Alarm.com Reports Fourth Quarter and Full Year 2022 Results

February 23, 2023

-- Fourth quarter SaaS and license revenue increased 10.5% year-over-year to $134.6 million --
-- Fourth quarter total revenue increased 6.6% year-over-year to $208.1 million --
-- Full year 2022 SaaS and license revenue increased 13.0% year-over-year to $520.4 million --
-- Full year 2022 total revenue increased 12.5% year-over-year to $842.6 million --
-- Full year 2022 GAAP net income attributable to common stockholders increased 7.8% to $56.3 million, compared to $52.3 million for 2021 --
-- Full year 2022 non-GAAP adjusted EBITDA increased 3.1% to $146.8 million, compared to $142.5 million for 2021 --

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, 2022. Alarm.com also provided its financial outlook for SaaS and license revenue for the first quarter of 2023 and guidance for the full year 2023.

“We are pleased to report solid results for the quarter and the year,” said Steve Trundle, CEO of Alarm.com. “We continued to see strong adoption of the full-suite of our solutions in the residential, commercial and international markets. Our team delivered innovative, first-to-market capabilities that we believe will drive more value through our solutions, reinforce our technology leadership in the dynamic connected property space and expand the scope of growth opportunities we see for both our service provider partners and Alarm.com.”

Fourth Quarter 2022 Financial Results as Compared to Fourth Quarter 2021

  • SaaS and license revenue increased 10.5% to $134.6 million, compared to $121.7 million.
    • Excluding Vivint license revenue from the fourth quarter 2021, non-GAAP adjusted SaaS & license revenue growth rate(*) was 15.6%.
  • Total revenue increased 6.6% to $208.1 million, compared to $195.3 million.
  • GAAP net income attributable to common stockholders increased 97.7% to $18.1 million, or $0.34 per diluted share, compared to $9.1 million, or $0.18 per diluted share, primarily due to an increase in interest income and a decrease in interest expense.
  • Non-GAAP adjusted EBITDA(*) increased 24.5%to $39.0 million, compared to $31.3 million.
  • Non-GAAP adjusted net income attributable to common stockholders(*) increased 27.1% to $28.7 million, or $0.53 per diluted share, compared to $22.6 million, or $0.43 per diluted share.

Full Year 2022 Financial Results as Compared to Full Year 2021

  • SaaS and license revenue increased 13.0% to $520.4 million, compared to $460.4 million.
    • Excluding Vivint license revenue from 2021 and 2022, non-GAAP adjusted SaaS & license revenue growth rate(*) was 14.4%.
  • Total revenue increased 12.5% to $842.6 million, compared to $749.0 million.
  • GAAP net income attributable to common stockholders increased 7.8%to $56.3 million, or $1.07 per diluted share, compared to $52.3 million, or $1.01 per diluted share.
  • Non-GAAP adjusted EBITDA(*)increased 3.1%to $146.8 million, compared to $142.5 million.
  • Non-GAAP adjusted net incomeattributable to common stockholders(*) increased 3.3% to $106.9 million, or $1.95 per diluted share, compared to $103.5 million, or $1.99 per diluted share.

Balance Sheet and Cash Flow

  • Total cash and cash equivalents decreased to $622.2 million as of December 31, 2022, compared to $710.6 million as of December 31, 2021, primarily due to the repurchase of 1,385,592 shares of Alarm.com common stock, approximately 2.8% of total outstanding shares, for $78.8 million during the year ended December 31, 2022, as well as cash used for an acquisition and a land purchase to support future growth plans.
  • For the quarter ended December 31, 2022, cash flows from operations was $34.4 million, compared to $20.0 million for the quarter ended December 31, 2021. For the quarter ended December 31, 2022, non-GAAP free cash flow(*) was $33.9 million, compared to $17.8 million for the quarter ended December 31, 2021. For the year ended December 31, 2022, cash flows from operations was $56.9 million, compared to $103.2 million for the year ended December 31, 2021. For the year ended December 31, 2022, non-GAAP free cash flow(*) was $28.3 million, compared to $92.1 million for the year ended December 31, 2021. These decreases in cash flows from operations and free cash flow for the year ended December 31, 2022 as compared to the year ended December 31, 2021 were primarily due to an increase in purchased inventory resulting from increased costs and purchases made to reduce risks and uncertainties in our supply chain as well as differences in the timing of disbursements.

(*) Reconciliations of the non-GAAP measures are set forth at the end of this press release.

Recent Business Highlights

  • Launched Water Dragon: Water Dragon is an easy-to-install water monitoring device that enables any service provider to install a state-of-the-art solution for mitigating flood damage from water leaks. Water Dragon clamps onto the outside of the main water line and uses ultrasonic transducers to precisely measure water flow inside the pipe. As part of Alarm.com’s whole home water protection solution, subscribers are alerted about potential leaks, unexpected water usage and conditions that can lead to frozen pipes.
  • Introduced First Battery-Powered Video Doorbell: The new battery-powered version of Alarm.com’s 780 video doorbell gives service providers a more flexible installation option with a premium user experience that includes advanced video analytics and intelligent alerting capabilities. An on-board neural network rapidly identifies people while optimizing energy usage for extended battery life. The battery-powered device gives service providers a versatile option for challenging installations, particularly in international markets where regional wiring standards do not always support wired video doorbells.
  • Award-Winning Technology: Alarm.com’s first-to-market Smart Arming capability was recognized by the CES Innovation Awards. Smart Arming automatically arms and disarms Alarm.com powered home security systems based on real-time activity and by intelligently adapting to daily routines. Convenient, automated control of the security system enhances peace of mind and drives daily engagement with the smart home system.
  • Shooter Detection Systems (SDS) Earns Industry Award and Announces New Patent: American Security Today, an industry publication, honored SDS as a Platinum finalist in their U.S. Homeland Security Awards Program at the International Security Conference & Exposition. The annual awards program is specifically designed to honor distinguished government and vendor solutions that deliver enhanced value, benefit and intelligence to end-users in a variety of government, homeland security, enterprise and public safety vertical markets. SDS also announced the issuance of a patent titled Cable-Free Gunshot Detection. The patent describes the application of indoor gunshot detection sensors that use a cable-free device powered by a battery. The foundational concepts and designs in this patent are currently offered by the Guardian Wireless product, a dual mode acoustic and infrared gunshot detection sensor.

Financial Outlook

Alarm.com is providing its outlook for SaaS and license revenue for the first quarter of 2023 and its guidance for the full year of 2023 based upon current management expectations. This guidance assumes no contribution from the Vivint license agreement. As indicated previously, Alarm.com is pursuing the matter in arbitration and believes that SaaS and license revenue, total revenue, earnings and cash flow will be impacted by approximately $6.0 million each quarter, plus significant additional legal fees. In preparing its guidance, Alarm.com also assumed no additional unusual impact from the COVID-19 pandemic and no other material geopolitical events which might disrupt business, supply chains or otherwise impact results.

For the first quarter of 2023:

  • SaaS and license revenue is expected to be in the range of $132.4 million to $132.6 million.

For the full year 2023:

  • SaaS and license revenue is expected to be in the range of $551.5 million to $552.5 million.
  • Total revenue is expected to be in the range of $851.5 million to $877.5 million, which includes anticipated hardware and other revenue in the range of $300.0 million to $325.0 million.
  • Non-GAAP adjusted EBITDA is expected to be in the range of $115.0 million to $125.0 million.
  • Non-GAAP adjusted net income attributable to common stockholders is expected to be in the range of $79.7 million to $86.5 million, based on an estimated tax rate of 21.0%.
  • Based on an expected 55.2 million weighted average diluted shares outstanding, non-GAAP adjusted net income attributable to common stockholders is expected to be $1.44 to $1.57 per diluted share.

The 2023 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 2022 financial results and its outlook for the first quarter and full year 2023. A live audio webcast is scheduled to begin at 4:30 p.m. ET on February 23, 2023. To participate on the live call, analysts and investors should pre-register to obtain a dial-in number and individual passcode by visiting: https://register.vevent.com/register/BI3c1ab6d62890447a97ec5e1fcce75328. 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. The information contained on any referenced website is not incorporated into this press release.

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 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 non-GAAP 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, non-GAAP free cash flow, non-GAAP adjusted SaaS and license revenue and non-GAAP adjusted SaaS and license revenue growth rate. 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 adjusted EBITDA as a performance measure 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 most directly comparable GAAP financial measures, which are included in this press release.

We consider non-GAAP 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 non-GAAP adjusted EBITDA and non-GAAP adjusted net income attributable to common stockholders 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:

Interest expense: We record interest expense primarily related to the January 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, and previously recorded interest expense related to our debt facility. We exclude interest expense in calculating our non-GAAP adjusted EBITDA. 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 other than the interest expense related to the amortization of debt issuance costs and debt discount related to the 2026 Notes as discussed below.

Interest income and certain activity within other (expense) / income, net: We exclude interest income as well as certain activity within other (expense) / income, net including gains, losses or impairments on investments and other assets as well as losses on the early extinguishment of the debt, when applicable, from our non-GAAP financial measures because we do not consider it part of our ongoing results of operations.

Provision for / (benefit from) 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.

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.

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 of debt discount and debt issuance costs: We record amortization of debt issuance costs and previously recorded amortization of debt discount related to the January 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, as interest expense. We exclude amortization of debt issuance costs and debt discount from our 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, because we believe that the exclusion of this non-cash interest expense will provide for more meaningful information about our financial performance.

Stock-based compensation expense: We exclude stock-based compensation expense, which relates to restricted stock units 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.

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.

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.

Vivint license revenue: We exclude Vivint license revenue from our non-GAAP adjusted SaaS and license revenue and non-GAAP adjusted SaaS and license revenue growth rate because we believe that this exclusion will provide more meaningful information about our financial performance on a comparable basis, given that we are no longer recording Vivint license revenue effective beginning in the fourth quarter of 2022. We filed a demand for arbitration on October 27, 2022 following Vivint's notification to us indicating that Vivint will stop paying us license fees under the Patent and Cross License Agreement.

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 opportunities, positioning, the benefits of recently launched offerings, acquisitions and investments, anticipated impact of Vivint’s refusal to pay license fees and related legal actions, and the Company’s guidance for the first quarter and full year of 2023 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: impact of the global economic uncertainty and financial market conditions caused by significant worldwide events, including public health crises, such as the COVID-19 pandemic, geopolitical upheaval, such as Russia’s incursion into Ukraine, supply chain disruptions, interest rates and inflation (collectively Macroeconomic Conditions); impact of Macroeconomic Conditions and their economic effects on demand for the Company's products; impact of Vivint's refusal to pay license fees and related legal actions; 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 potential loss of any key supplier or the inability of a key supplier to deliver their products to us on time or at the contracted price; 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; and 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 9, 2022 and other subsequent filings the Company makes with the Securities and Exchange Commission from time to time, including its Form 10-K for the year ended December 31, 2022. 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,

 

2022

 

2021

 

2022

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

 

 

SaaS and license revenue

$

134,551

 

 

$

121,744

 

 

$

520,377

 

 

$

460,372

 

 

$

393,257

 

Hardware and other revenue

 

73,588

 

 

 

73,546

 

 

 

322,182

 

 

 

288,597

 

 

 

224,746

 

Total revenue

 

208,139

 

 

 

195,290

 

 

 

842,559

 

 

 

748,969

 

 

 

618,003

 

Cost of revenue(1):

 

 

 

 

 

 

 

 

 

Cost of SaaS and license revenue

 

19,878

 

 

 

16,976

 

 

 

73,897

 

 

 

66,758

 

 

 

53,539

 

Cost of hardware and other revenue

 

59,694

 

 

 

65,410

 

 

 

268,684

 

 

 

239,141

 

 

 

173,889

 

Total cost of revenue

 

79,572

 

 

 

82,386

 

 

 

342,581

 

 

 

305,899

 

 

 

227,428

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Sales and marketing

 

23,566

 

 

 

24,579

 

 

 

92,748

 

 

 

86,664

 

 

 

75,967

 

General and administrative

 

25,374

 

 

 

22,567

 

 

 

106,688

 

 

 

87,406

 

 

 

78,643

 

Research and development

 

57,408

 

 

 

47,612

 

 

 

218,635

 

 

 

177,713

 

 

 

152,147

 

Amortization and depreciation

 

7,747

 

 

 

7,386

 

 

 

30,870

 

 

 

29,715

 

 

 

27,520

 

Total operating expenses

 

114,095

 

 

 

102,144

 

 

 

448,941

 

 

 

381,498

 

 

 

334,277

 

Operating income

 

14,472

 

 

 

10,760

 

 

 

51,037

 

 

 

61,572

 

 

 

56,298

 

Interest expense

 

(788

)

 

 

(4,238

)

 

 

(3,144

)

 

 

(15,956

)

 

 

(2,596

)

Interest income

 

4,697

 

 

 

141

 

 

 

8,759

 

 

 

587

 

 

 

870

 

Other (expense) / income, net

 

(101

)

 

 

(64

)

 

 

(59

)

 

 

(134

)

 

 

25,588

 

Income before income taxes

 

18,280

 

 

 

6,599

 

 

 

56,593

 

 

 

46,069

 

 

 

80,160

 

Provision for / (benefit from) income taxes

 

490

 

 

 

(2,242

)

 

 

962

 

 

 

(5,106

)

 

 

3,500

 

Net income

 

17,790

 

 

 

8,841

 

 

 

55,631

 

 

 

51,175

 

 

 

76,660

 

Net loss attributable to redeemable noncontrolling interests

 

295

 

 

 

305

 

 

 

707

 

 

 

1,084

 

 

 

1,193

 

Net income attributable to common stockholders

$

18,085

 

 

$

9,146

 

 

$

56,338

 

 

$

52,259

 

 

$

77,853

 

 

 

 

 

 

 

 

 

 

 

Per share information attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

$

0.36

 

 

$

0.18

 

 

$

1.13

 

 

$

1.05

 

 

$

1.59

 

Diluted

$

0.34

 

 

$

0.18

 

 

$

1.07

 

 

$

1.01

 

 

$

1.53

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

49,781,756

 

 

 

50,146,652

 

 

 

49,926,236

 

 

 

49,869,857

 

 

 

48,950,328

 

Diluted

 

54,534,956

 

 

 

51,927,073

 

 

 

54,932,757

 

 

 

51,919,902

 

 

 

50,963,190

 

______________________________

(1) Exclusive of amortization and depreciation shown in operating expenses below.

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense included in operating expenses:

Three Months Ended
December 31,

 

Year Ended December 31,

 

2022

 

2021

 

2022

 

2021

 

2020

Sales and marketing

$

861

 

 

$

1,200

 

 

$

4,342

 

 

$

4,432

 

 

$

3,025

 

General and administrative

 

3,902

 

 

 

2,724

 

 

 

15,037

 

 

 

9,941

 

 

 

7,996

 

Research and development

 

9,838

 

 

 

7,408

 

 

 

33,275

 

 

 

24,321

 

 

 

18,155

 

Total stock-based compensation expense

$

14,601

 

 

$

11,332

 

 

$

52,654

 

 

$

38,694

 

 

$

29,176

 

 
 

ALARM.COM HOLDINGS, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

December 31,

 

2022

 

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

622,165

 

 

$

710,621

 

Accounts receivable, net of allowance for credit losses of $2,835 and $2,168, respectively, and net of allowance for product returns of $1,551 and $1,181, as of December 31, 2022 and 2021, respectively

 

124,283

 

 

 

105,548

 

Inventory

 

115,584

 

 

 

75,276

 

Other current assets, net of allowance for credit losses of $0 and $2, as of December 31, 2022 and 2021, respectively

 

29,056

 

 

 

26,175

 

Total current assets

 

891,088

 

 

 

917,620

 

Property and equipment, net

 

57,172

 

 

 

41,713

 

Intangible assets, net

 

82,458

 

 

 

91,406

 

Goodwill

 

148,183

 

 

 

112,901

 

Deferred tax assets

 

84,185

 

 

 

13,547

 

Operating lease right-of-use assets

 

28,933

 

 

 

30,479

 

Other assets, net of allowance for credit losses of $2 and $78, as of December 31, 2022 and 2021, respectively

 

37,356

 

 

 

24,349

 

Total assets

$

1,329,375

 

 

$

1,232,015

 

Liabilities, redeemable noncontrolling interests and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

119,657

 

 

$

89,816

 

Accrued compensation

 

25,582

 

 

 

23,495

 

Deferred revenue

 

7,540

 

 

 

5,697

 

Operating lease liabilities

 

12,157

 

 

 

10,331

 

Total current liabilities

 

164,936

 

 

 

129,339

 

Deferred revenue

 

10,792

 

 

 

9,140

 

Convertible senior notes, net

 

490,370

 

 

 

425,345

 

Operating lease liabilities

 

27,380

 

 

 

32,591

 

Other liabilities

 

13,050

 

 

 

9,545

 

Total liabilities

 

706,528

 

 

 

605,960

 

Redeemable noncontrolling interests

 

23,988

 

 

 

12,888

 

Stockholders’ equity

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2022 and 2021

 

 

 

 

 

Common stock, $0.01 par value, 300,000,000 shares authorized; 50,985,454 and 50,406,606 shares issued; and 49,452,709 and 50,259,453 shares outstanding as of December 31, 2022 and 2021, respectively

 

510

 

 

 

504

 

Additional paid-in capital

 

497,199

 

 

 

498,979

 

Treasury stock, at cost; 1,532,745 and 147,153 shares as of December 31, 2022 and 2021, respectively

 

(83,993

)

 

 

(5,149

)

Retained earnings

 

185,143

 

 

 

118,833

 

Total stockholders’ equity

 

598,859

 

 

 

613,167

 

Total liabilities, redeemable noncontrolling interests and stockholders’ equity

$

1,329,375

 

 

$

1,232,015

 

 
 

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Cash Flows

(in thousands)

 

Year Ended December 31,

Cash flows from operating activities:

2022

 

2021

 

2020

Net income

$

55,631

 

 

$

51,175

 

 

$

76,660

 

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

 

 

 

 

 

Provision for / (recovery of) credit losses on accounts receivable

 

1,156

 

 

 

(775

)

 

 

2,162

 

Reserve for product returns

 

4,746

 

 

 

2,494

 

 

 

1,795

 

Recovery of credit losses on notes receivable

 

(78

)

 

 

(9

)

 

 

(359

)

Provision for excess and obsolete inventory

 

 

 

 

448

 

 

 

1,451

 

Amortization on patents and tooling

 

1,359

 

 

 

1,240

 

 

 

882

 

Amortization and depreciation

 

30,870

 

 

 

29,715

 

 

 

27,520

 

Amortization of debt discount and debt issuance costs

 

3,126

 

 

 

15,823

 

 

 

108

 

Amortization of operating leases

 

10,499

 

 

 

9,692

 

 

 

8,888

 

Deferred income taxes

 

(55,039

)

 

 

(10,115

)

 

 

(3,256

)

Change in fair value of contingent liability

 

 

 

 

 

 

 

(2,595

)

Stock-based compensation

 

52,654

 

 

 

38,694

 

 

 

29,176

 

Acquired in-process research and development

 

 

 

 

 

 

 

3,297

 

Gain on sale of investment

 

 

 

 

 

 

 

(24,737

)

(Gain on) / impairment of investment or intangible assets

 

(140

)

 

 

86

 

 

 

(676

)

Loss on early extinguishment of debt

 

 

 

 

185

 

 

 

 

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

 

 

 

 

 

Accounts receivable

 

(24,346

)

 

 

(23,941

)

 

 

(10,098

)

Inventory

 

(40,308

)

 

 

(31,443

)

 

 

(10,647

)

Other current and non-current assets

 

(8,952

)

 

 

(11,912

)

 

 

(2,683

)

Accounts payable, accrued expenses and other current liabilities

 

32,938

 

 

 

39,418

 

 

 

13,781

 

Deferred revenue

 

3,428

 

 

 

2,308

 

 

 

2,031

 

Operating lease liabilities

 

(12,723

)

 

 

(11,809

)

 

 

(10,177

)

Other liabilities

 

2,080

 

 

 

1,883

 

 

 

(443

)

Cash flows from operating activities

 

56,901

 

 

 

103,157

 

 

 

102,080

 

Cash flows used in investing activities:

 

 

 

 

 

Business acquisition, net of cash acquired

 

(31,730

)

 

 

 

 

 

(26,299

)

Additions to property and equipment

 

(28,640

)

 

 

(11,062

)

 

 

(16,141

)

Purchases of in-process research and development

 

 

 

 

 

 

 

(3,297

)

Issuances of notes receivable

 

(3,000

)

 

 

 

 

 

(1,200

)

Receipt of payments on notes receivable

 

61

 

 

 

59

 

 

 

2,026

 

Purchase of investment in unconsolidated entity

 

(5,150

)

 

 

(5,000

)

 

 

 

Proceeds from sale of investment

 

140

 

 

 

 

 

 

25,687

 

Purchases of patents, patent licenses and developed technology

 

 

 

 

(4,362

)

 

 

(1,050

)

Cash flows used in investing activities

 

(68,319

)

 

 

(20,365

)

 

 

(20,274

)

Cash flows (used in) / from financing activities:

 

 

 

 

 

Proceeds from credit facility

 

 

 

 

 

 

 

50,000

 

Repayments of credit facility

 

 

 

 

(110,000

)

 

 

(3,000

)

Proceeds from issuance of convertible senior notes

 

 

 

 

500,000

 

 

 

 

Payments of debt issuance costs

 

 

 

 

(15,698

)

 

 

 

Payments of deferred consideration for business acquisitions

 

(1,500

)

 

 

(1,160

)

 

 

(1,538

)

Purchases of treasury stock

 

(78,844

)

 

 

 

 

 

(5,149

)

Payments of tax withholdings related to vesting of restricted stock units

 

 

 

 

(4,476

)

 

 

 

Issuances of common stock from equity-based plans

 

4,020

 

 

 

5,704

 

 

 

11,711

 

Cash flows (used in) / from financing activities

 

(76,324

)

 

 

374,370

 

 

 

52,024

 

Net (decrease) / increase in cash, cash equivalents and restricted cash

 

(87,742

)

 

 

457,162

 

 

 

133,830

 

Cash, cash equivalents and restricted cash at beginning of the period

 

710,621

 

 

 

253,459

 

 

 

119,629

 

Cash, cash equivalents and restricted cash at end of the period

$

622,879

 

 

$

710,621

 

 

$

253,459

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

Cash and cash equivalents

$

622,165

 

 

$

710,621

 

 

$

253,459

 

Restricted cash included in other current assets and other assets

 

714

 

 

 

 

 

 

 

Total cash, cash equivalents and restricted cash

$

622,879

 

 

$

710,621

 

 

$

253,459

 

 
 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures

(in thousands)

(unaudited)

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2022

 

2021

 

2022

 

2021

 

2020

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Net income

$

17,790

 

 

$

8,841

 

 

$

55,631

 

 

$

51,175

 

 

$

76,660

 

Adjustments:

 

 

 

 

 

 

 

 

 

Interest expense, interest income and certain activity within other (expense) / income, net

 

(3,909

)

 

 

4,161

 

 

 

(5,768

)

 

 

15,503

 

 

 

(23,862

)

Provision for / (benefit from) income taxes

 

490

 

 

 

(2,242

)

 

 

962

 

 

 

(5,106

)

 

 

3,500

 

Amortization and depreciation expense

 

7,747

 

 

 

7,386

 

 

 

30,870

 

 

 

29,715

 

 

 

27,520

 

Stock-based compensation expense

 

14,601

 

 

 

11,332

 

 

 

52,654

 

 

 

38,694

 

 

 

29,176

 

Secondary offering expense

 

 

 

 

 

 

 

 

 

 

 

 

 

543

 

Acquisition-related expense

 

331

 

 

 

 

 

 

1,059

 

 

 

29

 

 

 

2,732

 

Litigation expense

 

1,904

 

 

 

1,804

 

 

 

11,440

 

 

 

12,462

 

 

 

8,988

 

Total adjustments

 

21,164

 

 

 

22,441

 

 

 

91,217

 

 

 

91,297

 

 

 

48,597

 

Adjusted EBITDA

$

38,954

 

 

$

31,282

 

 

$

146,848

 

 

$

142,472

 

 

$

125,257

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2022

 

2021

 

2022

 

2021

 

2020

Adjusted net income:

 

 

 

 

 

 

 

 

 

Net income, as reported

$

17,790

 

 

$

8,841

 

 

$

55,631

 

 

$

51,175

 

 

$

76,660

 

Provision for / (benefit from) income taxes

 

490

 

 

 

(2,242

)

 

 

962

 

 

 

(5,106

)

 

 

3,500

 

Income before income taxes

 

18,280

 

 

 

6,599

 

 

 

56,593

 

 

 

46,069

 

 

 

80,160

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and certain activity within other (expense) / income, net

 

(4,697

)

 

 

(77

)

 

 

(8,912

)

 

 

(453

)

 

 

(26,458

)

Amortization expense

 

4,782

 

 

 

4,360

 

 

 

18,706

 

 

 

17,347

 

 

 

16,799

 

Amortization of debt discount and debt issuance costs

 

784

 

 

 

4,232

 

 

 

3,126

 

 

 

15,817

 

 

 

 

Stock-based compensation expense

 

14,601

 

 

 

11,332

 

 

 

52,654

 

 

 

38,694

 

 

 

29,176

 

Secondary offering expense

 

 

 

 

 

 

 

 

 

 

 

 

 

543

 

Acquisition-related expense

 

331

 

 

 

 

 

 

1,059

 

 

 

29

 

 

 

2,732

 

Litigation expense

 

1,904

 

 

 

1,804

 

 

 

11,440

 

 

 

12,462

 

 

 

8,988

 

Non-GAAP adjusted income before income taxes

 

35,985

 

 

 

28,250

 

 

 

134,666

 

 

 

129,965

 

 

 

111,940

 

Income taxes 1

 

(7,557

)

 

 

(5,933

)

 

 

(28,280

)

 

 

(27,293

)

 

 

(23,507

)

Non-GAAP adjusted net income

$

28,428

 

 

$

22,317

 

 

$

106,386

 

 

$

102,672

 

 

$

88,433

 

 

1 Income taxes are calculated using a rate of 21.0% for each of the years ended December 31, 2022, 2021 and 2020 as well as the three months ended December 31, 2022 and 2021. The 21.0% effective tax rates for each of the years ended December 31, 2022, 2021 and 2020 as well as the three months ended December 31, 2022 and 2021 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,

 

2022

 

2021

 

2022

 

2021

 

2020

Adjusted net income attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders, as reported

$

18,085

 

 

$

9,146

 

 

$

56,338

 

 

$

52,259

 

 

$

77,853

 

Provision for / (benefit from) income taxes

 

490

 

 

 

(2,242

)

 

 

962

 

 

 

(5,106

)

 

 

3,500

 

Income attributable to common stockholders before income taxes

 

18,575

 

 

 

6,904

 

 

 

57,300

 

 

 

47,153

 

 

 

81,353

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and certain activity within other (expense) / income, net

 

(4,697

)

 

 

(77

)

 

 

(8,912

)

 

 

(453

)

 

 

(26,458

)

Amortization expense

 

4,782

 

 

 

4,360

 

 

 

18,706

 

 

 

17,347

 

 

 

16,799

 

Amortization of debt discount and debt issuance costs

 

784

 

 

 

4,232

 

 

 

3,126

 

 

 

15,817

 

 

 

 

Stock-based compensation expense

 

14,601

 

 

 

11,332

 

 

 

52,654

 

 

 

38,694

 

 

 

29,176

 

Secondary offering expense

 

 

 

 

 

 

 

 

 

 

 

 

 

543

 

Acquisition-related expense

 

331

 

 

 

 

 

 

1,059

 

 

 

29

 

 

 

2,732

 

Litigation expense

 

1,904

 

 

 

1,804

 

 

 

11,440

 

 

 

12,462

 

 

 

8,988

 

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

 

36,280

 

 

 

28,555

 

 

 

135,373

 

 

 

131,049

 

 

 

113,133

 

Income taxes 1

 

(7,618

)

 

 

(5,997

)

 

 

(28,428

)

 

 

(27,520

)

 

 

(23,758

)

Non-GAAP adjusted net income attributable to common stockholders

$

28,662

 

 

$

22,558

 

 

$

106,945

 

 

$

103,529

 

 

$

89,375

 

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2022

 

2021

 

2022

 

2021

 

2020

Adjusted net income attributable to common stockholders per share:

 

 

 

 

 

 

 

 

 

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

$

0.36

 

 

$

0.18

 

 

$

1.13

 

 

$

1.05

 

 

$

1.59

 

Provision for / (benefit from) income taxes

 

0.01

 

 

 

(0.04

)

 

 

0.02

 

 

 

(0.10

)

 

 

0.07

 

Income attributable to common stockholders before income taxes

 

0.37

 

 

 

0.14

 

 

 

1.15

 

 

 

0.95

 

 

 

1.66

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and certain activity within other (expense) / income, net

 

(0.09

)

 

 

 

 

 

(0.18

)

 

 

(0.01

)

 

 

(0.54

)

Amortization expense

 

0.10

 

 

 

0.09

 

 

 

0.37

 

 

 

0.35

 

 

 

0.34

 

Amortization of debt discount and debt issuance costs

 

0.02

 

 

 

0.08

 

 

 

0.06

 

 

 

0.32

 

 

 

 

Stock-based compensation expense

 

0.28

 

 

 

0.23

 

 

 

1.05

 

 

 

0.77

 

 

 

0.60

 

Secondary offering expense

 

 

 

 

 

 

 

 

 

 

 

 

 

0.01

 

Acquisition-related expense

 

0.01

 

 

 

 

 

 

0.02

 

 

 

 

 

 

0.06

 

Litigation expense

 

0.04

 

 

 

0.03

 

 

 

0.24

 

 

 

0.25

 

 

 

0.18

 

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

 

0.73

 

 

 

0.57

 

 

 

2.71

 

 

 

2.63

 

 

 

2.31

 

Income taxes 1

 

(0.15

)

 

 

(0.12

)

 

 

(0.57

)

 

 

(0.55

)

 

 

(0.48

)

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

$

0.58

 

 

$

0.45

 

 

$

2.14

 

 

$

2.08

 

 

$

1.83

 

 

 

 

 

 

 

 

 

 

 

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

$

0.53

 

 

$

0.43

 

 

$

1.95

 

 

$

1.99

 

 

$

1.75

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic, as reported

 

49,781,756

 

 

 

50,146,652

 

 

 

49,926,236

 

 

 

49,869,857

 

 

 

48,950,328

 

Diluted, as reported

 

54,534,956

 

 

 

51,927,073

 

 

 

54,932,757

 

 

 

51,919,902

 

 

 

50,963,190

 

 

1 Income taxes are calculated using a rate of 21.0% for each of the years ended December 31, 2022, 2021 and 2020 as well as the three months ended December 31, 2022 and 2021. The 21.0% effective tax rates for each of the years ended December 31, 2022, 2021 and 2020 as well as the three months ended December 31, 2022 and 2021 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

(dollars in thousands)

(unaudited)

 

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2022

 

2021

 

2022

 

2021

 

2020

Non-GAAP free cash flow:

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

$

34,446

 

 

$

19,963

 

 

$

56,901

 

 

$

103,157

 

 

$

102,080

 

Additions to property and equipment

 

(556

)

 

 

(2,123

)

 

 

(28,640

)

 

 

(11,062

)

 

 

(16,141

)

Non-GAAP free cash flow

$

33,890

 

 

$

17,840

 

 

$

28,261

 

 

$

92,095

 

 

$

85,939

 

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

2022

 

2021

 

2022

 

2021

 

2020

Non-GAAP adjusted SaaS and license revenue:

 

 

 

 

 

 

 

 

 

SaaS and license revenue

$

134,551

 

 

$

121,744

 

 

$

520,377

 

 

$

460,372

 

 

$

393,257

 

License revenue from Vivint

 

 

 

 

(5,310

)

 

 

(16,631

)

 

 

(20,200

)

 

 

(17,474

)

Non-GAAP adjusted SaaS and license revenue

$

134,551

 

$

116,434

 

 

$

503,746

 

 

$

440,172

 

 

$

375,783

 

Fourth Quarter 2022 as Compared to Fourth Quarter 2021:

Three Months Ended
December 31, 2022

SaaS and license revenue growth rate

10.5%

Adjustment to SaaS and license revenue growth rate for Vivint license revenue

5.1%

Non-GAAP adjusted SaaS and license revenue growth rate

15.6%

 

 

Full Year 2022 as Compared to Full Year 2021:

Year Ended
December 31, 2022

SaaS and license revenue growth rate

13.0%

Adjustment to SaaS and license revenue growth rate for Vivint license revenue

1.4%

Non-GAAP adjusted SaaS and license revenue growth rate

14.4%

 
 

 

Investor & Media Relations:
Matthew Zartman
Alarm.com
ir@alarm.com

Source: Alarm.com Holdings, Inc.