Ascent Capital’s Q4 Results Off by $16M
The holding company for MONI Smart Security and LiveWatch attributed the reduction in quarterly revenue to a lower average number of subscribers in 2017 due to softness in its dealer channel and customer attrition.
DALLAS — Ascent Capital Group (Nasdaq: ASCMA), the holding company that owns MONI Smart Security and DIY business LiveWatch, on Thursday reported net revenue for its fourth quarter and full year ended Dec. 31 totaled $133.5 million and $553.5 million, respectively. Net losses for the same periods totaled $16 million and $107.6 million.
In the fourth quarter, MONI posted net revenue of $133.5 million, a net loss of $14.6 million, and adjusted EBITDA of $73.8 million. For the full year, MONI reported net revenue of $553.5 million, a net loss of $111.3 million, and adjusted EBITDA of $313.6 million. MONI’s adjusted EBITDA included net expense creation costs of $9.4 million and $35.5 million for the fourth quarter and full year, respectively.
Ascent Capital attributed the reduction in revenue to a lower average number of subscribers in 2017 due to softness in its dealer channel and customer attrition. MONI’s core unit attrition increased 50 basis points sequentially to 14.5 at year end. The decrease was partially offset by a 2.2% increase in average recurring monthly revenue (RMR) per subscriber to $44.04 enacted during the past 12 months. An increase in average RMR per new subscriber acquired also helped offset losses.
Subscriber acquisition costs were $3.4 million and $12.2 million for the three and 12 months ended Dec. 31, respectively. Those numbers compare to $2.5 million and $8.9 million for the same periods in 2016. During Q4 and the full year, MONI added 18,363 and 95,786 customers, respectively.
The company previously disclosed it had approximately 36,000 customers in Puerto Rico that were impacted by the devastation wrought by Hurricane Maria in September. During the fourth quarter, the company issued credits to customers in Puerto Rico totaling $1.3 million. Dealers in Puerto Rico created approximately 100 accounts in the fourth quarter, compared to about 1,400 accounts for the same period in 2016.
During a conference call with investors Thursday, MONI President and CEO Jeff Gardner said while the company’s growth is not yet where he wants it to be, “I believe we are making the right investments aimed at improving our operating performance, and helping position us as a leader in the smart home security market.”
A key piece to that strategy is a new licensing agreement that will rebrand MONI and LiveWatch under the Brinks Home Security name. Under the terms of the agreement, MONI will pay The Brink’s Co. (NYSE: BCO) licensing fees largely based on its ability to drive growth under the brand. The agreement has an initial term of seven years, with first year fees of approximately $5 million.
During the fourth quarter the company also announced a renewed relationship with Skyline Security, which is MONI’s largest dealer partner. Other new dealers to sign with MONI during the quarter were Smart Security Solutions, which adds about 100 customers per month, and Nova, a 75-customer per month dealer. The company said it has no dealers of size coming to term in 2018.
MONI showed improved creation costs during the fourth quarter, which it attributed to better dealer multiples. In the fourth quarter, the dealer creation multiple was 34.6x, compared to 35.4x in the same period the year prior. The company also reported its direct-to-consumer channel accounted for 40% of new customers in the fourth quarter.
“Looking ahead to 2018, we entered the year with a strong, healthy group of top 30 dealers. This group was up 2% year over year in the fourth quarter. And we have the power of the Brinks brand to facilitate our recruiting efforts,” Gardner said on the conference call. “ISC West, our largest recruiting event, will be held in April in Las Vegas, and our presence under the new brand, represents a great opportunity. I am confident that we are in a much stronger position in 2018 as compared to 2017.”
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