Ascent Capital Group Reports Q2 Earnings
The MONI and LiveWatch holding company reported net losses for the three and six months ended June 30 totaled $43.5 million and $62.4 million, respectively.
ENGLEWOOD, Colo. — Ascent Capital Group (Nasdaq: ASCMA), a holding company that owns MONI and DIY business LiveWatch, on Wednesday reported second quarter net revenue of $140.5 million, a decrease of 2.2% from the previous quarter.
For the six months ended June 30, net revenue totaled $281.7 million, a decrease of 1.8%. The decrease in net revenues was attributed to the reduction in subscriber accounts at MONI on a year-over-year basis. This was partially offset by an increase in average recurring monthly revenue (RMR) per subscriber to $43.84 due to certain price increases enacted during the past twelve months, as well as an increase in average RMR per new subscriber acquired.
Subscriber acquisition costs totaled $2.8 million and $5.5 million for the three and six months ended June 30, respectively, as compared to $2.1 million and $4.3 million for the three and six months ended June 30, 2016.
Ascent reported its selling, general & administrative (SG&A) costs increased during the second quarter more than two-fold to $64.8 million. SG&A costs for the six months ended June 30 increased 57.2% to $101 million. The increase for both periods is primarily attributable to a $28 million legal settlement in the second quarter in relation to class action litigation of alleged violation of telemarketing laws.
Ascent reported a net loss from continuing operations for the three and six months ended June 30 of $43.5 million and $62.5 million, respectively. This compares to net losses from continuing operations of $22.2 million and $45.4 million in the prior year periods.
Attrition Pressures Persist
MONI’s core account portfolio unit attrition rate for the twelve months ended June 30, which excludes attrition of Pinnacle Security accounts, was 14.1%, compared to 13.2% during the same period the year prior. An increase in the number of subscriber accounts with five-year contracts reaching the end of their initial contract term as well as a more aggressive price increase strategy contributed to the increase in attrition in the period.
Overall unit attrition increased to 14.8% for the twelve months ended June 30, compared to 13.9% for the same period the year prior.
Overall attrition reflects the impact of the Pinnacle Security bulk buys, where MONI purchased approximately 113,000 accounts from Pinnacle Security in 2012 and 2013, which are now experiencing normal end-of-term attrition.
The company said it believes core attrition best reflects the long term characteristics of its customer base.
RMR attrition for the twelve months ended June 30 increased to 13.4% from 12.5% for the twelve months ended June 30, 2016, reflecting price decreases related to the company’s efforts to secure contract extensions from existing customers.
In a statement that corresponded with the second quarter earnings report, MONI President and CEO Jeffery Gardner said the company is pleased with its operational progress during the quarter.
“We continued to drive improvements in dealer economics, generated solid new marketing sales leads through our MONI direct and LiveWatch platforms and have a growing funnel of partnership opportunities that we are considering for the second half of the year,” he stated. “We are also making progress on attrition, taking proactive measures to retain high-risk customers and reduce operating costs in the long term.
Gardner said while account growth of MONI’s dealer channel continues to be soft and will take time to stabilize, “I am confident we are making the right investments in sales training, recruitment support and lead generation now that will benefit the long term growth of this channel and the business.”
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