Preview | Exhibit
-- SaaS and license revenue of $58.9 million, up 40% year-over-year --
-- Total revenue of $86.0 million, up 33% year-over-year --
-- GAAP net income of $9.9 million, compared to $1.9 million for the second quarter of 2016 --
-- Non-GAAP adjusted EBITDA of $15.9 million, up 31% year-over-year --
TYSONS, VA., August 8, 2017-- Alarm.com Holdings, Inc. (Nasdaq: ALRM), the leading platform for the intelligently connected property, today reported financial results for its second quarter ended June 30, 2017. Alarm.com also provided its financial outlook for 2017 third quarter SaaS and license revenue, and increased its guidance for the full year 2017.
"We're pleased with our second quarter results and the continued performance of our service provider partners in the market," said Steve Trundle, President and CEO of Alarm.com. "The market for connected property security, monitoring, and automation solutions continues to grow, and we further enhanced our video and commercial offerings in the second quarter."
Second Quarter 2017 Financial Results
• | SaaS and license revenue increased 40% to $58.9 million for the second quarter of 2017, which includes the first full quarter of revenue from Connect following the acquisition of the Connect and Piper business units from Icontrol on March 8, 2017. |
• | Total revenue increased 33% to $86.0 million for the second quarter of 2017 compared to $64.4 million for the second quarter of 2016. |
• | Non-GAAP adjusted EBITDAincreased to $15.9 million for the second quarter of 2017, up 31% year over year from $12.1 million for the second quarter of 2016. |
• | GAAP net income was $9.9 million, or $0.20 per diluted share for the second quarter of 2017 compared to $1.9 million or $0.04 per diluted share for the second quarter of 2016. |
• | Non-GAAP adjusted net incomeincreased to $16.0 million, or $0.33 per diluted share for the second quarter of 2017 compared to $7.1 million or $0.15 per diluted share for the second quarter of 2016. |
• | GAAP net income and Non-GAAP adjusted net income in the second quarter of 2017 included a $4.5 million tax benefit due to additional research and development (R&D) tax credits and a favorable impact from the new accounting standard for employee share-based transactions during the quarter. |
Balance Sheet and Cash Flow
• | Total cash and cash equivalents was $68.9 million as of June 30, 2017, compared to $140.6 million as of December 31, 2016. |
• | For the quarter ended June 30, 2017, cash flows from operations increased to $11.8 million from $0.7 million for the quarter ended June 30, 2016. |
Recent Business Highlights
• | Launched New Residential Video Cameras: Alarm.com launched new indoor and outdoor residential video cameras in the second quarter. The new cameras offer significantly improved image quality and performance, deep integration into the Alarm.com platform and improved computational capacity to support the future deployment of advanced video analytics capabilities under development by the ObjectVideo Labs team. |
• | Integrated New Security Panels and Introduced New System Enhancement Module: Alarm.com strengthened its leadership position in deploying 4G LTE cellular gateway technology via the integration of two new security panels, the Vario manufactured by Nortek Security, and the IQ Panel 2 manufactured by Qolsys. Alarm.com also introduced a new LTE System Enhancement Module for the DSC Powerseries security control panel. The new System Enhancement Module is designed to facilitate the upgrade of light commercial customers to Alarm.com's services without replacing legacy equipment in the property. Alarm.com offers a broad range of hardware options for delivering its services over the best-in-class network life and connection speeds offered by 4G LTE cellular communications. |
• | Customer Connections Milestones: Customer Connections enables Alarm.com's service provider partners to engage their customer base with targeted communications campaigns to increase the lifetime value of accounts. Since its introduction, participation in Customer Connections has grown significantly to include more than 1,400 service provider partners and over 900,000 subscribers. New campaigns address all of Alarm.com's Best Practices for increasing account retention and include options for engaging commercial subscribers and upgrading existing accounts. |
• | Released New Commercial-grade Video Cameras: The introduction of new commercial-grade video cameras expands the range of performance characteristics and price points available with Alarm.com's portfolio of commercial-grade video cameras. With newly added cameras, Alarm.com's service provider partners can more effectively address a wider range of property sizes, applications and customer needs within the small and medium-sized business market. |
Financial Outlook
Alarm.com is providing its outlook for 2017 third quarter SaaS and license revenue and increasing its guidance for the full year.
For the third quarter of 2017:
• | SaaS and license revenue is expected to be in the range of $60.6 million to $60.8 million. |
For the full year 2017:
• | SaaS and license revenue is expected to be in the range of $233.3 million to $233.8 million. |
• | Total revenue is expected to be in the range of $326.3 million to $327.8 million, which includes anticipated hardware and other revenue in the range of $93 million to $94 million. |
• | Non-GAAP adjusted EBITDA is expected to be in the range of $66.5 million to $67.3 million. |
• | Non-GAAP adjusted net income is expected to be in the range of $47.5 million to $48.3 million. |
• | Based on an expected 49.4 million weighted average shares outstanding (diluted), non-GAAP adjusted net income is expected to be in the range of $0.96 to $0.98 per diluted share. |
Conference Call and Webcast Information
Alarm.com's second quarter results conference call and live audio webcast is scheduled to begin at 5:00 p.m. ET on August 8, 2017. 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 August 15, 2017 by dialing 855.859.2056 (U.S./Canada) or 404.537.3406 (International) and providing Conference ID: 51825778. Alarm.com will also offer a live and archived webcast of the conference call accessible via 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 people use Alarm.com's technology to monitor and control their property from anywhere. Centered on security and remote monitoring, our platform addresses a wide range of market needs and enables application-based control for a growing variety of Internet of Things (IoT) devices. Our security, video monitoring, intelligent automation and energy management solutions are available through our network of thousands of professional service providers in North America and around the globe. Alarm.com's common stock is traded on 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 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 financial and operating 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 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.
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 those expenses resulting from ongoing intellectual property litigation. Notably, we do not adjust for ordinary course legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
We exclude one or more of the following items from non-GAAP financial measures:
Stock-based compensation: We exclude stock-based compensation expense, which relates to equity incentives primarily awarded to employees of Alarm.com, because they are non-cash charges that we do not consider when assessing the operating performance of our business. Additionally, the determination of stock-based compensation expense can be calculated using various methodologies and is dependent upon subjective assumptions and other factors that vary on a company by company basis. Therefore, we believe that excluding stock-based compensation from our non-GAAP financial measures improves the comparability of our results to the results of other companies in our industry.
Litigation expense: We exclude 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 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. Included in the litigation expense is $0.2 million and $0.3 million of expense we incurred in the three and six months ended June 30, 2016, respectively, prior to adjusting this measure for a non-ordinary course lawsuit.
Acquisition-related expense: Included in operating expense are external incremental costs directly related to completing the acquisition and integration of the Connect and Piper business units from Icontrol Networks, Inc. We exclude acquisition-related expense from our non-GAAP financial measures because we believe it is useful for investors to understand the effects of this transaction and its integration costs on our total operating expenses.
Amortization: GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed techn