Alarm.com
May 10, 2016
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Alarm.com Reports First Quarter 2016 Results

-- SaaS and license revenue of $40.0 million for the first quarter, a 25% increase year-over-year -- 
-- Total revenue of $59.0 million for the first quarter, a 28% increase year-over-year -- 
-- Adjusted EBITDA1 of $10.2 million for the first quarter as compared to $7.0 million for the same period in the prior year --

TYSONS, Va., May 10, 2016 (GLOBE NEWSWIRE) -- Alarm.com Holdings, Inc. (Nasdaq:ALRM), the leading platform solution for the connected home and business, today reported financial results for its first quarter ended March 31, 2016.  The company also provided its financial outlook for 2016 second quarter SaaS and license revenue and increased its guidance for the full year 2016.

"We're off to a solid start in 2016 as highlighted by the 25% year-over-year growth in SaaS and license revenue," said Steve Trundle, President and CEO of Alarm.com.  "Our service providers continue to succeed in the market and are benefitting from the tools, resources, and programs we offer to help them optimize operations and take advantage of a growing opportunity."

First Quarter 2016 Results 

Balance Sheet and Cash Flow

Recent Business Highlights

Financial Outlook

Alarm.com is providing its outlook for 2016 second quarter SaaS and license revenue and increasing its guidance for the full year.

For the second quarter of 2016:

For the full year 2016:

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 10, 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 May 17, 2016 by dialing 855.859.2056 (U.S./Canada) or 404.537.3406 (International) and providing Conference ID: 91697849. 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 and business. Millions of people depend on 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 the Nasdaq under the ticker symbol ALRM. For more information, please visit www.alarm.com.

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 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 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:

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 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 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 2016 and the company's ability to continue to expand its platform to benefit its service providers and to deliver enhanced customer experiences. 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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016 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)
(unaudited)
 
 March 31,
 2016
 December 31,
2015
Assets   
Current assets:   
Cash and cash equivalents$135,845  $128,358 
Accounts receivable, net23,532  21,348 
Inventory7,583  6,474 
Other current assets4,592  4,870 
Total current assets171,552  161,050 
Property and equipment, net17,494  15,446 
Intangible assets, net5,820  6,318 
Goodwill24,723  24,723 
Deferred tax assets12,168  11,915 
Other assets4,111  6,643 
Total Assets$235,868  $226,095 
Liabilities and stockholders' equity   
Current liabilities:   
Accounts payable, accrued expenses and other current liabilities$26,658  $19,276 
Accrued compensation4,335  7,514 
Deferred revenue2,350  2,289 
Total current liabilities33,343  29,079 
Deferred revenue9,877  9,701 
Long-term debt6,700  6,700 
Other liabilities11,500  10,484 
Total Liabilities61,420  55,964 
Stockholders' equity   
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2016 and December 31, 2015.   
Common stock, $0.01 par value, 300,000,000 shares authorized; 45,658,598 and 45,581,662 shares issued; and 45,580,928 and 45,485,294 shares outstanding as of March 31, 2016 and December 31, 2015.456  455 
Additional paid-in capital299,359  297,781 
Treasury stock (35,523 shares at cost of $1.20 per share)(42) (42)
Accumulated other comprehensive income   
Accumulated deficit(125,325) (128,063)
Total Stockholders' Equity174,448  170,131 
Total Liabilities and Stockholders' Equity$235,868  $226,095 


ALARM.COM HOLDINGS, INC.
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 
 Three Months Ended 
March 31,
 2016 2015
Revenue:   
SaaS and license revenue$40,012  $31,955 
Hardware and other revenue19,031  14,056 
Total revenue59,043  46,011 
Cost of revenue:   
Cost of SaaS and license revenue6,781  6,033 
Cost of hardware and other revenue14,335  10,776 
Total cost of revenue21,116  16,809 
Operating expenses:   
Sales and marketing8,976  7,916 
General and administrative13,129  7,070 
Research and development9,970  7,752 
Amortization and depreciation1,591  1,338 
Total operating expenses33,666  24,076 
Operating income4,261  5,126 
Interest expense(41) (42)
Other income, net111  7 
Income before income taxes4,331  5,091 
Provision for income taxes1,593  2,050 
Net income2,738  3,041 
Income allocated to participating securities  (2,895)
Net income attributable to common stockholders$2,738  $146 
    
Per share information attributable to common stockholders:   
Net income per share:   
Basic$0.06  $0.06 
Diluted$0.06  $0.04 
Weighted average common shares outstanding:   
Basic45,526,058  2,636,813 
Diluted47,303,896  4,172,787 
    
Stock-based compensation expense included in operating expenses:   
Sales and marketing$141  $60 
General and administrative227  294 
Research and development484  207 
Total stock-based compensation expense$852  $561 


ALARM.COM HOLDINGS, INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 Three Months Ended
March 31,
Cash flows from operating activities:2016 2015
Net income$2,738  $3,041 
Adjustments to reconcile net income to net cash from operating activities:   
Provision for doubtful accounts155  288 
Reserve for product returns473  380 
Amortization on patents134  50 
Amortization and depreciation1,591  1,338 
Amortization of debt issuance costs26  28 
Deferred income taxes(253) (883)
Change in fair value of contingent liability(60)  
Undistributed losses from equity investees12  53 
Stock-based compensation852  561 
Changes in operating assets and liabilities (net of business acquisition):   
Accounts receivable(2,812) (186)
Inventory(1,109) (1,041)
Other assets199  (1,242)
Accounts payable, accrued expenses and other current liabilities3,661  369 
Deferred revenue237  254 
Other liabilities1,076  453 
Cash flows from operating activities6,920  3,463 
Cash flows used in investing activities:   
Business acquisition, net of cash acquired  (5,612)
Additions to property and equipment(2,538) (1,026)
Issuances of notes receivable(73) (98)
Repayments of notes receivable2,441   
Cash flows used in investing activities(170) (6,736)
Cash flows from / (used in) financing activities:   
Payments of offering costs  (138)
Proceeds from early exercise of stock options  9 
Issuances of common stock from equity-based plans371  12 
Tax windfall benefit from stock options366  7 
Cash flows from / (used in) financing activities737  (110)
Net increase / (decrease) in cash and cash equivalents7,487  (3,383)
Cash and cash equivalents at beginning of the period128,358  42,572 
Cash and cash equivalents at end of the period$135,845  $39,189 


Alarm.com Holdings, Inc.
Reconciliation of Non-GAAP Measures
(in thousands)
(unaudited)
     
  Three Months Ended
March 31,
  2016 2015
Adjusted EBITDA   
Net income$2,738  $3,041 
Adjustments:   
Interest expense and other income, net(70) 35 
Income tax expense1,593  2,050 
Amortization and depreciation1,591  1,338 
Stock-based compensation expense852  561 
Litigation expense3,478   
Total adjustments7,444  3,984 
Adjusted EBITDA$10,182  $7,025 
     
Adjusted net income:   
Net income, as reported$2,738  $3,041 
Adjustments:2   
Interest expense and other income, net(44) 21 
Amortization expense315  276 
Stock-based compensation expense538  335 
Litigation expense2,198   
Non-GAAP adjusted net income$5,745  $3,673 
        

2 Adjustments are tax effected at the effective tax rate, 36.8% and 40.3% for the three months ended March 31, 2016 and 2015.

 
 
Alarm.com Holdings, Inc.
Reconciliation of Non-GAAP Measures - continued
(in thousands, except share and per share data)
(unaudited)
     
  Three Months Ended
March 31,
  2016 2015
Adjusted net income attributable to common stockholders:   
Net income attributable to common stockholders, as reported$2,738  $146 
Adjustments:2   
Interest expense and other income, net(44) 21 
Amortization expense315  276 
Stock-based compensation expense538  335 
Litigation expense2,198   
Non-GAAP adjusted net income attributable to common stockholders$5,745  $778 
     
Adjusted net income per share:   
Net income per share - basic, as reported$0.06  $0.06 
Adjustments:2   
Interest expense and other income, net  0.01 
Amortization expense0.01  0.10 
Stock-based compensation expense0.01  0.13 
Litigation expense0.05   
Non-GAAP adjusted net income per share - basic$0.13  $0.30 
     
Non-GAAP adjusted net income per share - diluted$0.12  $0.19 
     
Weighted average common shares outstanding:   
Basic, as reported45,526,058  2,636,813 
Diluted, as reported47,303,896  4,172,787 
      

2 Adjustments are tax effected at the effective tax rate, 36.8% and 40.3% for the three months ended March 31, 2016 and 2015.

 

Investor Relations:
Jonathan Schaffer
The Blueshirt Group
ir@alarm.com 
212.871.3953

Media Relations:
Matthew Zartman 
Alarm.com
mzartman@alarm.com