Q4 2019 Earnings Call
based on early
Data, we remain confident that when the trial period for Arlo smart lapses, there will be a further acceleration in the growth of paid accounts through 2020. Expect a more fulsome report on this subject on our next earnings call on December 30th. We closed our strategic partnership with very sure a fast-growing leading provider of professionally monitored security solution with more than three million customers in 16 countries across Europe and Latin America, very sharp a darlo fifty million dollars for our lives European commercial operations covering marketing distribution of Arlo products and services with this agreement very short also committed to purchase a minimum of $500 million dollars of our low products over the next five years to be distributed through the first month multi-channel go to market for a consumer security experience.
Clearly this partnership has immense financial and strategic implications for our low and we'll diversify our revenue on both the regional and channel basis. It raises the forecast growth in Europe from 5% to 25% over the next five years and all deployments through very Shores direct channel will have a one-to-one attach rate to Arlo smart services with a further accelerate our recurring service Revenue overall profitability in Europe is expected to improve over the life of the deal and importantly the deal has substantially strengthened our liquidity with about $7,000 in total proceeds and our strong cash management. We close the fourth quarter with 256 point seven million dollars in cash cash equivalents on a short-term Investments a record high for the company in a sequential increase of more than a hundred million dollars after closing very sure we announced our low smartcloud a Thursday.
s version of our Arlo smart
Service platform smartcloud is a comprehensive service offering that brings together. Our expertise across artificial intelligence computer vision multi object detection. Audio analysis scale storage real-time events and ecosystem Integrations to manage vast fleets of cameras and provide the kinds of customize alerts are Arlo smart users have come to rely on formalizing content to grow the partnership in B2B side of our business this unique offering delivers reliable and scalable cloud services to any company or Community making Arlo the ideal choice for those down to bring intelligent Security Solutions to Market very sure provides a great first commercial example of smart clouds value and proves our ability to diversify our business to further accelerate our service Revenue growth.
I would also like to touch on our newly announced privacy pledge at Arlo we believe in a user's right to privacy and control of their personal information a belief that is underscored the design of our products and services since day one in light of increasing attention on privacy concerns regarding the treatment of user-data. Our privacy pledge reaffirms our commitment to these principles and clearing different rates are low from others in the industry are low is a company purely focused on providing Security Solutions that respect and protect our users personal information. We don't collect or retrieve any information that is not required to provide the service. We don't sell data and we are not in any other business that would pull us from our core mission of helping users protect what they care about most the response from users are partners and our retailers has been overwhelming and we will continue to provide leadership on this front are clear stance makes Arlo not only the ideal company for consumers to trust for their personal security job.
But also the ideal company to partner and integrate with to bring solutions to Market moving on to products last quarter we launched.
Our first integrated video doorbell that captures the convince what conventional video doorbells can't are unique smart entry solution utilizes an industry-leading Square aspect ratio camera lens off with a extra wide 180° field-of-view. This lets users see the visitors from head to toe including packages left at their front door solving. The biggest complaint users have with existing products on the market wage with HD resolution and clear to a audio the video doorbell delivers direct to mobile video calls for faster response time and comes with a 3 month trial of our list smart that lets users get personalized alerts wage as packages package detection. So users can quickly reply or take action. We believe this powerful combination creates the most sophisticated doorbell on the market and provides another lever to drive future paid subscriptions for Arlo And we received numerous accolades to bolster this belief, but none clearer than CNET editors Choice Award with CNET claiming that are low just ousted Nest as their faith.
Video doorbell quote unquote CNET named it the best video doorbell for 2020.
and of course our other recently released product the Pro 3 continues to impress homeowners and Industry experts alike in January at CES 2020 the Arlo Pro 3 can
Can you this award winning momentum in was named an innovation award honoree additionally Pro 3 had garnered editors Choice Awards across CNET PC Magazine techhive Digital Trends and fads mobile. We are honored that the Pro 3 was praised by techhive as quote one of the absolute best indoor outdoor security cameras. You can buy buy CNET as the best security camera of 2028 and quote the outdoor home security camera to be and by gotta be mobile as the quote smart home security system that strikes the perfect balance between image quality smart features flexible installation and price.
Further expanding on our Pro 3 line of best-in-class cameras. We announced our all new Arlo Pro 3 floodlight camera, the first wire free integrated floodlight camera on the market wage featuring class-leading right LEDs an integrated 2K HDR camera hundred and sixty degree field-of-view two-way audio custom lighting configurations a rechargeable battery a built-in siren and a compact modern form factor that provides the ultimate in place anywhere protection the Arlo floodlight camera joins Ultra Pro 3 and our video doorbell and including a free 3 months subscription to Arlo smart are powerful cloud-based and computer vision-based subscription service.
the floodlight camera
Was recognized as a c e s twenty20 Innovation award honoree and one the best of CES awards from bestproducts.com and Popular Mechanics and the top Tech CES award from digital friends the industry action to this new product announcement has also been extremely encouraging and Business Insider remarks quote Arlo is the gold standard for security cameras. So I have no doubt that it's 803 floodlight camera will be an excellent device furthermore gear Patrol called the floodlight camera a quote seriously steroidal floodlight for the security conscious. The flick segment of IP cameras is growing faster than the market as a whole and as you can see these numerous accolades speak volumes on Arlo's product differentiation, ease-of-use and promising growth opportunities.
Now, I'll turn the call over to Christine for her commentary on our restructuring plan our activities to add cash to the balance sheet our fourth-quarter and full-year results and our guidance for the first quarter first quarter and full-year. Thank you Matt before I discuss the financials in detail. I would like to highlight that we closed the fourth quarter of 2019 with 256.7 million dollars in cash and cash equivalents and short-term Investments, which is a sequential increase of more than a hundred million dollars. This cash increase is largely a result of the agreement. We completed with Vera sure which increased our cash balance by approximately 75 million dollars and prudent balance sheet management. Additionally the team did an outstanding job managing working capital which contributed to the sequential cash increase first with the sale of the European business and Associated inventory. We added $55 to the balance sheet dead.
additionally in Q4
We received a prepayment of twenty million dollars from Vera sure for products to be purchased by them in 2020 which will show up as an increase in deferred revenue along with the two point five million dollar prepayment for engineering development services. The gain on the sale of our Amiya commercial operations is reported as 54.9 million in Arkansas financial statements note that this number includes fifty million dollars received for the sale of the Amia commercial operations, 4.9 million dollars for the sale of existing inventory in a a distribution center as well as various working capital adjustments including the right off of immediate deferred service Revenue as well as the four point six million dollar recognition of Goodwill associated with the Amia business as can be seen in our sequential Decline and operating expenses are restructuring activities continue to go well and we are still on the path to get get down.
the quarterly run rate
3 to $34 million dollars per quarter of non-gaap operating expense by the end of the second quarter of 2020. We recorded approximately $600,000 of restructuring expenses during Q4 nineteen given these successes. We did not need to draw down on our line of credit. I would also like to note the beginning Q4 of 2019. We will change our metric definitions to registered accounts and paid accounts from registered users and paid subscribers. We believe this more accurately describes our metrics given the various your transaction where we are now paid by very sure for Army accounts as opposed to individuals or businesses more detailed information can be found in the supplemental information in our press release.
And now on to the financials as mad highlighted, we achieved a hundred and twenty two point four million dollars of Revenue in line with our guidance and up 15.4% sequentially down 2% year-over-year.