Arlo Technologies, Inc. (NYSE:ARLO) Q1 2024 Earnings Call Transcript

Jacob Stephan: That’s really helpful. And then, just, I guess, to follow-up on kind of that question, with the unpaid users. Maybe it would help. Could you quantify what the load on your cost of goods would be or what the load on running the back-end software for those unpaid users is?

Matthew McRae: We don’t break it out, but I can tell you it’s pretty low. Our unpaid users are broken really into two categories. What we used to call and we still call legacy users. Those are the users that were before we changed our business model to a much more subscription-oriented company, right? Now those users have some free storage and a couple of services that are a bit more expensive. Now that user base is actually shrinking over time as more and more subscribe as we go forward. And then there is the free users after we made our business model change to really a subscription-oriented business. And those have a very low-cost basis from a cloud perspective and others, sorry, because there is no storage component. There’s very little compute and it’s really just streaming live and doing some notifications off of raw motion events.

Very, very efficient and that was part of our business model change. Now obviously, if we deploy additional features into that free tier in exchange for the ad monetization, that could change, but it would be done in a way that’s accretive to our business because of the monetization scheme that we can deploy.

Jacob Stephan: I appreciate all the color here. Best of luck going forward guys.

Operator: There are no further questions at this time. That concludes today’s conference call. You may now disconnect.