-- SaaS and license revenue of $44.6 million for the third quarter, a 23% increase year-over-year
-- Total revenue of $67.8 million for the third quarter, a 26% increase year-over-year
-- Net income of $2.6 million and non-GAAP adjusted net income of $9.1 million for the third quarter
-- Adjusted EBITDA of $11.7 million for the third quarter
TYSONS, VA., November 14, 2016 -- Alarm.com Holdings, Inc. (Nasdaq: ALRM), the leading platform solution for the connected home and business, today reported financial results for its third quarter ended September 30, 2016. The company also provided its financial outlook for 2016 fourth quarter SaaS and license revenue and increased its guidance for the full year 2016.
“We continued to execute our strategy in the third quarter and are pleased with the solid results,” said Steve Trundle, President and CEO of Alarm.com. “Along with our service providers, we remain well positioned to capture growing momentum in the market for connected home and business solutions. At the same time, we continued to invest in our platform to open new market opportunities for Alarm.com and our partners.”
Third Quarter 2016 Results
• | SaaS and license revenue increased 23% to $44.6 million for the third quarter of 2016, including $0.4 million of non-recurring revenue, compared to $36.2 million for the third quarter of 2015. |
• | Total revenue increased 26% to $67.8 million for the third quarter of 2016 compared to $54.0 million for the third quarter of 2015. |
• | Net incomewas $2.6 million for the third quarter of 2016 compared to $2.9 million for the third quarter of 2015. |
• | Adjusted EBITDAincreased to $11.7 million for the third quarter of 2016 compared to $9.7 million for the third quarter of 2015. |
• | Net income attributable to common stockholders was $2.6 million for the third quarter of 2016, or $0.05 per diluted share, compared to $2.9 million, or $0.06 per diluted share, for the third quarter of 2015. |
• | Non-GAAP adjusted net incomeincreased to $9.1 million for the third quarter of 2016 compared to $6.7 million for the third quarter of 2015. |
• | Non-GAAP adjusted net income attributable to common stockholdersincreased to $9.1 million for the third quarter of 2016, or $0.19 per diluted share, compared to $6.6 million, or $0.14 per diluted share, for the third quarter of 2015. |
Balance Sheet and Cash Flow
• | Total cash and cash equivalents were $135.1 million as of September 30, 2016 compared to $128.4 million as of December 31, 2015. |
• | For the nine months ended September 30, 2016, cash flows from operations were $8.8 million compared to $21.2 million for the nine months ended September 30, 2015. |
Recent Business Highlights
• | Chief Financial Officer Named: Alarm.com announced that Steve Valenzuela will join Alarm.com as its Chief Financial Officer effective November 15. Mr. Valenzuela brings decades of highly relevant executive experience, having served as CFO of five different software companies including SugarCRM, Apigee Corporation, and Zenprise, acquired by Citrix. He previously held financial management positions with companies in the technology industry such as Tandem Computers, Atari and Intel, and various others, ranging from fast-growing start-ups to publicly-traded, multi-billion dollar enterprises. |
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• | Hurricane Matthew: More than 500,000 properties serviced by the Alarm.com platform are located in states affected recently by Hurricane Matthew. At the storm’s peak, 9.4% of subscriber systems reported power failures and 9.3% reported broadband failure. Alarm.com’s resilient cellular technology helped to keep those homes and communities secure and the Alarm.com platform communicated more than one thousand panic alarms initiated by end-user customers for police or fire response. |
• | Central Station Visual Verification Deployed: In the event of an alarm, Central Station operators can now view Image Sensor images and video clips from the property while dispatching emergency services. The opt-in service provides real-time information during emergencies to help improve response time and reduce false alarms. |
• | Mobile App Updates: Alarm.com updated its MobileTech installation app to provide a completely refreshed layout and new features to help its service providers install and troubleshoot systems more efficiently and accurately and reduce support calls and service visits. In addition, Alarm.com updated both its Android and iOS mobile app for end-user customers. Leveraging the latest capabilities on each operating system, Alarm.com’s updated app creates more convenient ways for end-user customers to interact with their service and know what's happening at their property. |
Financial Outlook
Alarm.com is providing its outlook for 2016 fourth quarter SaaS and license revenue and increasing its guidance for the full year.
For the fourth quarter of 2016:
• | SaaS and license revenue is expected to be in the range of $45.8 million to $46.1 million. |
For the full year 2016:
• | SaaS and license revenue is expected to be in the range of $172.5 million to $172.8 million. |
• | Total revenue is expected to be in the range of $254.0 million to $256.3 million, which includes anticipated hardware and other revenue for the year in the range of $81.5 million to $83.5 million. |
• | Adjusted EBITDA is expected to be in the range of $45.3 million to $45.8 million. |
• | Non-GAAP adjusted net income is expected to be in the range of $28.0 million to $28.5 million. |
• | Based on an expected 48.3 million weighted average shares outstanding (diluted), non-GAAP adjusted net income is expected to be in the range of $0.58 to $0.59 per diluted share. |
Conference Call and Webcast Information
Alarm.com’s third quarter results conference call and webcast is scheduled to begin at 5:00 p.m. ET on November 14, 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 November 21, 2016 by dialing 855.859.2056 (U.S./Canada) or 404.537.3406 (International) and providing Conference ID: 2790819. 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
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management solutions are available through our network of thousands of professional service providers in North America and around the globe. Alarm.com's common stock is traded on Nasdaq under the ticker symbol ALRM. For more information, please visit www.alarm.com.
Non-GAAP Financial Measures
To supplement our 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 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 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, non-ordinary course litigation expense and acquisition-related expense can have unpredictable fluctuations based on unforeseen activity that is out of our control and/or cannot reasonably be predicted. We expect the above charges to have a significant and potentially highly variable impact on our future GAAP financial results. The litigation expense we exclude from this calculation relates to non-ordinary course litigation expenses, including ongoing intellectual property litigation. Notably, we do not adjust for ordinary course legal expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
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. Included in stock-based compensation expense for the nine months ended September 30, 2015 is $0.8 million related to the purchase of an employee's stock awards. Additionally, the determination of stock-based compensation expense can be calculated using various methodologies and is dependent upon subjective assumptions and other factors that vary on a company by company basis. Therefore, we believe that excluding stock-based compensation from our non-GAAP financial measures improves the comparability of our results to the results of other companies in our industry.
Litigation expense: We exclude non-ordinary course litigation expense because we do not consider legal costs incurred in litigation and litigation-related matters of non-ordinary course lawsuits, particularly costs involved in ongoing intellectual property litigation to be indicative of our core operating performance. We do not adjust for
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ordinary course legal expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
Acquisition-related expense: Included in operating expense are external incremental costs directly related to completing the acquisition and integration of the Connect and Piper businesses units from Icontrol Networks, Inc. Included in the acquisition-related expense for the nine months ended September 30, 2016 is $0.6 million of expense we incurred in the first quarter of 2016 prior to the announcement of the proposed acquisition in June 2016. We exclude acquisition-related expense from our non-GAAP financial measures because we believe it is useful for investors to understand the effects of these transaction and integration costs on our total operating expenses.
Amortization: