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Alarm.com Reports Fourth Quarter and Full Year 2020 Results

February 25, 2021

Fourth quarter SaaS and license revenue increased 17% year-over-year to $105.5 million

Fourth quarter total revenue increased 18% year-over-year to $165.6 million

Fourth quarter GAAP net income attributable to common stockholders increased to $16.0 million, compared to $13.0 million for the fourth quarter 2019

Fourth quarter non-GAAP adjusted EBITDA increased 8% year-over-year to $32.4 million, compared to $30.0 million for the fourth quarter 2019

TYSONS, Va.--(BUSINESS WIRE)-- Alarm.com Holdings, Inc. (Nasdaq: ALRM), the leading platform for the intelligently connected property, today reported financial results for its fourth quarter and full year ended December 31, 2020. Alarm.com also provided its financial outlook for SaaS and license revenue for the first quarter of 2021 and guidance for the full year 2021.

“We are pleased to report solid results for the quarter and the year,” said Steve Trundle, President and CEO of Alarm.com. “Our service provider partners and the Alarm.com team continued to perform at high levels despite the ongoing pandemic. During the year we delivered a breadth of innovative new platform capabilities for both our residential and commercial services, including the Smart Water Valve + Meter, Connected Car, Flex IO, the Alarm.com Touchless Video Doorbell and OpenEye’s SaaS application for commercial customers, which will help our service provider partners extend their leadership positions in multiple markets.”

Fourth Quarter 2020 Financial Results as Compared to Fourth Quarter 2019

  • SaaS and license revenue increased 17% to $105.5 million, compared to $90.1 million.
  • Total revenue increased 18% to $165.6 million, compared to $140.5 million.
  • GAAP net income attributable to common stockholders increased to $16.0 million, or $0.31 per diluted share, compared to $13.0 million or $0.26 per diluted share.
  • Non-GAAP adjusted EBITDA increased to $32.4 million, compared to $30.0 million.
  • Non-GAAP adjusted net income attributable to common stockholders increased to $23.1 million, or $0.45 per diluted share, compared to $21.5 million, or $0.43 per diluted share.

Full Year 2020 Financial Results as Compared to Full Year 2019

  • SaaS and license revenue increased 17% to $393.3 million, compared to $337.4 million.
  • Total revenue increased 23% to $618.0 million, compared to $502.4 million.
  • GAAP net income attributable to common stockholders increased to $77.9 million, or $1.53 per diluted share, compared to $53.5 million or $1.06 per diluted share.
  • Non-GAAP adjusted EBITDA increased to $125.3 million, compared to $108.3 million.
  • Non-GAAP adjusted net income attributable to common stockholders increased to $89.4 million, or $1.75 per diluted share, compared to $77.2 million, or $1.54 per diluted share.

Balance Sheet and Cash Flow

  • Total cash and cash equivalents increased to $253.5 million as of December 31, 2020, compared to $119.6 million as of December 31, 2019.
  • For the quarter ended December 31, 2020, cash flows from operations was $35.4 million and free cash flow was $29.9 million, compared to cash flows from operations of $23.3 million and free cash flow of $14.6 million for the quarter ended December 31, 2019.
  • For the year ended December 31, 2020, cash flows from operations was $102.1 million and free cash flow was $85.9 million, compared to cash flows from operations of $47.1 million and free cash flow of $27.8 million for the year ended December 31, 2019.

Recent Business Highlights

  • Launched the Alarm.com Touchless Video Doorbell: Alarm.com launched the first commercially available video doorbell that rings without requiring any physical contact with the device to reduce public health risks and make home visits and deliveries safer. Alarm.com’s video analytics engines enable the video doorbell to automatically identify people at the door during the day or at night. It immediately alerts the property owner who can see and speak to visitors through Alarm.com’s apps with HD video and two-way audio. The video doorbell’s camera provides a 150° vertical field of view and greater than HD clarity for a full head-to-toe image of visitors as well as a clear view of packages left on the doorstep. The Alarm.com Touchless Doorbell won a TWICE Picks Award at CES 2021 for its unique impact on safety and value that it delivers to consumers.
  • Released Initial Integration of OpenEye and Alarm.com for Business: CloudConnect is a two-way integration between the OpenEye Cloud Video Platform and the Alarm.com for Business platform that directly associates event data from intrusion sensors and access control readers with OpenEye’s SaaS offering. Based on criteria such as system arming status or badge scans by specific users, subscribers can customize event-based rules to record video clips, tag videos and generate alerts, or they can directly navigate to video recordings associated with a particular event. The integration further unifies intrusion, access control and video solutions to offer a more intelligent and convenient way to manage and secure commercial properties.
  • EnergyHub Expands Ecosystem of Electric Vehicle (EV) Chargers: A new partnership with Enel X allows utilities to manage Enel X smart EV charging stations through EnergyHub’s Mercury DERMS platform. The expanded breadth of EnergyHub’s EV charging solution increases the EV charging resources available for utilities to manage in concert with other distributed energy resources. Flexibly managing energy demand can reduce strain on the grid and help utilities avoid infrastructure upgrade costs. EnergyHub’s utility customers Baltimore Gas & Electric (BG&E) and Eversource are the first to leverage this new partnership.
  • PointCentral Launches Connected Retro: The connected intercom solution seamlessly upgrades existing telephone-based apartment and gated-community intercom systems without adding or replacing hardware. Leveraging the acquisition of Doorport, PointCentral’s Connected Retro solution enhances property security and convenience with digital key pin codes that work seamlessly throughout a community, with 30-day audit history tied to every code. Combined with the full suite of PointCentral’s smart rental solutions, property managers and owners can offer a comprehensive curb-to-couch experience to address use cases like unattended showings, package delivery and contactless entry that help increase tenant satisfaction while also improving security, operational efficiencies and asset protection.
  • Expanded Commercial Services Offering with Acquisition of Shooter Detection Systems (SDS): SDS develops the Guardian Indoor Active Shooter Detection System, a unique innovative combination of acoustic and infrared sensors and proprietary algorithms that accurately detects gunshots and communicates incident details to building occupants and security teams. Alarm.com and SDS will continue to advance SDS's engineering and development of gunshot detection solutions and also integrate it with the Alarm.com ecosystem to deliver new levels of safety and security for commercial enterprises of all sizes.
  • Rear Admiral (Ret.) Stephen Evans Appointed to Board of Directors: Effective February 1, 2021, Rear Admiral (Ret.) Evans was appointed to serve as a member of Alarm.com's board of directors. Admiral Evans retired in 2020 from the United States Navy where he most recently served as Special Advisor to the Commander, Naval Operations. Admiral Evans served as Senior Advisor, Deputy U.S. Military, NATO Military Committee from 2019 to 2020, as Commander, George H. W. Bush Carrier Strike Group from 2017 to 2019 and as Commander, Naval Service Training Command from 2015 to 2017. Admiral Evans earned a B.A. at The Citadel and a M.A. in National Security Affairs from the U.S. Naval War College.

Financial Outlook

At this time, the general economic situation remains fluid and it remains challenging to predict the full scope and duration of the impacts of the COVID-19 pandemic. Alarm.com is providing its outlook for SaaS and license revenue for the first quarter of 2021 and its guidance for the full year 2021 based upon current management expectations in light of the ongoing COVID-19 pandemic.

For the first quarter of 2021:

  • SaaS and license revenue is expected to be in the range of $104.8 million to $105.0 million.

For the full year 2021:

  • SaaS and license revenue is expected to be in the range of $440.5 million to $441.5 million.
  • Total revenue is expected to be in the range of $660.5 million to $671.5 million, which includes anticipated hardware and other revenue in the range of $220.0 million to $230.0 million.
  • Non-GAAP adjusted EBITDA is expected to be in the range of $120.0 million to $130.0 million.
  • Non-GAAP adjusted net income attributable to common stockholders is expected to be in the range of $84.0 million to $90.0 million, based on an estimated tax rate of 21.0%.
  • Based on an expected 52.2 million weighted average diluted shares outstanding, non-GAAP adjusted net income attributable to common stockholders is expected to be $1.61 to $1.72 per diluted share.

The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. The guidance provided above is based on expectations as of the date of this press release and Alarm.com undertakes no obligation to update guidance after such date.

Conference Call and Webcast Information

Alarm.com will host a conference call to discuss its fourth quarter and full year 2020 financial results and its outlook for the first quarter and full year 2021. A live audio webcast is scheduled to begin at 4:30 p.m. ET on February 25, 2021. To participate on the live call, analysts and investors should dial 866.588.3290 (U.S./Canada) or 262.558.6169 (International) at least ten minutes prior to the start time of the call. A telephonic replay of the call will be available through March 4, 2021 by dialing 855.859.2056 (U.S./Canada) or 404.537.3406 (International) and providing Conference ID: 5419089. Alarm.com will also offer a live and archived webcast of the conference call accessible on 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 consumers and businesses depend on Alarm.com's technology to manage and control their property from anywhere. Our platform integrates with a growing variety of Internet of Things (IoT) devices through our apps and interfaces. Our security, video, access control, intelligent automation, energy management, and wellness 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 income before income taxes, non-GAAP adjusted net income, non-GAAP adjusted income attributable to common stockholders before income taxes, non-GAAP adjusted net income attributable to common stockholders, non-GAAP adjusted net income attributable to common stockholders per share and free cash flow. We have included non-GAAP measures in this press release because they are financial, operating or liquidity measures used by our management to (i) understand and evaluate our core operating performance and trends and generate future operating plans, (ii) make strategic decisions regarding the allocation of capital and investments in initiatives that are focused on cultivating new markets for our solutions and (iii) provide useful information to management about the amount of cash generated by the business after necessary capital expenditures. 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.

We consider free cash flow to be a liquidity measure, which we define as cash flows from operating activities less purchases of property and equipment.

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, acquisition-related expense and tax windfall adjustments 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.

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

Stock-based compensation expense: We exclude stock-based compensation expense, which relates to stock options and other forms of 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 expense from our non-GAAP financial measures improves the comparability of our results to the results of other companies in our industry.

Secondary offering expense: We exclude secondary offering expense because we do not consider costs associated with the secondary offering to be indicative of our core operating performance and we believe that the exclusion of this expense allows us to better provide meaningful information about our operating performance, facilitates comparisons to our historical operating results and 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 and settlement fees incurred in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes, 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.

Acquisition-related expense: Included in operating expenses are incremental costs directly related to business and asset acquisitions as well as changes in the fair value of contingent consideration liabilities, when applicable. We exclude acquisition-related expense from our non-GAAP financial measures because we believe that the exclusion of this expense allows us to better provide meaningful information about our operating performance, facilitates comparisons to our historical operating results, improves the comparability of our results to the results of other companies in our industry, and ultimately, we believe helps investors better understand the acquisition-related expense and the effects of the transaction on our results of operations.

Depreciation expense: We record depreciation primarily for investments in property and equipment. We exclude depreciation in calculating adjusted EBITDA because we do not consider depreciation when we evaluate our ongoing business operations. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, we do not exclude depreciation.

Amortization expense: 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 expense 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. Although we exclude amortization of acquired intangible assets from our non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

Interest expense: We record interest expense primarily related to our debt 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 attributable to common stockholders per share, basic and diluted, we do not exclude interest expense.

Interest income and other income, net: We exclude interest income and other income, net from our non-GAAP financial measures because we do not consider it part of our ongoing results of operations.

Income taxes: We exclude the impact related to our provision for / (benefit from) income taxes from our adjusted EBITDA calculation. We do not consider this tax adjustment to be 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,” “believe,” “continue,” “designed,” “enable,” “ensure,” “expect,” “intend,” “will,” and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding the Company’s positioning, the benefits of recently launched offerings, and the Company’s guidance for the first quarter and full year 2021 described under “Financial Outlook” above and key assumptions related thereto. 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 Company's results and business operations may be negatively impacted by the COVID-19 pandemic, the Company’s actual operating results may differ significantly from any guidance provided, certain precautions the Company is taking due to the COVID-19 pandemic could harm its business, the Company’s quarterly results may fluctuate, downturns in general economic and market conditions, including due to the COVID-19 pandemic, may reduce demand, the reliability of the Company’s network operations centers, the Company’s ability to retain service provider partners and residential and commercial subscribers and sustain its growth rate, 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 provider partners, customers and employees, consumer demand for interactive security, video monitoring, intelligent automation, energy management and wellness solutions, the Company’s reliance on its service provider network to attract new customers and retain existing customers, the Company's dependence on its suppliers, the reliability of the Company’s hardware and wireless network suppliers and enhanced United States tax, tariff, import/export restrictions, or other trade barriers, particularly tariffs from China 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 5, 2020 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)

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2020

 

2019

 

2020

 

2019

 

2018

Revenue:

 

 

 

 

 

 

 

 

 

SaaS and license revenue

$

105,477

 

 

$

90,062

 

 

$

393,257

 

 

$

337,375

 

 

$

291,072

 

Hardware and other revenue

 

60,099

 

 

 

50,426

 

 

 

224,746

 

 

 

164,988

 

 

 

129,422

 

Total revenue

 

165,576

 

 

 

140,488

 

 

 

618,003

 

 

 

502,363

 

 

 

420,494

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

Cost of SaaS and license revenue

 

13,866

 

 

 

12,638

 

 

 

53,539

 

 

 

50,066

 

 

 

44,933

 

Cost of hardware and other revenue

 

45,394

 

 

 

39,932

 

 

 

173,889

 

 

 

133,533

 

 

 

100,782

 

Total cost of revenue

 

59,260

 

 

 

52,570

 

 

 

227,428

 

 

 

183,599

 

 

 

145,715

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Sales and marketing

 

23,562

 

 

 

18,423

 

 

 

75,967

 

 

 

61,815

 

 

 

55,902

 

General and administrative

 

23,009

 

 

 

18,174

 

 

 

78,643

 

 

 

69,959

 

 

 

95,750

 

Research and development

 

38,867

 

 

 

30,068

 

 

 

152,147

 

 

 

114,443

 

 

 

89,204

 

Amortization and depreciation

 

7,497

 

 

 

6,301

 

 

 

27,520

 

 

 

22,134

 

 

 

21,721

 

Total operating expenses

 

92,935

 

 

 

72,966

 

 

 

334,277

 

 

 

268,351

 

 

 

262,577

 

Operating income

 

13,381

 

 

 

14,952

 

 

 

56,298

 

 

 

50,413

 

 

 

12,202

 

Interest expense

 

(527

)

 

 

(652

)

 

 

(2,596

)

 

 

(2,974

)

 

 

(2,918

)

Interest income

 

136

 

 

 

605

 

 

 

870

 

 

 

4,922

 

 

 

2,272

 

Other income, net

 

678

 

 

 

67

 

 

 

25,588

 

 

 

6,535

 

 

 

143

 

Income before income taxes

 

13,668

 

 

 

14,972

 

 

 

80,160

 

 

 

58,896

 

 

 

11,699

 

Provision for / (benefit from) income taxes

 

(1,971

)

 

 

2,138

 

 

 

3,500

 

 

 

5,566

 

 

 

(9,825

)

Net income

 

15,639

 

 

 

12,834

 

 

 

76,660

 

 

 

53,330

 

 

 

21,524

 

Net loss attributable to redeemable noncontrolling interest

 

328

 

 

 

201

 

 

 

1,193

 

 

 

201

 

 

 

 

Net income allocated to participating securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

Net income attributable to common stockholders

$

15,967

 

 

$

13,035

 

 

$

77,853

 

 

$

53,531

 

 

$

21,521

 

 

 

 

 

 

 

 

 

 

 

Per share information attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

$

0.32

 

 

$

0.27

 

 

$

1.59

 

 

$

1.11

 

 

$

0.45

 

Diluted

$

0.31

 

 

$

0.26

 

 

$

1.53

 

 

$

1.06

 

 

$

0.43

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

49,271,962

 

 

 

48,624,834

 

 

 

48,950,328

 

 

 

48,427,446

 

 

 

47,633,739

 

Diluted

 

51,384,316

 

 

 

50,184,451

 

 

 

50,963,190

 

 

 

50,273,889

 

 

 

49,692,184

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense included in operating expenses:

Three Months Ended
December 31,

 

Year Ended December 31,

 

2020

 

2019

 

2020

 

2019

 

2018

Sales and marketing

$

762

 

 

$

690

 

 

$

3,025

 

 

$

2,075

 

 

$

1,196

 

General and administrative

 

1,963

 

 

 

1,712

 

 

 

7,996

 

 

 

6,474

 

 

 

4,901

 

Research and development

 

5,550

 

 

 

3,480

 

 

 

18,155

 

 

 

12,054

 

 

 

7,332

 

Total stock-based compensation expense

$

8,275

 

 

$

5,882

 

 

$

29,176

 

 

$

20,603

 

 

$

13,429

 

 
 

ALARM.COM HOLDINGS, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

December 31,

 

2020

 

2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

253,459

 

 

$

119,629

 

Accounts receivable, net of allowance for credit losses of $4,696 and $2,584, respectively, and net of allowance for product returns of $1,480 and $1,075, respectively

 

83,326

 

 

 

76,373

 

Inventory

 

44,281

 

 

 

34,168

 

Other current assets, net of allowance for credit losses of $17 and $16, respectively

 

16,348

 

 

 

13,504

 

Total current assets

 

397,414

 

 

 

243,674

 

Property and equipment, net

 

44,796

 

 

 

38,548

 

Intangible assets, net

 

103,259

 

 

 

103,438

 

Goodwill

 

112,838

 

 

 

104,963

 

Deferred tax assets

 

21,692

 

 

 

19,137

 

Operating lease right-of-use assets

 

33,455

 

 

 

30,523

 

Other assets, net of allowance for credit losses of $72 and $0, respectively

 

18,233

 

 

 

17,516

 

Total assets

$

731,687

 

 

$

557,799

 

Liabilities, redeemable noncontrolling interest and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

53,927

 

 

$

48,727

 

Accrued compensation

 

22,307

 

 

 

16,342

 

Deferred revenue

 

4,037

 

 

 

3,043

 

Operating lease liabilities

 

9,973

 

 

 

7,683

 

Total current liabilities

 

90,244

 

 

 

75,795

 

Deferred revenue

 

8,492

 

 

 

7,455

 

Long-term debt

 

110,000

 

 

 

63,000

 

Operating lease liabilities

 

37,697

 

 

 

37,199

 

Other liabilities

 

6,811

 

 

 

7,489

 

Total liabilities

 

253,244

 

 

 

190,938

 

Redeemable noncontrolling interest

 

10,691

 

 

 

11,210

 

Stockholders’ equity

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2020 and 2019

 

 

 

 

 

Common stock, $0.01 par value, 300,000,000 shares authorized; 49,630,773 and 48,700,963 shares issued; and 49,483,620 and 48,700,713 shares outstanding as of December 31, 2020 and 2019, respectively

 

496

 

 

 

487

 

Additional paid-in capital

 

405,831

 

 

 

365,627

 

Treasury stock, at cost; 147,153 and 0 shares as of December 31, 2020 and 2019, respectively

 

(5,149

)

 

 

 

Retained earnings / (accumulated deficit)

 

66,574

 

 

 

(10,463

)

Total stockholders’ equity

 

467,752

 

 

 

355,651

 

Total liabilities, redeemable noncontrolling interest and stockholders’ equity

$

731,687

 

 

$

557,799

 

 
 

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Cash Flows

(in thousands)

 

Year Ended December 31,

Cash flows from operating activities:

2020

 

2019

 

2018

Net income

$

76,660

 

 

$

53,330

 

 

$

21,524

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

Provision for credit losses on accounts receivable

 

2,162

 

 

 

1,170

 

 

 

149

 

Reserve for product returns

 

1,795

 

 

 

(123

)

 

 

273

 

(Recovery of) / provision for credit losses on notes receivable

 

(359

)

 

 

(3,272

)

 

 

3,319

 

Provision for excess and obsolete inventory

 

1,451

 

 

 

485

 

 

 

 

Amortization on patents and tooling

 

882

 

 

 

700

 

 

 

900

 

Amortization and depreciation

 

27,520

 

 

 

22,134

 

 

 

21,721

 

Amortization of debt issuance costs

 

108

 

 

 

108

 

 

 

108

 

Amortization of operating leases

 

8,888

 

 

 

7,600

 

 

 

 

Deferred income taxes

 

(3,256

)

 

 

2,599

 

 

 

(11,482

)

Change in fair value of contingent liability

 

(2,595

)

 

 

(198

)

 

 

 

Stock-based compensation

 

29,176

 

 

 

20,603

 

 

 

13,429

 

Gain on notes receivable

 

 

 

 

(6,931

)

 

 

 

Acquired in-process research and development

 

3,297

 

 

 

850

 

 

 

 

Gain on sale of investment

 

(24,737

)

 

 

 

 

 

 

(Gain on) / impairment of investment

 

(676

)

 

 

605

 

 

 

 

Disposal of property and equipment

 

 

 

 

 

 

 

1,410

 

Changes in operating assets and liabilities (net of business acquisitions):

 

 

 

 

 

Accounts receivable

 

(10,098

)

 

 

(22,273

)

 

 

(9,298

)

Inventory

 

(10,647

)

 

 

(6,976

)

 

 

(8,813

)

Other current and non-current assets

 

(2,683

)

 

 

(2,887

)

 

 

115

 

Accounts payable, accrued expenses and other current liabilities

 

13,781

 

 

 

(10,980

)

 

 

30,615

 

Deferred revenue

 

2,031

 

 

 

(1,567

)

 

 

(1,502

)

Operating lease liabilities

 

(10,177

)

 

 

(8,268

)

 

 

 

Other liabilities

 

(443

)

 

 

403

 

 

 

(1,758

)

Cash flows from operating activities

 

102,080

 

 

 

47,112

 

 

 

60,710

 

Cash flows used in investing activities:

 

 

 

 

 

Business acquisitions, net of cash acquired

 

(26,299

)

 

 

(58,833

)

 

 

 

Additions to property and equipment

 

(16,141

)

 

 

(19,324

)

 

 

(11,015

)

Purchases of in-process research and development

 

(3,297

)

 

 

(850

)

 

 

 

Issuances or purchases of notes receivable

 

(1,200

)

 

 

(26,103

)

 

 

(1,287

)

Receipt of payments on notes receivable

 

2,026

 

 

 

31,696

 

 

 

 

Proceeds from sale of investment

 

25,687

 

 

 

 

 

 

 

Purchases of patents and patent licenses

 

(1,050

)

 

 

 

 

 

(1,075

)

Cash flows used in investing activities

 

(20,274

)

 

 

(73,414

)

 

 

(13,377

)

Cash flows from / (used in) financing activities:

 

 

 

 

 

Proceeds from credit facility

 

50,000

 

 

 

 

 

 

 

Repayments of credit facility

 

(3,000

)

 

 

(4,000

)

 

 

(4,000

)

Payments of deferred consideration for business acquisitions

 

(1,538

)

 

 

 

 

 

 

Purchases of treasury stock and repurchases of common stock

 

(5,149

)

 

 

 

 

 

(1

)

Issuances of common stock from equity-based plans

 

11,711

 

 

 

3,870

 

 

 

6,400

 

Cash flows from / (used in) financing activities

 

52,024

 

 

 

(130

)

 

 

2,399

 

Net increase / (decrease) in cash and cash equivalents

 

133,830

 

 

 

(26,432

)

 

 

49,732

 

Cash and cash equivalents at beginning of the period

 

119,629

 

 

 

146,061

 

 

 

96,329

 

Cash and cash equivalents at end of the period

$

253,459

 

 

$

119,629

 

 

$

146,061 

 
 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures

(in thousands)

(unaudited)

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2020

 

2019

 

2020

 

2019

 

2018

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Net income

$

15,639

 

 

$

12,834

 

 

$

76,660

 

 

$

53,330

 

 

$

21,524

 

Adjustments:

 

 

 

 

 

 

 

 

 

Interest expense, interest income and other income, net

 

(287

)

 

 

(20

)

 

 

(23,862

)

 

 

(8,483

)

 

 

503

 

Provision for / (benefit from) income taxes

 

(1,971

)

 

 

2,138

 

 

 

3,500

 

 

 

5,566

 

 

 

(9,825

)

Amortization and depreciation expense

 

7,497

 

 

 

6,301

 

 

 

27,520

 

 

 

22,134

 

 

 

21,721

 

Stock-based compensation expense

 

8,275

 

 

 

5,882

 

 

 

29,176

 

 

 

20,603

 

 

 

13,429

 

Secondary offering expense

 

 

 

 

 

 

 

543

 

 

 

 

 

 

 

Acquisition-related expense

 

688

 

 

 

813

 

 

 

2,732

 

 

 

2,403

 

 

 

 

Litigation expense

 

2,521

 

 

 

2,072

 

 

 

8,988

 

 

 

12,754

 

 

 

45,729

 

Total adjustments

 

16,723

 

 

 

17,186

 

 

 

48,597

 

 

 

54,977

 

 

 

71,557

 

Adjusted EBITDA

$

32,362

 

 

$

30,020

 

 

$

125,257

 

 

$

108,307

 

 

$

93,081

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income:

 

 

 

 

 

 

 

 

 

Net income, as reported

$

15,639

 

 

$

12,834

 

 

$

76,660

 

 

$

53,330

 

 

$

21,524

 

Provision for / (benefit from) income taxes

 

(1,971

)

 

 

2,138

 

 

 

3,500

 

 

 

5,566

 

 

 

(9,825

)

Income before income taxes

 

13,668

 

 

 

14,972

 

 

 

80,160

 

 

 

58,896

 

 

 

11,699

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and other income, net

 

(814

)

 

 

(672

)

 

 

(26,458

)

 

 

(11,457

)

 

 

(2,415

)

Amortization expense

 

4,590

 

 

 

3,996

 

 

 

16,799

 

 

 

14,334

 

 

 

15,235

 

Stock-based compensation expense

 

8,275

 

 

 

5,882

 

 

 

29,176

 

 

 

20,603

 

 

 

13,429

 

Secondary offering expense

 

 

 

 

 

 

 

543

 

 

 

 

 

 

 

Acquisition-related expense

 

688

 

 

 

813

 

 

 

2,732

 

 

 

2,403

 

 

 

 

Litigation expense

 

2,521

 

 

 

2,072

 

 

 

8,988

 

 

 

12,754

 

 

 

45,729

 

Non-GAAP adjusted income before income taxes

 

28,928

 

 

 

27,063

 

 

 

111,940

 

 

 

97,533

 

 

 

83,677

 

Income taxes 1

 

(6,074

)

 

 

(5,683

)

 

 

(23,507

)

 

 

(20,482

)

 

 

(17,572

)

Non-GAAP adjusted net income

$

22,854

 

 

$

21,380

 

 

$

88,433

 

 

$

77,051

 

 

$

66,105

 

1 Income taxes are calculated using a rate of 21.0% for each of the years ended December 31, 2020, 2019 and 2018 as well as the three months ended December 31, 2020, 2019. The 21.0% effective tax rates for each of the years ended December 31, 2020, 2019 and 2018 as well as the three months ended December 31, 2020, 2019 exclude the income tax effect on the non-GAAP adjustments and reflect the estimated long-term corporate tax rate.

 
 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(in thousands, except share and per share data)

(unaudited)

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2020

 

2019

 

2020

 

2019

 

2018

Adjusted net income attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders, as reported

$

15,967

 

 

$

13,035

 

 

$

77,853

 

 

$

53,531

 

 

$

21,521

 

Provision for / (benefit from) income taxes

 

(1,971

)

 

 

2,138

 

 

 

3,500

 

 

 

5,566

 

 

 

(9,825

)

Income attributable to common stockholders before income taxes

 

13,996

 

 

 

15,173

 

 

 

81,353

 

 

 

59,097

 

 

 

11,696

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and other income, net

 

(814

)

 

 

(672

)

 

 

(26,458

)

 

 

(11,457

)

 

 

(2,415

)

Amortization expense

 

4,590

 

 

 

3,996

 

 

 

16,799

 

 

 

14,334

 

 

 

15,235

 

Stock-based compensation expense

 

8,275

 

 

 

5,882

 

 

 

29,176

 

 

 

20,603

 

 

 

13,429

 

Secondary offering expense

 

 

 

 

 

 

 

543

 

 

 

 

 

 

 

Acquisition-related expense

 

688

 

 

 

813

 

 

 

2,732

 

 

 

2,403

 

 

 

 

Litigation expense

 

2,521

 

 

 

2,072

 

 

 

8,988

 

 

 

12,754

 

 

 

45,729

 

Non-GAAP adjusted income attributable to common stockholders before income taxes

 

29,256

 

 

 

27,264

 

 

 

113,133

 

 

 

97,734

 

 

 

83,674

 

Income taxes 1

 

(6,144

)

 

 

(5,725

)

 

 

(23,758

)

 

 

(20,524

)

 

 

(17,572

)

Non-GAAP adjusted net income attributable to common stockholders

$

23,112

 

 

$

21,539

 

 

$

89,375

 

 

$

77,210

 

 

$

66,102

 

 
 

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2020

 

2019

 

2020

 

2019

 

2018

Adjusted net income attributable to common stockholders per share:

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders per share - basic, as reported

$

0.32

 

 

$

0.27

 

 

$

1.59

 

 

$

1.11

 

 

$

0.45

 

Provision for / (benefit from) income taxes

 

(0.04

)

 

 

0.04

 

 

 

0.06

 

 

 

0.11

 

 

 

(0.20

)

Income attributable to common stockholders before income taxes

 

0.28

 

 

 

0.31

 

 

 

1.66

 

 

 

1.22

 

 

 

0.25

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and other income, net

 

(0.02

)

 

 

(0.02

)

 

 

(0.54

)

 

 

(0.24

)

 

 

(0.05

)

Amortization expense

 

0.09

 

 

 

0.09

 

 

 

0.34

 

 

 

0.30

 

 

 

0.32

 

Stock-based compensation expense

 

0.17

 

 

 

0.12

 

 

 

0.60

 

 

 

0.42

 

 

 

0.28

 

Secondary offering expense

 

 

 

 

 

 

 

0.01

 

 

 

 

 

 

 

Acquisition-related expense

 

0.02

 

 

 

0.02

 

 

 

0.06

 

 

 

0.05

 

 

 

 

Litigation expense

 

0.05

 

 

 

0.04

 

 

 

0.18

 

 

 

0.26

 

 

 

0.96

 

Non-GAAP adjusted income before income taxes

 

0.59

 

 

 

0.56

 

 

 

2.31

 

 

 

2.01

 

 

 

1.76

 

Income taxes 1

 

(0.12

)

 

 

(0.12

)

 

 

(0.48

)

 

 

(0.42

)

 

 

(0.37

)

Non-GAAP adjusted net income attributable to common stockholders per share - basic

$

0.47

 

 

$

0.44

 

 

$

1.83

 

 

$

1.59

 

 

$

1.39

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted net income attributable to common stockholders per share - diluted

$

0.45

 

 

$

0.43

 

 

$

1.75

 

 

$

1.54

 

 

$

1.33

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic, as reported

 

49,271,962

 

 

 

48,624,834

 

 

 

48,950,328

 

 

 

48,427,446

 

 

 

47,633,739

 

Diluted, as reported

 

51,384,316

 

 

 

50,184,451

 

 

 

50,963,190

 

 

 

50,273,889

 

 

 

49,692,184

 

1 Income taxes are calculated using a rate of 21.0% for each of the years ended December 31, 2020, 2019 and 2018 as well as the three months ended December 31, 2020, 2019. The 21.0% effective tax rates for each of the years ended December 31, 2020, 2019 and 2018 as well as the three months ended December 31, 2020, 2019 exclude the income tax effect on the non-GAAP adjustments and reflect the estimated long-term corporate tax rate.

 
 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(in thousands)

(unaudited)

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2020

 

2019

 

2020

 

2019

 

2018

Free cash flow:

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

$

35,410

 

 

$

23,265

 

 

$

102,080

 

 

$

47,112

 

 

$

60,710

 

Additions to property and equipment

 

(5,464

)

 

 

(8,664

)

 

 

(16,141

)

 

 

(19,324

)

 

 

(11,015

)

Non-GAAP free cash flow

$

29,946

 

 

$

14,601

 

 

$

85,939

 

 

$

27,788

 

 

$

49,695

 

 

Investor Relations:
David Trone
Alarm.com
dtrone@alarm.com

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

Source: Alarm.com Holdings, Inc.

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