Alarm.com
May 9, 2017

Alarm.com Reports First Quarter 2017 Results

Alarm.com Reports First Quarter 2017 Results

-- SaaS and license revenue of $50.2 million for the first quarter, a 26% increase year-over-year --
-- Total revenue of $74.2 million for the first quarter, a 26% increase year-over-year --
-- GAAP net income of $4.0 million for the first quarter as compared to $2.7 million for the first quarter of 2016 --
-- Non-GAAP adjusted EBITDA of $14.1 million for the first quarter as compared to $10.8 million for the first quarter of 2016 --

TYSONS, Va., May 09, 2017 (GLOBE NEWSWIRE) -- Alarm.com Holdings, Inc. (Nasdaq:ALRM), the leading platform for the intelligently connected property, today reported financial results for its first quarter ended March 31, 2017.  Alarm.com also provided its financial outlook for 2017 second quarter SaaS and license revenue and increased its guidance for the full year 2017.

"We're off to a solid start in 2017 with continued growth in SaaS and license revenue and increased profitability," said Steve Trundle, President and CEO of Alarm.com.  "Our service provider partners continue to lead the security industry's transformation from traditional service to higher value interactive solutions, and we announced new product initiatives to help them deliver a best-in-class experience to their customers."

First Quarter 2017 Financial Results

Balance Sheet and Cash Flow

Business Highlights

Financial Outlook

Alarm.com is providing its outlook for 2017 second quarter SaaS and license revenue and increasing its guidance for the full year.

For the second quarter of 2017:

For the full year 2017:

Conference Call and Webcast Information

Alarm.com's first quarter results conference call and webcast is scheduled to begin at 5:00 p.m. ET on May 9, 2017.  To participate on the live call, analysts and investors should dial 877.445.1593 (U.S./Canada) or 267.753.2138 (International) at least ten minutes prior to the start time of the call.  A telephonic replay of the call will be available through May 16, 2017 by dialing 855.859.2056 (U.S./Canada) or 404-537-3406 (International) and providing Conference ID: 4018365.  Alarm.com will also offer a live and archived webcast of the conference call accessible via Alarm.com's Investor Relations website at http://investors.alarm.com/.

About Alarm.com Holdings, Inc.

Alarm.com is the leading platform for the intelligently connected property.  Millions of people use Alarm.com's technology to monitor and control their property from anywhere. Centered on security and remote monitoring, our platform addresses a wide range of market needs and enables application-based control for a growing variety of Internet of Things (IoT) devices. Our security, video monitoring, intelligent automation and energy management solutions are available through our network of thousands of professional service providers in North America and around the globe. Alarm.com's common stock is traded on Nasdaq under the ticker symbol ALRM. For more information, please visit www.alarm.com.

Non-GAAP Financial Measures

To supplement our consolidated selected financial data presented on a basis consistent with GAAP, this press release contains certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP adjusted net income and non-GAAP adjusted net income per share. We have included non-GAAP measures in this press release because they are key measures used by our management to understand and evaluate our core operating performance and trends and generate future operating plans, make strategic decisions regarding the allocation of capital, and investments in initiatives that are focused on cultivating new markets for our solutions. We also use certain non-GAAP financial measures, including adjusted EBITDA, as performance measures under our executive bonus plan. Further, we believe that these non-GAAP measures of our financial results provide useful information to investors and others in understanding and evaluating our results of operations, business trends and financial condition. While we believe the use of these non-GAAP measures provides useful information to investors and management in analyzing our financial performance, non-GAAP measures have inherent limitations in that they do not reflect all of the amounts and transactions that are included in our financial statements prepared in accordance with GAAP. Non-GAAP measures do not serve as an alternative to GAAP nor do we consider our non-GAAP measures in isolation, accordingly we present non-GAAP financial measures only in connection with GAAP results. We urge investors to consider non-GAAP measures only in conjunction with our GAAP financials and to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures which are included in this press release.

With respect to our expectations under "Financial Outlook" above, reconciliation of adjusted EBITDA  and adjusted net income guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular, non-ordinary course litigation expense and acquisition-related expense can have unpredictable fluctuations based on unforeseen activity that is out of our control and/or cannot reasonably be predicted. We expect the above charges to have a significant and potentially highly variable impact on our future GAAP financial results. The litigation expense we exclude from this calculation relates to non-ordinary course litigation expenses, including those expenses resulting from ongoing intellectual property litigation. Notably, we do not adjust for ordinary course legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

We exclude one or more of the following items from non-GAAP financial measures:

Stock-based compensation: We exclude stock-based compensation expense, which relates to equity incentives primarily awarded to employees of Alarm.com, because they are non-cash charges that we do not consider when assessing the operating performance of our business. Additionally, the determination of stock-based compensation expense can be calculated using various methodologies and is dependent upon subjective assumptions and other factors that vary on a company by company basis. Therefore, we believe that excluding stock-based compensation from our non-GAAP financial measures improves the comparability of our results to the results of other companies in our industry.

Litigation expense: We exclude non-ordinary course litigation expense because we do not consider legal costs incurred in litigation and litigation-related matters of non-ordinary course lawsuits, particularly costs incurred in ongoing intellectual property litigation, to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.  Included in the litigation expense is $0.1 million of expense we incurred in the first quarter of 2016 prior to adjusting this measure for a non-ordinary course lawsuit.

Acquisition-related expense: Included in operating expense are external incremental costs directly related to completing the acquisition and integration of the Connect and Piper business units from Icontrol Networks, Inc. We exclude acquisition-related expense from our non-GAAP financial measures because we believe it is useful for investors to understand the effects of these transaction and integration costs on our total operating expenses.

Amortization: GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed technology and trade names.  We exclude amortization of intangibles from our non-GAAP financial measures because we do not consider amortization when we evaluate our ongoing business operations, nor do we factor amortization expense into our evaluation of potential acquisitions, or our measurement of the performance of those acquisitions. We believe that the exclusion of amortization expense enables the comparison of our performance to other companies in our industry as other companies may be more or less acquisitive than us and therefore, amortization expense may vary significantly by company based on their acquisition history.

Interest expense: We record interest expense primarily related to our debit facility. We exclude interest expense in calculating our adjusted EBITDA calculation. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income per share - basic and diluted, we do not exclude interest expense.

Other income, net: We exclude other income, net because we do not consider it part of our ongoing results of operations.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements may be identified by their use of terms and phrases such as "anticipate," "expect," "will," "believe," "continue," "enable" and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding the Company's future financial performance for the second quarter and full-year 2017, the Company's ability to continue to expand its platform to benefit its service providers and to deliver enhanced customer experiences, the Company's ability to grow its research and development capacity and increase its participation in the Internet of Things (IoT) secular trend, the Company's ability to accelerate the development of intelligent, data-driven smart home and business services and video services and video analytics applications, and the Company's ability to help service providers create and maintain high-value accounts . The events described in these forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: the integration of the Connect and Piper business units into the Company (the Acquisition) could subject the Company to significant additional liabilities for which it may not be indemnified, the Acquisition may cause disruption in the Company's business or in the Connect and Piper business units, the Company may experience difficulties in realizing the expected benefits of the Acquisition, the Company's actual post-Acquisition operating results may differ significantly from any guidance provided, the Company's ability to retain service providers and subscribers and grow sales, the Company's ability to manage growth and execute on its business strategies, the effects of increased competition and evolving technologies, the Company's ability to integrate acquired assets and businesses and to manage service providers, customers and employees, consumer demand for interactive security and home automation services, the reliability of the Company's network operations centers, the Company's reliance on its service provider network to attract new customers and retain existing customers, the reliability of the Company's hardware and wireless network suppliers, future financial prospects, as well as other risks and uncertainties discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2017 and other subsequent filings the Company makes with the Securities and Exchange Commission from time to time. In addition, the forward-looking statements included in this press release represent the Company's views and expectations as of the date hereof and are based on information currently available to the Company. The Company anticipates that subsequent events and developments may cause the Company's views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so except as required by law. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date hereof.

 

 

ALARM.COM HOLDINGS, INC.
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 
    Three Months Ended
 March 31,
    2017   2016
Revenue:        
SaaS and license revenue   $ 50,226     $ 40,012  
Hardware and other revenue   23,968     19,031  
Total revenue   74,194     59,043  
Cost of revenue:        
Cost of SaaS and license revenue   8,092     6,781  
Cost of hardware and other revenue   18,543     14,335  
Total cost of revenue   26,635     21,116  
Operating expenses:        
Sales and marketing   10,314     8,976  
General and administrative   15,375     13,129  
Research and development   14,521     9,970  
Amortization and depreciation   2,864     1,591  
Total operating expenses   43,074     33,666  
Operating income   4,485     4,261  
Interest expense   (216 )   (41 )
Other income, net   237     111  
Income before income taxes   4,506     4,331  
Provision for income taxes   543     1,593  
Net income   3,963     2,738  
Income allocated to participating securities   (2 )   (5 )
Net income attributable to common stockholders   $ 3,961     $ 2,733  
         
Per share information attributable to common stockholders:        
Net income per share:        
Basic   $ 0.09     $ 0.06  
Diluted   $ 0.08     $ 0.06  
Weighted average common shares outstanding:        
Basic   46,225,473     45,526,058  
Diluted   48,758,774     47,303,896  

 

 

ALARM.COM HOLDINGS, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
 
    March 31,
 2017
  December 31,
2016
Assets        
Current assets:        
Cash and cash equivalents   $ 63,150     $ 140,634  
Accounts receivable, net   38,889     29,810  
Inventory   7,289     10,543  
Other current assets   9,931     9,197  
Total current assets   119,259     190,184  
Property and equipment, net   20,788     20,180  
Intangible assets, net   104,664     4,568  
Goodwill   64,102     24,723  
Deferred tax assets   22,036     16,752  
Other assets   4,791     4,838  
Total Assets   $ 335,640     $ 261,245  
Liabilities and stockholders' equity        
Current liabilities:        
Accounts payable, accrued expenses and other current liabilities   $ 31,829     $ 28,300  
Accrued compensation   6,230     8,814  
Deferred revenue   2,944     2,585  
Total current liabilities   41,003     39,699  
Deferred revenue   10,039     10,040  
Long-term debt   73,700     6,700  
Other liabilities   12,491     13,557  
Total Liabilities   137,233     69,996  
Commitments and contingencies        
Stockholders' equity        
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued
   and outstanding as of March 31, 2017 and December 31, 2016.
       
Common stock, $0.01 par value, 300,000,000 shares authorized; 46,310,450 and
   46,172,318 shares issued; and 46,283,227 and 46,142,483 shares outstanding as
   of March 31, 2017 and December 31, 2016.
  463     461  
Additional paid-in capital   311,909     308,697  
Accumulated deficit   (113,965 )   (117,909 )
Total Stockholders' Equity   198,407     191,249  
Total Liabilities and Stockholders' Equity   $ 335,640     $ 261,245  

 

 

ALARM.COM HOLDINGS, INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
    Three Months Ended
 March 31,
Cash flows from operating activities:   2017   2016
Net income   $ 3,963     $ 2,738  
Adjustments to reconcile net income to net cash from operating activities:        
Provision for doubtful accounts   128     155  
Reserve for product returns   554     473  
Amortization for patents and tooling   247     134  
Amortization and depreciation   2,864     1,591  
Amortization of debt issuance costs   23     26  
Deferred income taxes   (1,123 )   113  
Change in fair value of contingent liability       (60 )
Undistributed (gains) / losses from equity investees   (5 )   12  
Stock-based compensation   1,313     852  
Changes in operating assets and liabilities (net of business acquisitions):        
Accounts receivable   1,580     (2,812 )
Inventory   3,553     (1,109 )
Other assets   668     199  
Accounts payable, accrued expenses and other current liabilities   483     3,661  
Deferred revenue   (213 )   237  
Other liabilities   (1,066 )   1,076  
Cash flows from operating activities   12,969     7,286  
Cash flows used in investing activities:        
Business acquisitions, net of cash acquired   (154,289 )    
Additions to property and equipment   (2,637 )   (2,538 )
Issuances of notes receivable   (1,000 )   (73 )
Repayments of notes receivable       2,441  
Cash flows used in investing activities   (157,926 )   (170 )
Cash flows from financing activities:        
Proceeds from credit facility   67,000      
Issuances of common stock from equity-based plans   473     371  
Cash flows from financing activities   67,473     371  
Net (decrease) / increase in cash and cash equivalents   (77,484 )   7,487  
Cash and cash equivalents at beginning of the period   140,634     128,358  
Cash and cash equivalents at end of the period   $ 63,150     $ 135,845  

 

 

ALARM.COM HOLDINGS, INC.
Reconciliation of Non-GAAP Measures
(in thousands)
(unaudited)
 
    Three Months Ended
March 31,
    2017   2016
Adjusted EBITDA        
  Net income   $ 3,963     $ 2,738  
  Adjustments:        
Less: Interest expense and other income, net   (21 )   (70 )
Provision for income tax   543     1,593  
Amortization and depreciation   2,864     1,591  
Stock-based compensation expense   1,313     852  
Acquisition-related expense   3,648     570  
Litigation expense   1,793     3,549  
Total adjustments   10,140     8,085  
Adjusted EBITDA   $ 14,103     $ 10,823  
         
Adjusted net income:        
Net income, as reported   $ 3,963     $ 2,738  
Adjustments:        
Less: Other income, net   (237 )   (111 )
Amortization   1,493     498  
Stock-based compensation expense   1,313     852  
Acquisition-related expense   3,648     570  
Litigation expense   1,793     3,549  
Income tax 2   (969 )   (1,972 )
Non-GAAP adjusted net income   $ 11,004     $ 6,124  

2 Income tax for the adjustments for other income, net, amortization expense, stock-based compensation expense, acquisition-related expense and litigation expense are calculated at the effective tax rate, 12.1% and 36.8% for the three months ended March 31, 2017 and 2016.

 

ALARM.COM HOLDINGS, INC.
Reconciliation of Non-GAAP Measures - continued
(in thousands, except share and per share data)
(unaudited)
 
    Three Months Ended
March 31,
    2017   2016
Adjusted net income attributable to common stockholders:        
Net income attributable to common stockholders, as reported   $ 3,961     $ 2,733  
Adjustments:        
Less: Other income, net   (237 )   (111 )
Amortization   1,493     498  
Stock-based compensation expense   1,313     852  
Acquisition-related expense   3,648     570  
Litigation expense   1,793     3,549  
Income tax 2   (969 )   (1,972 )
Non-GAAP adjusted net income attributable to common
stockholders
  $ 11,002     $ 6,119  

 

Adjusted net income per share:        
Net income per share - basic, as reported                   $ 0.09     $ 0.06  
Adjustments:        
Less: Other income, net   (0.01 )    
Amortization   0.03     0.01  
Stock-based compensation expense   0.03     0.02  
Acquisition-related expense   0.08     0.01  
Litigation expense   0.04     0.08  
Income tax 2   (0.02 )   (0.04 )
Non-GAAP adjusted net income per share - basic   $ 0.24     $ 0.14  
         
Non-GAAP adjusted net income per share - diluted   $ 0.23     $ 0.13  
         
Weighted average common shares outstanding:        
Basic, as reported   46,225,473     45,526,058  
         
Diluted, as reported   48,758,774     47,303,896  
         

2 Income tax for the adjustments for other income, net, amortization expense, stock-based compensation expense, acquisition-related expense and litigation expense are calculated at the effective tax rate, 12.1% and 36.8% for the three months ended March 31, 2017 and 2016.

 

Investor Relations:

Jonathan Schaffer

The Blueshirt Group

ir@alarm.com



Media Relations:

Matthew Zartman

Alarm.com

mzartman@alarm.com