Last week Alarm.com (NASDAQ: ALRM) reported impressive second quarter results including total revenue of $64.4 million and SaaS and license revenue of $42.0 million, double digit increases year-over-year. Other second quarter highlights for Alarm.com, a cloud-based platform for security and smart home services, include:
- Total revenue was $64.4 million, a 24 percent increase year-over-year.
- SaaS and license revenue was $42.0 million, a 23 percent increase year-over. This category represents 65.2 percent of total revenue.
- Hardware and other revenue was $22.4 million, a 25.8 percent increase year-over-year. This includes an 86 percent increase in camera and video doorbell sales, reported CEPro.
- Net income was $1.9 million, compared to net income of $2.5 million for Q2 2015.
- Net income per share was $0.04 per diluted share, compared $0.10 to Q2 2015.
“Our service providers continued to perform and see solid demand in the second quarter and that drove business momentum for Alarm.com,” said Steve Trundle, President and CEO of Alarm.com in a press release. “The market for IoT-enabled solutions continues to grow as homeowners and businesses realize the benefits of interactive security and home automation. We remain focused on delivering a superior experience to both subscribers and service providers through market-leading technology.”
In an earnings call, Alarm.com corporate controller and interim CAO AJ Gollinger said the SaaS and license revenue visibility remains high, evidenced by a 93 percent renewal rate in the second quarter, according to CEPro.
“This was right at the midpoint of our historical range of 92 percent to 94 percent. SaaS and license revenue gross margin increased to 83 percent during the second quarter of 2016, up a 100 basis points over the prior year. This improvement was largely due to our increased scale,” said Gollinger.
In addition to the financial highlights, Alarm.com announced an agreement to acquire two business units – Connect and Piper – from Icontrol Networks, Inc. for $140 million. The acquisition will provide technology infrastructure, key customer relationships and new hardware devices to complement the company’s existing platform and to help accelerate innovation. The sale is subject to regulatory approval.
The company’s estimates that third quarter SaaS and license revenue will be between $43.8 million and $44.0 million, and between $171.3 million and $171.8 million for the full year 2016. Total revenue for the year is estimated to be between $242.3 million and $245.8 million, including hardware and other revenue ranging between $71.0 million and $74.0 million. Non-GAAP adjusted income is estimated to be between $23.5 million and $24.5 million.
Founded in 2000, Alarm.com has millions of subscribers who use patented Alarm.com technology, purchased and supported exclusively through a network of thousands of authorized Security and Smart Home service providers, to monitor and control their property at home and on the go.
Using an Alarm.com system, for example, a homeowner can monitor devices and systems including a garage door, door locks, security cameras, flood sensors, water valves, security sensors, solar panels, shades, lights, image sensors, energy management, interactive security and home automation. Alarm.com also provides a suite of smart business solutions including professional grade security, energy management and video monitoring.
Investors certainly seem pleased. On August 24, 2015, Alarm.com stock was at $16.01 per share. Though it has experienced a few dips since then, the stock has been on an upward trajectory. The stock price as of 4:30 PM Eastern on August 23 was $28.25, a sizable increase year-over-year.
Insider Take:
Despite a 31 percent decline year-over-year decline in net income, the second quarter financials for Alarm.com are impressive, particularly in the SaaS and license revenue category. With a 93 percent retention rate and acquisitions designed to help them grow capacity and functionality, this company is set up for success for the remainder of 2016.