Alarm.com Q1 Earnings Beats Estimates by 7 Cents EPS

For the full year, Alarm.com said total revenue is expected to be in the range of $381.5 million to $383.5 million, which includes anticipated hardware and other revenue in the range of $97.5 million to $99 million.

TYSONS, Va. — Alarm.com (NASDAQ: ALRM) reported earnings per share (EPS) of 34 cents in the first quarter, beating the Thomson Reuters’ consensus estimate of 27 cents. First quarter total revenue increased 25% to $92.8 million year-over-year, beating estimates by $3.3 million.

Alarm.com had a net margin of 8.6% and a negative return on equity of 47.3%.

During the same period last year, the firm earned 23 cents EPS. The company updated its FY18 guidance to $1.14-$1.15 EPS.

Among Q1 financial results as compared to the same period the prior year:

  • SaaS and license revenue increased 35% to $68 million, compared to $50.2 million. SaaS and license revenue includes software license revenue of $9.9 million, compared to $2.3 million, which represents partial quarter results from the closing of the acquisition of the Connect line of business from iControl Networks in 2017.
  • GAAP net income increased to $10.5 million, or 21 cents per diluted share, compared to $4 million or 8 cents per diluted share.
  • Non-GAAP adjusted EBITDA increased to $23 million, compared to $14.1 million.
  • Non-GAAP adjusted net income increased to $16.7 million, or 34 cents per diluted share, compared to $7.8 million or 16 cents per diluted share.

In comments made during an earnings call Thursday that were provided by Alarm.com, company President and CEO Steve Trundle referenced the continued success its service providers are currently experiencing in the market.

“Through the first four months of this year, our service providers have collectively originated more new accounts than in the first four months of any prior year,” he said.

Trundle said the most successful service providers “are those who focus on building a well-branded, service-oriented relationship with the customer. They emphasize their ability to make it easy for a potential customer to purchase an integrated smart home system that has best in class, dependable security at its core.”

Trundle also discussed new entrants in the security space and the proliferation of DIY offerings from both startups and large technology companies, such as Google and Amazon. He said such products are typically positioned as cheaper alternatives to the products and services that Alarm.com service providers offer.

“There are customers for these offerings as the market is very diverse, but the customer for retail products is not often our customer,” he said.

Rather, a typical Alarm.com customer views their smart home system as a permanent investment in their home or business.

“They value the fact that a local servicing company will stand behind the installation. They value the fact that the system will serve its purpose regardless of whether their broadband connection is up, their power is on, or whether they are available to receive an emergency text message.”

Trundle said consumers who are in the market for less expensive, DIY-oriented security alternatives tend to be less interested in a comprehensive security system or a relationship with a service provider. They also tend to be more interested in solving a specific narrow monitoring or automation need.

“Because the lifetime value of these customer relationships is much lower, if positive at all, the retail market is generally not appealing for our service provider partners,” he said.

About the Author

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Although Bosch’s name is quite familiar to those in the security industry, his previous experience has been in daily newspaper journalism. Prior to joining SECURITY SALES & INTEGRATION in 2006, he spent 15 years with the Los Angeles Times, where he performed a wide assortment of editorial responsibilities, including feature and metro department assignments as well as content producing for latimes.com. Bosch is a graduate of California State University, Fresno with a degree in Mass Communication & Journalism. In 2007, he successfully completed the National Burglar and Fire Alarm Association’s National Training School coursework to become a Certified Level I Alarm Technician.

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