock-Based Compensation Expense

The following table sets forth the stock-based compensation expense included in our unaudited condensed consolidated statements of comprehensive income (loss):


	Three Months Ended				Six Months Ended
	June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024
	(In thousands)
Cost of revenue	$	885	$	1,292	$	2,002	$	2,663
Research and development	4,500		4,778		8,400		9,682
Sales and marketing	2,079		2,176		5,152		4,416
General and administrative	7,519		12,674		16,441		22,709
Stock-based compensation, net of amounts capitalized	$	14,983	$	20,920	$	31,995	$	39,470
Capitalized stock-based compensation	267		—		868		—
Total stock-based compensation	$	15,250	$	20,920	$	32,863	$	39,470

As of June 29, 2025, all outstanding options were fully vested, therefore, there was no unrecognized compensation cost related to stock options. As of June 29, 2025, $63.9 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.1 year.