Alarm.com
Feb 25, 2016
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Alarm.com Reports Fourth Quarter and Full Year 2015 Results

-- SaaS and license revenue of $38.7 million for the fourth quarter and $140.9 million for the full year--
--Total revenue of $56.9 million for the fourth quarter and $208.9 million for the full year --
-- Adjusted EBITDA1 of $9.7 million for the fourth quarter and $34.3 million for the full year --
-- Company introduces 2016 first quarter and full year outlook --

TYSONS, Va., Feb. 25, 2016 (GLOBE NEWSWIRE) -- Alarm.com Holdings, Inc. (Nasdaq:ALRM), the leading platform solution for interactive security and the connected home, today reported financial results for the fourth quarter and full year ended December 31, 2015. The company also introduced its financial outlook for the 2016 first quarter and full year.

"Our 2015 fourth quarter and full year results demonstrated nice momentum which positions us well for 2016," said Steve Trundle, President and CEO of Alarm.com.  "We led with innovation, and our service provider partners continued to see strong demand for the interactive services we enable in North America and increasingly abroad."

Fourth Quarter 2015 Results

Full Year 2015 Results

Balance Sheet and Cash Flow

Recent Business Highlights

Financial Outlook

Alarm.com is introducing its outlook for the first quarter and full year 2016.

For the first quarter of 2016:

For the full year 2016:

Conference Call and Webcast Information

Alarm.com's fourth quarter and full year results conference call and webcast is scheduled to begin at 4:30 p.m. ET on February 25, 2016. 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 March 3, 2016 by dialing 855.859.2056 (U.S./Canada) or 404.537.3406 (International) and providing Conference ID: 35592448. Alarm.com will also offer a live and archived webcast of the conference call accessible via the company's Investor Relations website at http://investors.alarm.com/.

About Alarm.com Holdings, Inc.

Alarm.com is the leading platform solution for the connected home. Alarm.com makes connected home technology broadly accessible to millions of home and business owners. Our cloud-based services enable home and business owners to intelligently secure their properties and automate and control a broad array of connected devices through a single, intuitive user interface.  Our interactive security, intelligent automation, video monitoring and energy management solutions are delivered through an established network of trusted service providers, who are experts at designing, selling, installing and supporting Alarm.com solutions. 

1Non-GAAP Financial Measures

To supplement our unaudited 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, non-GAAP adjusted net income attributable to common stockholders, non-GAAP adjusted net income per share, and non-GAAP weighted average fully diluted common shares outstanding. 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 believe that these non-GAAP measures of our financial results provide useful information to investors and others in understanding and evaluating Alarm.com's 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, the measures and effects of stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

Alarm.com excludes one or more of the following items from non-GAAP financial measures:

Dividends paid to participating securities and income allocated to participating securities. Dividends paid to participating securities relate to $19.0 million of the $20.0 million June 2015 cash dividends paid in June 2015 to our preferred stockholders at the rate of (1) $0.36368 per share of Series A preferred stock and (2) $0.72736 per share of Series B preferred stock and Series B-1 preferred stock. We are excluding these dividends and income allocated to participating securities to improve the comparability of our results from period to period. Immediately prior to the completion of our offering on July 1, 2015, all of our outstanding shares of preferred stock converted into an aggregate of 35,017,884 shares of our common stock and, in future periods, all of our net income will be available to common stockholders.

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. Included in the twelve months ended December 31, 2015 stock-based compensation expense is $0.8 million related to the repurchase of an employee's stock awards. 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 litigation expense because we do not consider legal costs incurred in intellectual property litigation to be indicative of our core operating performance.

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 for our non-GAAP financial measures because we do not consider amortization when we evaluate our on-going 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 Alarm.com's performance to other companies in our industry as other companies may be more or less acquisitive than Alarm.com and therefore amortization expense may vary significantly by company based on their acquisition history.

Interest expense: We exclude interest expense because we do not consider it part of our ongoing results of operations.

Other (expense) / income, net: We exclude other (expense) / 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 first quarter and full-year 2016. 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: our ability to retain service providers and subscribers and grow sales, our ability to manage our growth and execute on our business strategies, the effects of increased competition and evolving technologies, our ability to integrate acquired assets and businesses, consumer demand for interactive security and home automation services, the reliability of our network operations centers, our reliance on our service provider network to attract new customers and retain existing customers, the reliability of our 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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 12, 2015 and other 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 as of the date hereof. 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 Balance Sheets
(in thousands, except share and per share data)
 December 31, 
Assets2015 2014 
Current assets:    
Cash and cash equivalents$128,358  $42,572  
Accounts receivable, net21,348  17,259  
Inventory6,474  6,852  
Other current assets4,870  1,919  
Total current assets161,050  68,602  
Property and equipment, net15,446  8,130  
Intangible assets, net6,318  5,092  
Goodwill24,723  21,374  
Deferred tax assets11,915  8,363  
Other assets6,643  9,371  
Total Assets$226,095  $120,932  
Liabilities, redeemable convertible preferred stock and stockholders' equity / (deficit)    
Current liabilities:    
Accounts payable, accrued expenses and other current liabilities$19,276  $15,233  
Accrued compensation7,514  5,816  
Deferred revenue2,289  1,699  
Total current liabilities29,079  22,748  
Deferred revenue9,701  9,202  
Long-term debt6,700   6,700  
Other liabilities10,484  1,670  
Total Liabilities55,964   40,320  
Redeemable convertible preferred stock    
Series B redeemable convertible preferred stock, $0.001 par value, 0 and 1,809,685 shares authorized; 0 and 1,809,685 shares issued and outstanding as of December 31, 2015 and 2014, liquidation preference of $0 and $191,132 as of December 31, 2015 and 2014.  136,523  
Series B-1 redeemable convertible preferred stock, $0.001 par value, 0 and 1,669,680 shares authorized; 0 and 82,934 shares issued and outstanding as of December 31, 2015 and 2014, liquidation preference of $0 and $8,759 as of December 31, 2015 and 2014.  6,265  
Series A redeemable convertible preferred stock, $0.001 par value, 0 and 3,511,725 shares authorized; 0 and 1,998,257 shares issued and outstanding as of December 31, 2015 and 2014, liquidation preference of $0 and $24,309 as of December 31, 2015 and 2014.   59,668  
Stockholders' equity / (deficit)    
Preferred stock, $0.001 par value, 10,000,000 and 0 shares authorized; 0 shares issued and outstanding as of December 31, 2015 and 2014.    
Common stock, $0.01 par value, 300,000,000 and 100,000,000 shares authorized; 45,581,662 and 2,823,816 shares issued; and 45,485,294 and 2,614,444 shares outstanding as of December 31, 2015 and 2014.455  26  
Additional paid-in capital297,781  7,168  
Treasury stock (35,523 shares at cost of $1.20 per share)(42) (42 ) 
Accumulated other comprehensive income    
Accumulated deficit(128,063) (128,996) 
Total Stockholders' Equity / (Deficit)170,131  (121,844) 
Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity / (Deficit)$226,095  $120,932  


 
Alarm.com Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
          
 Three Months Ended
December 31,
 Year Ended
December 31,
 2015 2014 2015 2014 2013
Revenue:          
SaaS and license revenue$38,689  $30,863  $140,936  $111,515  $82,620 
Hardware and other revenue18,232   14,688  67,952  55,797   47,602 
Total revenue56,921  45,551  208,888  167,312  130,222 
Cost of revenue:         
Cost of SaaS and license revenue6,628  6,328  25,722  23,007  16,476 
Cost of hardware and other revenue13,481  11,279  51,652  44,172  38,482 
Total cost of revenue20,109  17,607  77,374  67,179  54,958 
Operating expenses:         
Sales and marketing7,835  5,963  32,240  25,836  21,467 
General and administrative9,477  6,938  35,473  26,113  29,928 
Research and development13,335  6,725  40,002  23,193  13,085 
Amortization and depreciation1,438  1,277  5,808  3,991  3,360 
Total operating expenses32,085  20,903  113,523  79,133  67,840 
Operating income4,727  7,041  17,991  21,000  7,424 
Interest expense(50) (43 ) (178) (196) (269)
Other (expense) / income, net(286) (415) (348) (485) 57 
Income before income taxes4,391  6,583  17,465  20,319  7,212 
Provision for income taxes1,116  2,097  5,697  6,817  2,688 
Net income3,275  4,486  11,768  13,502  4,524 
Dividends paid to participating securities    (18,987)    
Income allocated to participating securities(8) (4,284)    (12,939) (4,402)
Net income / (loss) attributable to common stockholders$3,267  $202  $(7,219) $563  $122 
           
Per share information attributable to common stockholders:         
Net income / (loss) per share:          
Basic$0.07  $0.08  $(0.30) $0.25  $0.08 
Diluted$0.07  $0.05  $(0.30) $0.14  $0.04 
Weighted average common shares outstanding:         
Basic45,468,451  2,470,852  24,108,362  2,276,694  1,443,469 
Diluted47,353,327  4,123,312  24,108,362  3,890,121  2,795,345 
Cash dividends declared per share$   $  $0.36  $  $ 
          
Stock-based compensation expense included in operating expenses:         
Sales and marketing$112  $103  $372  $338  $102 
General and administrative180  466   2,486  1,862  495 
Research and development377  333  1,266  1,067  244 
Total stock-based compensation expense $669  $902  $4,124  $3,267  $841 


 
Alarm.com Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
 Year Ended December 31,
Cash flows from operating activities:2015 2014 2013
Net income$11,768  $13,502  $4,524 
Adjustments to reconcile net income to net cash from operating activities:     
Provision for doubtful accounts276  1,371  592 
Reserve for product returns1,559  1,863  1,781 
Amortization on patents391  201  201 
Amortization and depreciation5,808  3,991  3,360 
Amortization of debt issuance costs108  70   
Deferred income taxes(3,552) (1,735) (2,164)
Change in fair value of contingent liability(470)    
Undistributed losses from equity investees681  514  112 
Stock-based compensation3,347  3,267  841 
Impairment of cost method investment  200   
Goodwill and intangible asset impairment    11,266 
Gain on release of contingent liability    (5,820)
Other, net  129  330 
Changes in operating assets and liabilities (net of business acquisitions):      
Accounts receivable(5,910) (3,898) (8,678)
Inventory378  (4,334) (1,412)
Other assets(2,725) (1,136) (1,038)
Accounts payable, accrued expenses and other current liabilities5,966  444  5,169 
Deferred revenue1,081  1,234  1,618 
Other liabilities8,431  (48) (28)
Cash flows from operating activities27,137  15,635  10,654 
Cash flows used in investing activities:     
Business acquisitions, net of cash acquired(6,049) (3,186) (8,148)
Additions to property and equipment(10,347) (6,892) (2,275)
Investment in cost and equity method investees(247)   (4,516)
Distribution from cost method investee  2,545   
Issuances of notes receivable(406) (755) (1,492)
Purchases of licenses to patents(1,000)    
Purchases of marketable securities    (2,000)
Disposition of marketable securities  2,000   
Cash flows used in investing activities(18,049) (6,288) (18,431)
Cash flows from / (used in) financing activities:     
Proceeds from issuance of common stock from initial public offering, net of underwriting discount and commission97,976     
Proceeds from issuance of debt, net of debt issuance costs  6,376   
Repayments of term loan  (7,500)  (1,500)
Dividends paid to common stockholders(1,013)    
Dividends paid to employees for unvested shares(57)    
Dividends paid to redeemable convertible preferred stockholders(18,930)    
Payments of offering costs(2,632) (2,399)  
Repurchases of common stock(1 ) (7) (5)
Proceeds from early exercise of stock-based awards129  1,548   
Issuances of common stock from equity based plans344  554  785 
Tax windfall benefit from stock-based awards882  1,070  160 
Cash flows from / (used in) financing activities76,698  (358) (560)
Net increase / (decrease) in cash and cash equivalents85,786  8,989  (8,337)
Cash and cash equivalents at beginning of the period42,572  33,583  41,920 
Cash and cash equivalents at end of the period$128,358  $42,572  $33,583 


 
Alarm.com Holdings, Inc.
Reconciliation of Non-GAAP Measures
(in thousands)
            
  Three Months Ended 
December 31,
 Year Ended 
December 31,
  2015 2014 2015 2014 2013
Adjusted EBITDA         
Net income $3,275  $4,486  $11,768  $13,502  $4,524 
Adjustments:         
Interest expense and other (expense) / income, net336  458  526  681  212 
Income tax expense1,116  2,097  5,697  6,817  2,688 
Amortization and depreciation1,438  1,277  5,808  3,991  3,360 
Stock-based compensation expense669  902  4,124  3,267  841 
Goodwill and intangible asset impairment        11,266 
Release of acquisition related contingent liability        (5,820)
Litigation expense2,834    6,347   63  11,188 
Total adjustments6,393  4,734  22,502  14,819  23,735 
Adjusted EBITDA$9,668  $9,220  $ 34,270  $28,321  $28,259 
           
Adjusted net income:          
Net income, as reported$3,275  $4,486  $11,768  $13,502  $4,524 
Adjustments:2         
Interest expense and other (expense) / income, net251  312  354   453  133 
Amortization expense418  273  1,449  1,042  1,320 
Stock-based compensation expense499  615  2,779  2,171  528 
Goodwill and intangible asset impairment         7,067 
Release of acquisition related contingent liability        (3,651)
Litigation expense2,114    4,277  42  7,018 
Non-GAAP adjusted net income $6,557  $5,686  $20,627  $17,210  $16,939 
 

2 Adjustments are tax effected at the effective tax rate, 25.4% and 31.9% for the three months ended December 31, 2015 and 2014 and 32.6%, 33.5% and 37.3% for the years ended December 31, 2015, 2014 and 2013.

 
Alarm.com Holdings, Inc.
Reconciliation of Non-GAAP Measures - continued
(in thousands)
           
   Three Months Ended
December 31,
 Year Ended
December 31,
  2015 2014 2015 2014 2013
Adjusted net income attributable to common stockholders:         
Net income / (loss) attributable to common stockholders, as reported$3,267  $202  $(7,219) $563  $122 
Adjustments:2          
Dividends paid to participating securities    18,987     
Interest expense / other (expense) / income, net251  312  354  453  133 
Amortization expense418  273  1,449  1,042  1,320 
Stock-based compensation expense499  615  2,779  2,171  528 
Goodwill and intangible asset impairment        7,067 
Release of acquisition related contingent liability        (3,651)
Litigation expense2,114    4,277  42  7,018 
Less: income allocated to participating securities    (13,511)    
Non-GAAP adjusted net income attributable to common stockholders$6,549  $1,402   $7,116  $4,271  $12,537 
           
Adjusted net income per share:         
Net income / (loss) per share - basic, as reported$0.07  $0.08  $(0.30) $0.25  $0.08 
Adjustments:2         
Dividends paid to participating securities    0.79     
Interest expense / other (expense) income, net0.01  0.13  0.01  0.20  0.09 
Amortization expense0.01  0.11  0.06  0.46  0.91 
Stock-based compensation expense0.01  0.25  0.12  0.95  0.37 
Goodwill and intangible asset impairment        4.90 
Release of acquisition related contingent liability        (2.53)
Litigation expense0.05    0.18  0.02  4.86 
Less: income allocated to participating securities    (0.56)    
Non-GAAP adjusted net income per share - basic$0.15  $0.57   $0.30  $1.88  $ 8.68 
           
Non-GAAP adjusted net income per share - diluted$0.14  $0.34  $0.27  $1.10  $4.48  
           
Weighted average common shares outstanding:         
Basic, as reported45,468,451  2,470,852  24,108,362  2,276,694  1,443,469 
           
Diluted, as reported47,353,327  4,123,312  24,108,362  3,890,121  2,795,345 
Dilutive shares    1,770,412     
Non-GAAP weighted average common shares outstanding - diluted47,353,327  4,123,312  25,878,774  3,890,121  2,795,345 
 

2 Adjustments are tax effected at the effective tax rate, 25.4% and 31.9% for the three months ended December 31, 2015 and 2014 and 32.6%, 33.5% and 37.3% for the years ended December 31, 2015, 2014 and 2013.

 

Investor Relations:

Jonathan Schaffer

The Blueshirt Group

ir@alarm.com

212.871.3953



Media Relations:

Matthew Zartman

Alarm.com

mzartman@alarm.com

Source: Alarm.com Holdings, Inc.

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