Alarm.com Initial Valuation Set for Home Automation IPO
Latest S-1 for Alarm.com, a leading smart home as a service (SHaaS) provider suggests valuation could exceed $670 million for the home automation industry’s second public co. after Control4.
Alarm.com, only the second serious pure-play home automation company to go public after Control4 (Nasdaq: CTRL), recently filed an amended IPO that shows a price range of $13 to $15 for the offering of 7 million shares.
That translates to a fully diluted market value of $669 million at the midpoint of the proposed range, financial sources indicate.
In the original S-1, filed May 22, 2015, Alarm.com announced a $75 million offering, but now ups that range to $91 million to $105 million.
There are many parallels between Alarm.com and Control4, a leading provider of professionally installed smart home systems including lighting controls, multiroom audio/video, smart thermostats and more.
We learned from Control4’s IPO in 2013 that investors and analysts did not really understand IoT, much less the professional installation channel-the driver for both companies’ success.
But after Control4 CEO Martin Plaehn launched his pre-IPO dog-and-pony show, he found that the investment community really warmed up to both concepts, especially given Control4’s long history of shipping real product to real customers. Alarm.com is in the same position.
Plaehn told SSI‘s sister publication CE Pro back in 2013 that Control4 was 10x oversubscribed by the end of the investor roadshow. CTRL was up 25% in its first day of trading.
As for factors that could push Alarm.com’s market cap downward include any negative news about Control4 or poor performance by much-ballyhooed DIY systems from the likes of Samsung’s SmartThings, Lowe’s Iris, Staples Connect and others.
Both Control4 and Alarm.com currently sell their products and services through independent low-voltage contractors, so the rise of DIY players such as Apple (HomeKit) and Google (Brillo, Nest) could keep investors away from a pro-centric solution.
As we noted before, unlike Control4, Alarm.com does intend to participate in the DIY home automation market, according to the Form S-1. We suspect that involvement will come through Building 36, an IoT solution recently acquired by Alarm.com. Building 36 Technologies is a start-up that makes a Z-Wave IP gateway that uses Alarm.com as the back end.
Additionally, the DIY product could help Alarm.com better compete in international markets, which the company also hints at in the S-1.
Alarm.com’s chief competitor Icontrol has also invested in the DIY market with its 2014 acquisition of Piper. At the time, the company told CE Pro that international business was a primary driver of the acquisition.
Founded in 2000, Alarm.com offers interactive security and home automation services through a network of more than 5,000 independent dealers. The company says it has 2.3 million subscribers and 2014 revenues of $2.3 million. From 2010 to 2014, Alarm.com experienced 48% CAGR.
The proposed Nasdaq ticker symbol is ALRM.
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