Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 29, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-37461 | |
Entity Registrant Name | ALARM.COM HOLDINGS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-4247032 | |
Entity Address, Address Line One | 8281 Greensboro Drive | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Tysons | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22102 | |
City Area Code | 877 | |
Local Phone Number | 389-4033 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | ALRM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 49,112,071 | |
Entity Central Index Key | 0001459200 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Revenue: | |||||
Total revenue | $ 158,851 | $ 127,880 | $ 452,427 | $ 361,875 | |
Cost of revenue: | |||||
Total cost of revenue | [1] | 61,183 | 47,523 | 168,168 | 131,029 |
Operating expenses: | |||||
Sales and marketing | 18,410 | 14,533 | 52,405 | 43,392 | |
General and administrative | 17,410 | 18,701 | 55,634 | 51,785 | |
Research and development | 36,914 | 29,461 | 113,280 | 84,375 | |
Amortization and depreciation | 6,878 | 5,467 | 20,023 | 15,833 | |
Total operating expenses | 79,612 | 68,162 | 241,342 | 195,385 | |
Operating income | 18,056 | 12,195 | 42,917 | 35,461 | |
Interest expense | (556) | (715) | (2,069) | (2,322) | |
Interest income | 118 | 2,703 | 734 | 4,317 | |
Other income, net | 24,753 | 6,380 | 24,910 | 6,468 | |
Income before income taxes | 42,371 | 20,563 | 66,492 | 43,924 | |
Provision for income taxes | 6,546 | 2,873 | 5,471 | 3,428 | |
Net income | 35,825 | 61,021 | 40,496 | ||
Net loss attributable to redeemable noncontrolling interest | 259 | 865 | |||
Net income | $ 36,084 | 17,690 | $ 61,886 | 40,496 | |
Net income attributable to common stockholders | $ 17,690 | $ 40,496 | |||
Net income per share: | |||||
Basic (in dollars per share) | $ 0.74 | $ 0.36 | $ 1.27 | $ 0.84 | |
Diluted (in dollars per share) | $ 0.71 | $ 0.35 | $ 1.22 | $ 0.81 | |
Weighted average common shares outstanding: | |||||
Basic (in shares) | 49,007,343 | 48,518,041 | 48,842,333 | 48,360,927 | |
Diluted (in shares) | 50,979,679 | 50,152,807 | 50,673,752 | 50,238,409 | |
SaaS and license | |||||
Revenue: | |||||
Total revenue | $ 100,126 | $ 84,924 | $ 287,780 | $ 247,313 | |
Cost of revenue: | |||||
Total cost of revenue | [1] | 14,344 | 12,438 | 39,673 | 37,428 |
Hardware and other | |||||
Revenue: | |||||
Total revenue | 58,725 | 42,956 | 164,647 | 114,562 | |
Cost of revenue: | |||||
Total cost of revenue | [1] | $ 46,839 | $ 35,085 | $ 128,495 | $ 93,601 |
[1] | Exclusive of amortization and depreciation shown in operating expenses below. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 247,176 | $ 119,629 |
Accounts receivable, net of allowance for credit losses of $2,400 and $2,584, respectively, and net of allowance for product returns of $1,341 and $1,075, respectively | 81,883 | 76,373 |
Inventory, net | 40,199 | 34,168 |
Other current assets, net of allowance for credit losses of $30 and $16, respectively | 17,854 | 13,504 |
Total current assets | 387,112 | 243,674 |
Property and equipment, net | 42,639 | 38,548 |
Intangible assets, net | 91,384 | 103,438 |
Goodwill | 105,662 | 104,963 |
Deferred tax assets | 20,749 | 19,137 |
Operating lease right-of-use assets | 33,899 | 30,523 |
Other assets, net of allowance for credit losses of $66 and $0, respectively | 16,600 | 17,516 |
Total assets | 698,045 | 557,799 |
Current liabilities: | ||
Accounts payable, accrued expenses and other current liabilities | 50,029 | 48,727 |
Accrued compensation | 18,918 | 16,342 |
Deferred revenue | 4,411 | 3,043 |
Operating lease liabilities | 9,470 | 7,683 |
Total current liabilities | 82,828 | 75,795 |
Deferred revenue | 8,461 | 7,455 |
Long-term debt | 111,000 | 63,000 |
Operating lease liabilities | 38,605 | 37,199 |
Other liabilities | 7,724 | 7,489 |
Total liabilities | 248,618 | 190,938 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 10,711 | 11,210 |
Stockholders’ equity | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020 and December 31, 2019 | 0 | 0 |
Common stock, $0.01 par value, 300,000,000 shares authorized; 49,256,397 and 48,700,963 shares issued; and 49,109,244 and 48,700,713 shares outstanding as of September 30, 2020 and December 31, 2019, respectively | 493 | 487 |
Additional paid-in capital | 392,765 | 365,627 |
Treasury stock, at cost; 147,153 and 0 shares as of September 30, 2020 and December 31, 2019, respectively | (5,149) | 0 |
Retained earnings / (accumulated deficit) | 50,607 | (10,463) |
Total stockholders’ equity | 438,716 | 355,651 |
Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ 698,045 | $ 557,799 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit losses | $ (2,400) | $ (2,584) |
Allowance for product returns | (1,341) | (1,075) |
Other assets, allowance for credit loss, current | (30) | (16) |
Other assets, allowance for credit loss | $ (66) | $ 0 |
Preferred stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 49,256,397 | 48,700,963 |
Common stock, shares outstanding (in shares) | 49,109,244 | 48,700,713 |
Treasury stock, shares repurchased (in shares) | 147,153 | 0 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 61,021 | $ 40,496 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Provision for / (recovery of) credit losses on accounts receivable | (237) | 722 |
Reserve for product returns | 1,491 | (105) |
Recovery of credit losses on notes receivable | (368) | (3,319) |
Provision for excess and obsolete inventory | 1,178 | 15 |
Amortization on patents and tooling | 604 | 506 |
Amortization and depreciation | 20,023 | 15,833 |
Amortization of debt issuance costs | 81 | 81 |
Amortization of operating leases | 6,562 | 5,570 |
Deferred income taxes | (1,480) | 1,502 |
Change in fair value of contingent liability | (2,593) | 0 |
Stock-based compensation | 20,901 | 14,721 |
Gain on notes receivable | 0 | (6,931) |
Acquired in-process research and development | 3,297 | 850 |
Gain on sale of investment | (24,737) | 0 |
Impairment of investment | 0 | 605 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (7,131) | (16,004) |
Inventory | (7,209) | 1,997 |
Other current and non-current assets | (5,549) | (3,131) |
Accounts payable, accrued expenses and other current liabilities | 5,897 | (22,457) |
Deferred revenue | 2,374 | (1,153) |
Operating lease liabilities | (7,427) | (6,139) |
Other liabilities | (28) | 188 |
Cash flows from operating activities | 66,670 | 23,847 |
Cash flows from / (used in) investing activities: | ||
Additions to property and equipment | (10,677) | (10,660) |
Purchases of in-process research and development | (3,297) | (850) |
Issuances or purchases of notes receivable | (600) | (26,074) |
Receipt of payment on notes receivable | 2,023 | 31,695 |
Proceeds from sale of investment | 25,687 | 0 |
Purchases of patents and patent licenses | (900) | 0 |
Cash flows from / (used in) investing activities | 12,236 | (5,889) |
Cash flows from financing activities: | ||
Proceeds from credit facility | 50,000 | 0 |
Repayments of credit facility | (2,000) | (3,000) |
Payments of deferred consideration for business acquisitions | (819) | 0 |
Purchases of treasury stock | (5,149) | 0 |
Issuances of common stock from equity-based plans | 6,609 | 3,304 |
Cash flows from financing activities | 48,641 | 304 |
Net increase in cash and cash equivalents | 127,547 | 18,262 |
Cash and cash equivalents at beginning of the period | 119,629 | 146,061 |
Cash and cash equivalents at end of the period | $ 247,176 | $ 164,323 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Impact of adoption | Preferred Stock | Common Stock | Additional Paid-In Capital | Treasury Stock | Retained Earnings / (Accumulated Deficit) | Retained Earnings / (Accumulated Deficit)Impact of adoption |
Balance (in shares) at Dec. 31, 2018 | 0 | 48,103,000 | ||||||
Balance at Dec. 31, 2018 | $ 277,589 | $ 37 | $ 0 | $ 481 | $ 341,139 | $ (64,031) | $ 37 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued in connection with equity-based plans (in shares) | 147,000 | |||||||
Common stock issued in connection with equity-based plans | 1,591 | $ 1 | 1,590 | |||||
Vesting of common stock subject to repurchase | 2 | 2 | ||||||
Stock-based compensation expense | 4,267 | 4,267 | ||||||
Net income / (loss) attributable to common stockholders | 9,010 | 9,010 | ||||||
Balance (in shares) at Mar. 31, 2019 | 0 | 48,250,000 | ||||||
Balance at Mar. 31, 2019 | 292,496 | $ 0 | $ 482 | 346,998 | (54,984) | |||
Balance (in shares) at Dec. 31, 2018 | 0 | 48,103,000 | ||||||
Balance at Dec. 31, 2018 | $ 277,589 | 37 | $ 0 | $ 481 | 341,139 | (64,031) | 37 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Purchases of treasury stock (in shares) | 0 | |||||||
Net income / (loss) attributable to common stockholders | $ 40,496 | |||||||
Balance (in shares) at Sep. 30, 2019 | 0 | 48,572,000 | ||||||
Balance at Sep. 30, 2019 | 336,166 | $ 0 | $ 486 | 359,178 | (23,498) | |||
Ending balance at Dec. 31, 2019 | 11,210 | |||||||
Balance (in shares) at Dec. 31, 2018 | 0 | 48,103,000 | ||||||
Balance at Dec. 31, 2018 | 277,589 | 37 | $ 0 | $ 481 | 341,139 | (64,031) | 37 | |
Balance (in shares) at Dec. 31, 2019 | 0 | 48,701,000 | 0 | |||||
Balance at Dec. 31, 2019 | $ 355,651 | (816) | $ 0 | $ 487 | 365,627 | $ 0 | (10,463) | (816) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||||
Balance (in shares) at Mar. 31, 2019 | 0 | 48,250,000 | ||||||
Balance at Mar. 31, 2019 | $ 292,496 | $ 0 | $ 482 | 346,998 | (54,984) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued in connection with equity-based plans (in shares) | 232,000 | |||||||
Common stock issued in connection with equity-based plans | 701 | $ 3 | 698 | |||||
Vesting of common stock subject to repurchase | 2 | 2 | ||||||
Stock-based compensation expense | 5,433 | 5,433 | ||||||
Net income / (loss) attributable to common stockholders | 13,796 | 13,796 | ||||||
Balance (in shares) at Jun. 30, 2019 | 0 | 48,482,000 | ||||||
Balance at Jun. 30, 2019 | 312,428 | $ 0 | $ 485 | 353,131 | (41,188) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued in connection with equity-based plans (in shares) | 90,000 | |||||||
Common stock issued in connection with equity-based plans | 1,012 | $ 1 | 1,011 | |||||
Vesting of common stock subject to repurchase | $ 2 | 2 | ||||||
Purchases of treasury stock (in shares) | 0 | |||||||
Stock-based compensation expense | $ 5,034 | 5,034 | ||||||
Net income / (loss) attributable to common stockholders | 17,690 | 17,690 | ||||||
Balance (in shares) at Sep. 30, 2019 | 0 | 48,572,000 | ||||||
Balance at Sep. 30, 2019 | 336,166 | $ 0 | $ 486 | 359,178 | (23,498) | |||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||
Net income / (loss) attributable to common stockholders | (236) | |||||||
Ending balance at Mar. 31, 2020 | 10,974 | |||||||
Balance (in shares) at Dec. 31, 2019 | 0 | 48,701,000 | 0 | |||||
Balance at Dec. 31, 2019 | 355,651 | (816) | $ 0 | $ 487 | 365,627 | $ 0 | (10,463) | (816) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued in connection with equity-based plans (in shares) | 107,000 | |||||||
Common stock issued in connection with equity-based plans | $ 1,365 | $ 1 | 1,364 | |||||
Purchases of treasury stock (in shares) | 147,153 | 147,000 | ||||||
Purchases of treasury stock | $ (5,149) | $ (5,149) | ||||||
Stock-based compensation expense | 6,358 | 6,358 | ||||||
Net income / (loss) attributable to common stockholders | 8,807 | 8,807 | ||||||
Balance (in shares) at Mar. 31, 2020 | 0 | 48,808,000 | 147,000 | |||||
Balance at Mar. 31, 2020 | 366,216 | $ 0 | $ 488 | 373,349 | $ (5,149) | (2,472) | ||
Beginning balance at Dec. 31, 2019 | 11,210 | |||||||
Ending balance at Sep. 30, 2020 | 10,711 | |||||||
Balance (in shares) at Dec. 31, 2019 | 0 | 48,701,000 | 0 | |||||
Balance at Dec. 31, 2019 | 355,651 | $ (816) | $ 0 | $ 487 | 365,627 | $ 0 | (10,463) | $ (816) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income / (loss) attributable to common stockholders | 61,886 | |||||||
Balance (in shares) at Sep. 30, 2020 | 0 | 49,256,000 | 147,000 | |||||
Balance at Sep. 30, 2020 | $ 438,716 | $ 0 | $ 493 | 392,765 | $ (5,149) | 50,607 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||||
Beginning balance at Mar. 31, 2020 | $ 10,974 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||
Accretion adjustments of redeemable noncontrolling interest to redemption value | 112 | |||||||
Net income / (loss) attributable to common stockholders | (370) | |||||||
Ending balance at Jun. 30, 2020 | 10,716 | |||||||
Balance (in shares) at Mar. 31, 2020 | 0 | 48,808,000 | 147,000 | |||||
Balance at Mar. 31, 2020 | 366,216 | $ 0 | $ 488 | 373,349 | $ (5,149) | (2,472) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued in connection with equity-based plans (in shares) | 263,000 | |||||||
Common stock issued in connection with equity-based plans | 3,059 | $ 3 | 3,056 | |||||
Stock-based compensation expense | 7,095 | 7,095 | ||||||
Accretion adjustments of redeemable noncontrolling interest to redemption value | (112) | (112) | ||||||
Net income / (loss) attributable to common stockholders | 16,995 | 16,995 | ||||||
Balance (in shares) at Jun. 30, 2020 | 0 | 49,071,000 | 147,000 | |||||
Balance at Jun. 30, 2020 | 393,253 | $ 0 | $ 491 | 383,388 | $ (5,149) | 14,523 | ||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||
Accretion adjustments of redeemable noncontrolling interest to redemption value | 254 | |||||||
Net income / (loss) attributable to common stockholders | (259) | |||||||
Ending balance at Sep. 30, 2020 | 10,711 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued in connection with equity-based plans (in shares) | 185,000 | |||||||
Common stock issued in connection with equity-based plans | $ 2,185 | $ 2 | 2,183 | |||||
Purchases of treasury stock (in shares) | 0 | |||||||
Stock-based compensation expense | $ 7,448 | 7,448 | ||||||
Accretion adjustments of redeemable noncontrolling interest to redemption value | (254) | (254) | ||||||
Net income / (loss) attributable to common stockholders | 36,084 | 36,084 | ||||||
Balance (in shares) at Sep. 30, 2020 | 0 | 49,256,000 | 147,000 | |||||
Balance at Sep. 30, 2020 | $ 438,716 | $ 0 | $ 493 | $ 392,765 | $ (5,149) | $ 50,607 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Alarm.com Holdings, Inc. (referred to herein as Alarm.com, the Company, or we) is the leading platform for the intelligently connected property. We offer a comprehensive suite of cloud-based solutions for the smart residential and commercial property , including interactive security, video monitoring, intelligent automation and energy management. Millions of property owners depend on our technology to intelligently secure, automate and manage their residential and commercial properties. Our solutions are delivered through an established network of over 9,000 trusted service provider partners, who are experts at selling, installing and supporting our solutions. We derive revenue from the sale of our cloud-based Software-as-a-Service, or SaaS, services, license fees, software, hardware, activation fees and other revenue. Our fiscal year ends on December 31. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements include our accounts and those of our majority-owned and controlled subsidiaries after elimination of intercompany accounts and transactions. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual financial statements. They should be read together with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K filed with the SEC on February 26, 2020, or the Annual Report. The condensed consolidated balance sheet as of December 31, 2019 was derived from our audited financial statements, but does not include all disclosures required by GAAP for annual financial statements. In the opinion of management, these condens ed consolidated fin ancial statements include all normal recurring adjustments necessary for a fair statement of the results of operations, financial position and cash flows for the periods presented. However, the COVID-19 pandemic disrupted and may intermittently continue to disrupt our supply chain for an unknown period of time due to its impact on manufacturing, production and global transportation. The COVID-19 pandemic also disrupted and may intermittently continue to disrupt our sales channels due to restrictions imposed from time to time on our service providers’ ability to meet with residential and commercial property owners who use our solutions. In addition, the COVID-19 pandemic resulted in a global slowdown of economic activity and a recession in the United States and the economic situation remains fluid as parts of the economy appear to be recovering while others continue to struggle. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2020, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the COVID-19 pandemic. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, assumptions and judgments or revise the carrying value of our assets or liabilities. However, our estimates, judgments and assumptions are continually evaluated based on available information and experience and may change as new events occur and additional information is obtained. Because of the use of estimates inherent in the financial reporting process and given the additional unknowable duration and effects of the COVID-19 pandemic, actual results could differ from those estimates and any such differences may be material. Estimates are used when accounting for revenue recognition, allowances for credit losses, allowance for hardware returns, estimates of obsolete inventory, long-term incentive compensation, stock-based compensation, income taxes, legal reserves, contingent consideration and goodwill and intangible assets. Reclassifications Certain previously reported amounts in the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 have been reclassified to conform to our current presentation, including the addition of a provision for excess and obsolete inventory separate line item, which was previously included in inventory, as well as changes to the presentation of line items related to operating leases. Comprehensive Income Our comprehensive income for the three and nine months ended September 30, 2020 and 2019 was equal to our net income disclosed in the condensed consolidated statements of operations. Significant Accounting Policies Other than those disclosed herein, there have been no other material changes to our significant accounting policies during the three and nine months ended September 30, 2020 from those disclosed in our Annual Report. Treasury Stock We account for treasury stock under the cost method and present treasury stock, including any applicable commissions and fees, as a component of stockholders’ equity in the condensed consolidated balance sheets and statements of equity. Treasury stock held by us may be retired or reissued in the future. Credit Losses The allowance for credit losses is a valuation account that is deducted from the accounts receivable and notes receivable amortized cost basis to present the net amount expected to be collected. We estimate the allowance balance by applying the loss-rate method using relevant available information from internal and external sources, including historical write-off activity, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes in economic conditions, such as changes in unemployment rates. We use projected economic conditions over a period no more than twelve months based on data from external sources. For periods beyond the twelve-month reasonable and supportable forecast period, we revert to historical loss information immediately. The allowance for credit losses is measured on a pooled basis when similar risk characteristics exist. When assessing whether to measure certain financial assets on a pooled basis, we considered various risk characteristics, including the financial asset type, size and the historical or expected credit loss pattern. These risk characteristics are relevant to accounts receivable and notes receivable. We identified the following two portfolio segments for our accounts receivable: (i) outstanding accounts receivable balances within Alarm.com and certain subsidiaries and (ii) outstanding accounts receivable balances within all other subsidiaries. We identified the following two portfolio segments for our notes receivable: (i) loan receivables and (ii) hardware financing receivables. There were no changes to our portfolio segments since the adoption of Accounting Standards Update, or ASU, 2016-13, " Financial Instruments - Credit Losses (Topic 326)," or Topic 326, and no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses. Additionally, there were no significant changes in the amount of write-offs during the three and nine months ended September 30, 2020 as compared to historical periods. There were no purchases or sales of financial assets during the three and nine months ended September 30, 2020 and 2019. Expected credit losses are estimated over the contractual term of the financial assets and we adjust the term for expected prepayments when appropriate. For the three and nine months ended September 30, 2020, we recorded a reduction of credit loss expense of $1.2 million and $0.7 million in general and administrative expense in our condensed consolidated statements of operations. The contractual term excludes expected extensions, renewals and modifications because extension and renewal options are unconditionally cancelable by us. Write-offs of the amortized cost basis are recorded to the allowance for credit losses. Any subsequent recoveries of previously written off balances are recorded as a reduction to credit loss expense. We do not accrue interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms. Notes receivable that are 90 days or greater past due are placed on nonaccrual status. Notes receivable may be placed on nonaccrual status earlier if, in management’s opinion, a timely collection of the full principal and interest becomes uncertain. After a note receivable has been placed on nonaccrual status, interest will be recognized when cash is received. A note receivable may be returned to accrual status after all of the customer’s delinquent balances of principal and interest have been settled, and collection of all remaining contractual amounts due is reasonably assured. We have elected not to measure an allowance for credit losses for accrued interest receivables . We write-off any accrued interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms by reversing interest income. The accrued interest receivable as of September 30, 2020 and December 31, 2019 was less than $0.1 million and is reflected in other current assets within our condensed consolidated balance sheets and excluded from the amortized cost basis of the notes receivable . We did not write-off any accrued interest receivable during the three and nine months ended September 30, 2020 and 2019. Recent Accounting Pronouncements Adopted On June 16, 2016, the Financial Accounting Standards Board, or FASB, issued Topic 326 which provides guidance designed to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. From November 2018 to February 2020, amendments to Topic 326 were issued to clarify numerous accounting topics. When determining such expected credit losses, the guidance requires companies to apply a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendment was effective for us beginning on January 1, 2020. On January 1, 2020, we adopted Topic 326 by applying the modified retrospective approach to our trade receivables and our notes receivable that were outstanding as of that date, which required us to record the initial effect of Topic 326 as a cumulative-effect adjustment to retained earnings on January 1, 2020. The adoption of Topic 326 Balance Sheet Caption As of January 1, 2020 Accumulated deficit $ 816 Accounts receivable, net (367) Other current assets (83) Other assets (366) The adoption of Topic 326 did not materially impact our condensed consolidated statements of operations, condensed consolidated statement of equity or our condensed consolidated statements of cash flows. On August 28, 2018, the FASB issued ASU 2018-13, " Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which provides guidance designed to improve the effectiveness of fair value measurement disclosures in notes to the financial statements. The update removes several existing disclosure requirements, including, but not limited to: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements. The update also adds additional disclosure requirements for public companies, including but not limited to: (i) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The update also modifies and clarifies several existing disclosure requirements. The amendment in this update was effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. On January 1, 2020, we adopted Topic 820 and updated our fair value measurement disclosures (see Note 9). This pronouncement did not have a material impact on our condensed consolidated financial statements or disclosures. On January 16, 2020, the FASB issued ASU 2020-1, " Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 ," which provides guidance on the interaction between accounting standards related to equity securities, equity method investments and certain derivatives. This amendment clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative immediately before applying, or upon discontinuing, the equity method. The amendment also clarifies that an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method or the fair value option in accordance with the financial instruments guidance. The amendment in this update is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. On January 1, 2020, we adopted this amendment on a prospective basis and the adoption did not have a material impact on our consolidated financial statements. Not Yet Adopted On December 18, 2019, the FASB issued ASU 2019-12, " Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, " which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The update also simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance to improve consistent application. The amendment in this update is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact this pronouncement may have on our consolidated financial statements. On March 12, 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued such as the Eurodollar Base Rate, or LIBOR. The update allows entities to elect not to apply certain modification accounting requirements to contracts affected by the discontinuation of a reference rate if certain criteria are met. The amendment was effective beginning March 12, 2020 and will continue to be effective through December 31, 2022. We are currently assessing the impact this pronouncement may have on our consolidated financial statements. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customer | Revenue from Contracts with Customers Revenue Recognition We derive our revenue from three primary sources: the sale of cloud-based SaaS services on our integrated Alarm.com platform, the sale of licenses and services on our non-hosted software platform, or Software platform, and the sale of hardware products. We sell our platform and hardware solutions to service provider partners that resell our solutions and hardware to residential and commercial property owners, who are the service provider partners’ customers. Our subscribers consist of all of the properties maintained by those residential and commercial property owners to which we are delivering at least one of our solutions. We also sell our hardware to distributors who resell the hardware to service provider partners. We enter into contracts with our service provider partners that establish pricing for access to our platform solutions and for the sale of hardware. These service provider c ontracts typically have an initial term of one year, with subsequent renewal terms of one year. Our service provider partners typically enter into contracts with our subscribers, which our service provider partners have indicated range from three in length. When determining the amount of consideration we expect to be entitled to for the sale of our hardware, we estimate the variable consideration associated with customer returns. We record a reserve against revenue for hardware returns based on historical returns. For the twelve months ended September 30, 2020 and 2019, our reserve against revenue for hardware returns was 1%. We evaluate our h ardware reserve on a quarterly basis or if there is an indication of significant changes in return experience. Historically, our returns of hardware have not significantly differed from our estimated reserve. Additionally, we provide warranties related to the intended functionality of the products and services provided and those warranties typically allow for the return of hardware up to one year past the date of sale. We determined these warranties are not separate performance obligations as they cannot be purchased separately and do not provide a service in addition to an assurance the hardware will function as expected. Our hardware and other revenue also includes our revenue from the sale of perpetual licenses that provide our customers in the commercial market the right to use our OpenEye video surveillance software for an indefinite period of time in exchange for a one-time license fee, which is generally paid at contract inception. Our perpetual licenses provide a right to use intellectual property that is functional in nature and has significant stand-alone functionality. Accordingly, for perpetual licenses of functional intellectual property, revenue is recognized at the point-in-time when control has been transferred to the customer, which occurs once the software has been made available to the customer. Hardware and other revenue may also include activation fees charged to some of our service provider partners for activation of a new subscriber account on our platforms, as well as fees paid by service provider partners for our marketing services. Our service provider partners use services on our platforms, such as support tools and applications, to assist in the installation of our solutions in subscriber properties. This installation marks the beginning of the service period on our platforms and, on occasion, we earn activation revenue for fees charged for this service. The activation fee is non-refundable, separately negotiated and specified in our contractual arrangements with our service provider partners and is charged to the service provider partner for each subscriber activated on our platforms. The decision whether to charge an activation fee is based in part on the expected number of subscribers to be added by our service provider partners and as a result, many of our largest service provider partners do not pay an activation fee. Activation fees are not offered on a stand-alone basis separate from our SaaS offering and are billed and received at the beginning of the arrangement. We record activation fees initially as deferred revenue and we recognize these fees ratably over the expected term of the subscribers’ account which we estimate is ten years based on our annual attrition rate. The portion of these activation fees included in current and long-term deferred revenue as of our balance sheet date represents the amounts that will be recognized ratably as revenue over the following twelve months, or longer as approp riate, until the ten-year expected term is complete. The balance of deferred revenue for activation fees was $7.2 million and $8.1 million as of September 30, 2020 and December 31, 2019, respectively, which combines current and long-term balances. SaaS and license revenue associated with our contracts is invoiced and revenue is recognized at an amount that corresponds directly with the value of the performance completed to date. Additionally, the consideration received from hardware sales corresponds directly with the stand-alone selling price of the hardware. As a result, we have elected to use the practical expedient related to the amount of transaction price allocated to the unsatisfied performance obligations and therefore, we have not disclosed the total remaining revenue expected to be recognized on all contracts or the expected period over which the remaining revenue would be recognized. Contract Assets At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each distinct promise to transfer a good or service, or bundle of goods or services. To identify the performance obligations, we consider all of the goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. We record a contract asset when we satisfy a performance obligation by transferring a promised good or service. Contract assets can be conditional or unconditional depending on whether another performance obligation must be satisfied before payment can be received. We receive payments from our service provider partners based on the billing schedule established in our contracts. All of the accounts receivable presented in the condensed consolidated balance sheets represent unconditional rights to consideration. We do not have any assets from contracts containing conditional rights and we do not have any assets from satisfied performance obligations that have not been invoiced. We recognize an asset related to the costs incurred to obtain a contract only if we expect to recover those costs and we would not have incurred those costs if the contract had not been obtained. We recognize an asset from the costs incurred to fulfill a contract if the costs (i) are specifically identifiable to a contract, (ii) enhance resources that will be used in satisfying performance obligations in future and (iii) are expected to be recovered. Our contract assets consist of capitalized commission costs and upfront payments made to a customer. Based on the policy above, we capitalize a portion of our commission costs as an incremental cost of obtaining a contract. When calculating the incremental cost of obtaining a contract, we exclude any commission costs related to metrics that could be satisfied without obtaining a contract, including training-related metrics. We amortize our commission costs over a period of three years, which is consistent with the period over which the products and services related to the commission are transferred to the customer. The three-year period was determined based on our review of historical enhancements and upgrades to our products and services. We applied the portfolio approach to account for the amortization of contract costs as each contract has similar characteristics. Upfront payments made to a customer are capitalized and amortized over the expected period of benefit and are recorded as a reduction to revenue. The current portion of capitalized commission costs and upfront payments made to customers are included in other current assets within our condensed consolidated balance sheets. The non-current portion of capitalized commission costs and upfront payments made to customers are reflected in other assets within our condensed consolidated balance sheets. Our amortization of contract assets during the three and nine months ended September 30, 2020 was $1.0 million and $2.7 million, respectively, as compared to $0.6 million and $1.8 million during the same periods in the prior year. We review the capitalized costs for impairment at least annually. Impairment exists if the carrying amount of the asset recognized from contract costs exceeds the remaining amount of consideration we expect to receive in exchange for providing the goods and services to which such asset r elates, less the costs that relate directly to providing those good and services and that have not been recognized as an expense. W e did not recor d an impairment loss on our contract assets during the three and nine months ended September 30, 2020 and 2019. The changes in our contract assets are as follows (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Beginning of period balance $ 4,718 $ 3,849 $ 4,578 $ 2,881 Commission costs and upfront payments to a customer capitalized in period 607 333 2,429 2,438 Amortization of contract assets (1,046) (613) (2,728) (1,750) End of period balance $ 4,279 $ 3,569 $ 4,279 $ 3,569 Contract Liabilities Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. All of the deferred revenue presented in the condensed consolidated balance sheets represents contract liabilities resulting from advance cash receipts from customers or amounts billed in advance to customers from the sale of services. Changes in deferred revenue are due to our performance under the contract as well as to cash received from new contracts for which services have not been provided. The changes in our contract liabilities are as follows (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Beginning of period balance $ 11,537 $ 10,980 $ 10,498 $ 11,176 Revenue deferred in period 3,425 542 9,118 3,013 Revenue recognized from amounts included in contract liabilities (2,090) (1,499) (6,744) (4,166) End of period balance $ 12,872 $ 10,023 $ 12,872 $ 10,023 The revenue recognized from amounts included in contract liabilities primarily relates to prepayment contracts with customers as well as payments of activation fees. |
Accounts Receivable, Net
Accounts Receivable, Net | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, Net The components of accounts receivable, net are as follows (in thousands): September 30, December 31, Accounts receivable $ 85,624 $ 80,032 Allowance for credit losses (2,400) (2,584) Allowance for product returns (1,341) (1,075) Accounts receivable, net $ 81,883 $ 76,373 For the three and nine months ended September 30, 2020, we recorded a reduction to the provision for credit losses of $1.2 million and $0.2 million on our accounts receivable. For the three and nine months ended September 30, 2019, we recorded a provision for credit losses $0.2 million and $0.7 million, respectively. For the three and nine months ended September 30, 2020, we recorded a reserve for product returns of $0.5 million and $1.5 million, respectively. For the three and nine months ended September 30, 2019, we recorded a reduction to the reserve for product returns in our hardware and other revenue of $0.1 million. Historically, we have not experienced write-offs for uncollectible accounts or sales returns that have differed significantly from our estimates. Allowance for Credit Losses - Accounts Receivable The changes in our allowance for credit losses for accounts receivable are as follows (in thousands): Three Months Ended Nine Months Ended Alarm.com All Other Alarm.com All Other Beginning of period balance $ (3,550) $ (238) $ (2,500) $ (84) Impact of adopting Topic 326 — — (212) (155) Recovery of expected credit losses 1,146 56 195 42 Write-offs 170 16 283 31 End of period balance $ (2,234) $ (166) $ (2,234) $ (166) |
Inventory, Net
Inventory, Net | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory, Net | Inventory, Net The components of inventory, net are as follows (in thousands): September 30, December 31, Raw materials $ 8,776 $ 8,921 Finished goods 31,423 25,247 Total inventory, net $ 40,199 $ 34,168 |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Acquisition of a Business - OpenEye On October 21, 2019, Alarm.com Incorporated, one of our wholly-owned subsidiaries, acquired 85% of the issued and outstanding capital stock of PC Open Incorporated, a Washington corporation, doing business as OpenEye. OpenEye provides cloud-managed video surveillance solutions for the enterprise commercial market. We believe the acquisition of OpenEye will provide a key element to our comprehensive suite of interactive cloud-based services spanning video, access control, intrusion and automation for domestic and international commercial enterprises. In consideration for the purchase of 85% of the issued and outstanding capital stock of OpenEye, we paid $61.2 million in cash on October 21, 2019, after deducting $2.8 million related to an agreed holdback. Pursuant to the terms of the stock purchase agreement, following the preliminary determination of the working capital of OpenEye as of the closing date, the purchase price increased by $0.2 million. The working capital adjustm ent was finalized and paid to the stockholders of OpenEye in the second quarter of 2020 along with a portion of the holdback. The remaining amount of the holdback is expected to be paid to the stockholders of OpenEye by the fourth quarter of 2022, subject to off set for any indemnification obligations. An earn-out of up to an additional $11.0 million is payable if certain calendar 2020 revenue targets are met, of which contingent consideration of $2.8 million was recorded at October 21, 2019. The table below sets forth the purchase consideration and the fair value allocation of the tangible and intangible net assets acquired (in thousands): October 21, 2019 Calculation of Purchase Consideration: Cash paid, net of working capital adjustment $ 61,403 Holdback consideration 2,820 Contingent consideration 2,793 Total consideration $ 67,016 Tangible and Intangible Net Assets: Cash $ 2,352 Accounts receivable 5,742 Inventory 4,687 Other current assets 216 Property and equipment 296 Customer relationships 19,805 Developed technology 16,583 Trade name 2,219 Accounts payable (2,746) Accrued expenses (1,017) Other current liabilities (1,683) Deferred tax liability (9,209) Deferred revenue (889) Redeemable noncontrolling interest (11,411) Goodwill 42,071 Total tangible and intangible net assets $ 67,016 Goodwill of $42.1 million reflects the value of acquired workforce and synergies we expect to achieve from integrating OpenEye's cloud-managed video surveillance solutions into our existing comprehensive suite of interactive cloud-based services for domestic and international commercial enterprises. None of the goodwill recognized is exp ected to be deductible for income tax purposes in future periods. We allocate goodwill to reporting units based on expected benefit from synergies and have allocated the goodwill to the Alarm.com segment. The purchase price allocation for the purchase of 85% of the issued and outstanding capital stock of OpenEye was finalized during the second quarter of 2020. The final fair value of the assets and liabilities reflects an increase of $0.7 million in the deferred tax liability and an increase of $0.7 million in goodwill based on a measurement period adjustment determined upon filing of the pre-acquisition period tax return related to our purchase of 85% of the issued and outstanding capital stock of OpenEye. Fair Value of Net Assets Acquired and Intangibles In accordance with ASC 805, OpenEye constituted a business and the assets and liabilities were recorded at their respective fair values as of October 21, 2019. We developed our estimate of the fair value of intangible net assets using a multi-period excess earnings method for customer relationships, the relief from royalty method for the developed technology and the relief-from-royalty method for the trade name. Customer Relationships We recorded the customer relationships intangible separately from goodwill based on determination of the length, strength and contractual nature of the relationship that OpenEye shared with its customers. We valued the single group of customer relationships using the multi-period excess earnings method, an income approach. The significant assumptions used in the income approach include estimates about future expected cash flows from customer contracts, the attrition rate and the discount rate. We are amortizing the customer relationships, valued at $19.8 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of 13 years. Developed Technology Developed technology primarily consists of intellectual property of proprietary software that is marketed for sale. We valued the developed technology by applying the relief from royalty method, an income approach. The significant assumptions used in the relief from royalty method include estimates about future expected cash flows from the developed technology, the royalty rate, the obsolescence factor and the discount rate. We are amortizing the OpenEye developed technology, valued at $16.6 million, on an attribution method based on the discounted cash flows of the model over an estimated useful life of nine years. Trade Name We valued the trade names acquired using a relief from royalty method. The significant assumptions used in the income approach include future expected cash flows from the trade name, the royalty rate and the discount rate. We are amortizing the trade names, valued at $2.2 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of five years. Redeemable Noncontrolling Interests Our redeemable noncontrolling interest relates to our 85% equity ownership interest in OpenEye. The OpenEye stockholder agreement contains a put option that gives the minority OpenEye stockholders the right to sell their remaining 15% equity ownership interest to us based on the fair value of the shares. The OpenEye stockholder agreement also contains a call option that gives us the right to purchase the remaining OpenEye shares from the minority OpenEye stockholders based on the fair value of the shares. The put and call options can each be exercised beginning in the first quarter of 2023. The redeemable noncontrolling interest was recorded at fair value on October 21, 2019, by applying the income approach using unobservable inputs for projected cash flows, including projected financial results and a discount rate, which are considered Level 3 inputs. This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the condensed consolidated balance sheets. The redemption value of the noncontrolling interest was $11.4 million as of October 21, 2019, and decreased to $10.7 million as of September 30, 2020. Contingent Consideration We account for the contingent consideration related to the potential earn-out payment using fair value and establish a liability for the future earn-out payment based on an estimation of revenue attributable to perpetual licenses and subscription licenses over the 2020 calendar year. As of October 21, 2019, the fair value of the liability was $2.8 million. See Note 9 for details on the significant unobservable inputs used in the fair value estimate and post-acquisition accounting. Asset Acquisitions On March 12, 2020, Alarm.com Incorporated, one of our wholly-owned subsidiaries, acquired certain assets of an unrelated third party. Substantially all of the acquired assets consisted of in-process research and development, or IPR&D. We believe the acquisition of the IPR&D will strengthen our smart intercom capability, including building access security and convenience within the multiple dwelling unit market for residents, guests and deliveries. In consideration for the purchase of the IPR&D, we paid $1.2 million in cash on March 12, 2020, with the remaining $0.3 million expected to be paid 18 months following the acquisition date, subject to offset for any indemnification obligations. The $1.5 million consideration related to IPR&D was expensed at the time of the asset acquisition, as the IPR&D had no alternative future use. On March 31, 2020, Alarm.com Incorporated, one of our wholly-owned subsidiaries, acquired certain assets of an unrelated third party. Substantially all of the acquired assets consisted of IPR&D. We believe the acquisition of the IPR&D will further our commitment to make significant investments in innovative research and development in the intelligently connected property market to broaden our suite of solutions. In consideration for the purchase of the IPR&D, we paid $2.1 million in cash on March 31, 2020 and $0.1 million in December 2019, with the remaining $0.7 million expected to be paid the later of approximately 12 months following the acquisition date or upon resolution of any pending indemnification claims, subject to offset for any indemnification obligations. The $2.9 million consideration related to IPR&D was expensed at the time of the asset acquisition, as the IPR&D had no alternative future use. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net The changes in goodwill by reportable segment are outlined below (in thousands): Alarm.com Other Total Balance as of January 1, 2020 $ 104,963 $ — $ 104,963 Goodwill acquired — — — Measurement period adjustment 699 — 699 Balance as of September 30, 2020 $ 105,662 $ — $ 105,662 Due to the current uncertainty in the financial markets resulting from the COVID-19 pandemic, we assessed our goodwill for indicators of impairment during the three and nine months ended September 30, 2020. We elected to perform a qualitative assessment as of September 30, 2020 and determined there was no impairment of goodwill during the three and nine months ended September 30, 2020. There was also no impairment of goodwill during the three and nine months ended September 30, 2019. The following table reflects changes in the net carrying amount of the components of intangible assets (in thousands): Customer Developed Trade Name Total Balance as of January 1, 2020 $ 84,396 $ 16,820 $ 2,222 $ 103,438 Amortization (10,412) (1,371) (271) (12,054) Balance as of September 30, 2020 $ 73,984 $ 15,449 $ 1,951 $ 91,384 We recorded $4.0 million and $12.1 million of amortization related to our intangible assets for the three and nine months ended September 30, 2020, respectively, as compared to $3.4 million and $10.3 million for the same periods in the prior year. There were no impairments of long-lived intangible assets during the three and nine months ended September 30, 2020 and 2019. The following tables reflect the weighted average remaining life and carrying value of finite-lived intangible assets (in thousands, except weighted-average remaining life): September 30, 2020 Gross Accumulated Net Weighted- Customer relationships $ 123,731 $ (49,747) $ 73,984 9.2 Developed technology 30,542 (15,093) 15,449 7.9 Trade name 3,304 (1,353) 1,951 4.0 Other 234 (234) — 0.0 Total intangible assets $ 157,811 $ (66,427) $ 91,384 December 31, 2019 Gross Accumulated Net Weighted- Customer relationships $ 123,731 $ (39,335) $ 84,396 9.8 Developed technology 30,542 (13,722) 16,820 8.7 Trade name 3,304 (1,082) 2,222 4.8 Other 234 (234) — 0.0 Total intangible assets $ 157,811 $ (54,373) $ 103,438 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Purchases of Patents and Patent Licenses From time to time, we enter into agreements to purchase patents or patent licenses. In April 2020, we purchased 30 patents for $0.9 million. In October 2020, we purchased one patent for $0.2 million. The carrying value, net of amortization, of our purchased patents and patent licenses was $2.9 million and $2.4 million as of September 30, 2020 and December 31, 2019, respectively. As of September 30, 2020 and December 31, 2019, $0.7 million and $0.5 million of patent costs were included in other current assets, respectively, and $2.2 million and $1.9 million of patent costs were included in other assets, respectively. We have $6.8 million of historical cost in purchased patents and patent licenses as of September 30, 2020. We are amortizing the patent costs over the estimated useful lives of the patents, which range from three years to twelve years. Patent cost amortization of $0.1 million and $0.3 million was included in cost of SaaS and license revenue in our condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019, respectively. Patent cost amortization of $0.1 million and $0.2 million was included in amortization and depreciation in our condensed consolidated statements of operations for the three and nine months ended September 30, 2020, as compared to less than $0.1 million and $0.1 million in the same periods in the prior year. Loan to a Distribution Partner In September 2016, we entered into dealer and loan agreements with a distribution partner. The dealer agreement enables the distribution partner to resell our SaaS services and hardware to their subscribers. Under the loan agreements, we agreed to loan the distribution partner up to $4.0 million, collateralized by all assets owned by the distribution partner. The advance period for the loan was amended in August 2017 to begin each year on September 1 and end each year on December 31. Interest on the outstanding principal accrued at a rate per annum equal to the greater of 6.0% or LIBOR, plus 4.0%, as determined on the first date of each annual advance period. The repayment of principal and accrued interest was due in three installments beginning in July and ending in August following the advance period. The maturity date of the loan was August 31, 2019; however, the borrower had the option to extend the term of the loan for two successive terms of one year each. In May 2018, the loan agreement with our distribution partner was amended to convert the entire $4.0 million note receivable outstanding into a $4.0 million term loan. The term loan had a maturity date of July 31, 2022 and required annual principal repayments of $1.0 million on July 31 of each year, commencing on July 31, 2019. The term loan also required monthly interest payments, with interest accruing on the outstanding principal balance at a rate per annum equal to 6.0% through June 30, 2018 and a rate per annum equal to the LIBOR rate on the first of any interest period plus 7.0% beginning on July 1, 2018. In April 2017, we entered into a subordinated credit agreement with an affiliated entity of the distribution partner and loaned the affiliated entity $3.0 million, with a maturity date of November 21, 2022. Interest on the outstanding principal balance accrued at a rate of 8.5% per annum and required monthly interest payments. In June 2020, we amended the term loan with our distribution partner and also amended the subordinated credit agreement with the affiliated entity of the distribution partner. At the time of the amended term loan and subordinated credit agreement in June 2020, the outstanding balance of the term loan was $3.0 million and the outstanding balance of the subordinated credit agreement was $3.0 million. Under the amended terms, the distribution partner paid us $2.0 million in principal for the term loan on June 9, 2020 and the remaining $1.0 million was transferred to the amended subordinated credit agreement with the affiliated entity of the distribution partner. As of September 30, 2020, none of the notes receivable balance related to the amended term loan was outstanding. As of December 31, 2019, $1.0 million of the note receivable balance related to the term loan was included in other current assets in our condensed consolidated balance sheet and $2.0 million of the note receivable balance was included in other assets in our condensed consolidated balance sheet. The amended subordinated credit agreement with the affiliated entity of the distribution partner matures on September 9, 2025 and interest on the outstanding principal balance accrues at a rate of 9.0% per annum and is payable in kind. As of September 30, 2020 and December 31, 2019, $4.1 million and $3.0 million of the notes receivable balance related to the subordinated credit agreement was included in other assets in our condensed consolidated balance sheets, respectively. For the three and nine months ended September 30, 2020, we recognized $0.5 million and $1.8 million of revenue from the distribution partners associated with these loans, respectively, as compared to $0.4 million and $1.3 million for the same periods in the prior year. Loan to and Investment in a Hardware Supplier In October 2018, we entered into a subordinate convertible promissory note with one of our hardware suppliers, or the October 2018 Promissory Note, which was subsequently amended. In March 2019, we entered into a separate secured promissory note with the same hardware supplier, which, together with the October 2018 Promissory Note, we refer to as the Promissory Notes. Under the Promissory Notes, we agreed to provide the hardware supplier loans of up to $7.4 million, collateralized by all assets owned by the supplier. In March 2019, we also purchased and acquired a secured promissory note, or the Acquired Promissory Note, that matured on March 30, 2019 and was originally executed between our hardware supplier and another third-party secured creditor. The Acquired Promissory Note had an outstanding balance of $26.6 million as of December 31, 2018, including interest. We paid $16.4 million to the third-party secured creditor in exchange for all of the rights associated with the Acquired Promissory Note, including a security interest and a right to enforce that interest against all assets owned by the hardware supplier. We also paid an additional $6.0 million to the third-party secured creditor in September 2019 based on the outcome of certain contingencies measured as of May 4, 2019. The fair value of the Acquired Promissory Note at the date of purchase was $22.4 million, which represented the initial cash consideration paid in March 2019 and the contingent consideration paid in September 2019. On June 24, 2019, we received a payment of $7.4 million from the supplier for the partial satisfaction of amounts due under the Promissory Notes and the Acquired Promissory Note. On July 15, 2019, we received an additional payment of $25.0 million from the supplier and converted the remaining $5.6 million outstanding notes receivable balance into 9,520,832 shares of Series B preferred stock in the hardware supplier. We concluded that the $5.6 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and will be accounted for using the measurement alternative. Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments. As a result of the payments received, we reversed the $3.3 million reserve related to the October 2018 Promissory Note that was previously recorded during the three months ended December 31, 2018. The reversal of the reserve was recorded as a reduction to general and administrative expense in our condensed consolidated statements of operations during the three months ended June 30, 2019. As a result of the $25.0 million payment received and conversion of the $5.6 million outstanding notes receivable balance into an equity investment on July 15, 2019, we recorded interest of $1.7 million within interest income and a gain of $6.9 million within other income, net, in our condensed consolidated statements of operations during the three and nine months ended September 30, 2019, related to the Promissory Notes and the Acquired Promissory Note. As of September 30, 2019, there was no remaining outstanding balance of the Promissory Notes and the Acquired Promissory Note. The total equity investment in the hardware supplier was $5.6 million as of September 30, 2020 and December 31, 2019. Loan to a Service Provider Partner In July 2020, we entered into a loan agreement with a service provider partner, under which we agreed to loan the service provider partner up to $2.5 million, collateralized by the assets of the service provider partner. Interest on the outstanding principal accrues at a rate per annum equal to 9.0% and requires monthly interest and principal payments beginning in February 2021. The maturity date of the loan is July 24, 2025. As of September 30, 2020, $0.6 million of principal was outstanding from the service provider partner under the loan agreement. For the three and nine months ended September 30, 2020, we recognized less than $0.1 million and $0.1 million of revenue from the distribution partners associated with these loans, respectively, as compared to less than $0.1 million for the same periods in the prior year Investment in a Platform Partner In 2013, we paid $3.5 million in cash to purchase 3,548,820 Series A convertible preferred shares from one of our platform partners. In 2014, we entered into a Series 1 Preferred Stock purchase agreement with the platform partner and another investor. The other investor purchased shares of the platform partner’s Series 1 Preferred Stock. As a result of the purchase, our 3,548,820 shares of Series A convertible preferred shares converted into 3,548,820 shares of common stock. Based upon the level of equity investment at risk, the platform partner is a variable interest entity, or VIE. We are not the primary beneficiary of the platform partner VIE because we do not direct the activities of the platform partner that most significantly impact its economic performance. We account for the equity investment in the platform partner using the measu rement alternative. On July 31, 2020, the platform partner was acquired by an unrelated third party and, as a result of the sale, we received proceeds of $25.7 million in exchange for our shares of common stock. As a result of the sale, we recorded a gain of $24.7 million within other income, net, in our condensed consolidate d statements of operations during the three and nine months ended September 30, 2020. As of September 30, 2020 , our investment in the platform partner was zero and as of December 31, 2019, our investment in the platform partner was $1.0 million and was included in other assets in our condensed consolidated balance sheets. Allowance for Credit Losses - Notes Receivable The changes in our allowance for credit losses for notes receivable are as follows (in thousands): Three Months Ended Nine Months Ended Loan Hardware Loan Hardware Beginning of period balance $ (46) $ (37) $ — $ (16) Impact of adopting Topic 326 — — (434) (15) Recovery of / (provision for) expected credit losses (20) 6 368 — Write-offs 1 — 1 — End of period balance $ (65) $ (31) $ (65) $ (31) We manage our notes receivables using delinquency as a key credit quality indicator. Current and delinquent notes receivable by class of financing receivables and by year of origination as of September 30, 2020 are as follows (in thousands): Loan Receivables: 2020 2019 2018 2017 2016 Prior Total Current $ 600 $ 20 $ — $ 4,113 $ — $ — $ 4,733 30-59 days past due — — — — — — — 60-89 days past due — — — — — — — 90-119 days past due — — — — — — — 120+ days past due — — — — — — — Total $ 600 $ 20 $ — $ 4,113 $ — $ — $ 4,733 Hardware Financing Receivables: Current $ — $ 81 $ 98 $ 7 $ — $ — $ 186 30-59 days past due — — — — — — — 60-89 days past due — 67 — — — — 67 90-119 days past due — — — 9 — — 9 120+ days past due — — — 16 — — 16 Total $ — $ 148 $ 98 $ 32 $ — $ — $ 278 The amortized cost of notes receivables placed on nonaccrual status is as follows (in thousands): September 30, 2020 December 31, 2019 Loan receivables $ — $ — Hardware financing receivables 25 16 Total $ 25 $ 16 During the three and nine months ended September 30, 2020 and 2019, there was no interest income recognized related to notes receivables that were in nonaccrual status. As of September 30, 2020 and December 31, 2019, there were no notes receivables placed in nonaccrual status for which there was not a related allowance for credit losses. As of September 30, 2020 and December 31, 2019, there were no notes receivables that were 90 days or greater past due for which we continued to accrue interest income. Prepaid Expenses As of September 30, 2020 and December 31, 2019, $10.9 million and $6.1 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following tables present our assets and liabilities measured at fair value on a recurring basis (in thousands): Fair Value Measurements on a Recurring Basis as of September 30, 2020 Fair value measurements in: Level 1 Level 2 Level 3 Total Assets: Money market accounts $ 224,957 $ — $ — $ 224,957 Total $ 224,957 $ — $ — $ 224,957 Liabilities: Contingent consideration liability from acquisitions $ — $ — $ 2 $ 2 Total $ — $ — $ 2 $ 2 Fair Value Measurements on a Recurring Basis as of December 31, 2019 Fair value measurements in: Level 1 Level 2 Level 3 Total Assets: Money market accounts $ 93,303 $ — $ — $ 93,303 Total $ 93,303 $ — $ — $ 93,303 Liabilities: Contingent consideration liability from acquisitions $ — $ — $ 2,595 $ 2,595 Total $ — $ — $ 2,595 $ 2,595 The following table summarizes the change in fair value of the Level 3 liabilities for contingent consideration liabilities from acquisitions with significant unobservable inputs (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Beginning of period balance $ 306 $ — $ 2,595 $ — Changes in fair value included in earnings (304) — (2,593) — End of period balance $ 2 $ — $ 2 $ — The money market accounts are included in our cash and cash equivalents in our condensed consolidated balance sheets. Our money market assets are valued using quoted prices in active markets. The contingent consideration liability consists of the potential earn-out payment related to our acquisition of 85% of the issued and outstanding capital stock of OpenEye on October 21, 2019. The earn-out payment is contingent on the satisfaction of certain calendar 2020 revenue targets and has a maximum potential payment of up to $11.0 million. We account for the contingent consideration using fair value and establish a liability for the future earn-out payment based on an estimation of revenue attributable to perpetual licenses and subscription licenses over the 2020 calendar year. The contingent consideration liability was valued with significant unobservable inputs, including the revenue volatility and the discount rate. As of October 21, 2019, the fair value of the liability was $2.8 million. At each reporting date until the payment date in 2021, we will remeasure the liability, using the same valuation approach. Changes in the fair value resulting from information that existed subsequent to the acquisition date are recorded in general and administrative expense in our condensed consolidated statements of operations. During the nine months ended September 30, 2020, the contingent consideration liability decreased $2.6 million from December 31, 2019 to less than $0.1 million, primarily due to a change to OpenEye's 2020 projected revenue. The si gnificant unobservable inputs used in the valuation as of September 30, 2020 included a revenue volatility of 64% and a discount rate of 2%. Selecting another revenue volatility or discount rate within an acceptable range would not result in a significant change to the fair value of the contingent consideration liability. The contingent consideration liability was included in accounts payable, accrued expenses and other current liabilities in our condensed consolidated balance sheet as of September 30, 2020, and included in other liabilities in our condensed consolidated balance sheet as of December 31, 2019 (see Note 12). We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. There were no transfers in or out of Level 3 during the three and nine months ended September 30, 2020 and 2019. We also monitor the value of the investments for other-than-temporary impairment on a quarterly basis. No other-than-temporary impairments occurred during the three and nine months ended September 30, 2020 and 2019. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases We lease office space, data centers and office equipment under non-cancelable operating leases with various expiration dates through 2026. In August 2014, we signed a lease for office space in Tysons, Virginia, where we relocated our headquarters to in February 2016. We have subsequently entered into amendments to this lease to provide us with additional office space. In March 2020, we entered into an amendment to the lease for our corporate headquarters, which provides for additional office space, additional parking spaces and additional tenant improvement allowance. The lease term ends in 2026, includes a five-year renewal option and a cumulative tenant improvement allowance of $11.8 million, including $0.7 million tenant improvement allowance within the March 2020 lease amendment. Supplemental information related to leases is presented in the table below (in thousands, except weighted-average term and discount rate): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Operating lease cost $ 2,329 $ 1,932 $ 6,562 $ 5,570 Cash paid for amounts included in the measurement of operating lease liabilities 2,699 2,211 7,427 6,139 Operating lease right-of-use assets obtained in exchange for new operating lease liabilities 1,998 1,133 8,645 3,384 September 30, December 31, Weighted-average remaining lease term — operating leases 5.2 years 5.7 years Weighted-average discount rate — operating leases 3.7 % 4.0 % Maturities of lease liabilities are as follows (in thousands): Year Ended December 31, Operating Leases (1) Remainder of 2020 $ 2,746 2021 11,042 2022 9,831 2023 9,071 2024 8,299 2025 and thereafter 11,840 Total lease payments 52,829 Less: imputed interest (2) 4,754 Present value of lease liabilities $ 48,075 _______________ (1) Operating lease payments exclude less than $0.1 million of legally binding minimum lease payments for leases executed but not yet commenced and includes $0.6 million for options to extend lease terms that were reasonably certain of being exercised. (2) Imputed interest was calculated using the incremental borrowing rate applicable for each lease. We did not have any finance leases or subleases as of September 30, 2020 or December 31, 2019. Our lease agreements do not contain any material residual value guarantees, restrictive covenants or variable lease payments. Short-term lease costs were immaterial for the three and nine months ended September 30, 2020 and 2019. |
Liabilities
Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Liabilities | Liabilities The components of accounts payable, accrued expenses and other current liabilities are as follows (in thousands): September 30, December 31, Accounts payable $ 32,300 $ 32,878 Accrued expenses 12,575 10,092 Other current liabilities 5,154 5,757 Accounts payable, accrued expenses and other current liabilities $ 50,029 $ 48,727 The components of other liabilities are as follows (in thousands): September 30, December 31, Contingent consideration liability from acquisitions $ — $ 2,595 Holdback liability from acquisitions 1,789 1,650 Other liabilities 5,935 3,244 Other liabilities $ 7,724 $ 7,489 |
Debt, Commitments and Contingen
Debt, Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Debt, Commitments and Contingencies Disclosure [Abstract] | |
Debt, Commitments and Contingencies | Debt, Commitments and Contingencies The debt, commitments and contingencies described below would require us, or our subsidiaries, to make payments to third parties under certain circumstances. Debt On October 6, 2017, we entered into a $125.0 million senior secured revolving credit facility, or the 2017 Facility, with Silicon Valley Bank, or SVB, as administrative agent, PNC Bank, National Association, as documentation agent, and a syndicate of lenders. Upon entry into the 2017 Facility, we borrowed $72.0 million, which was used to repay the previously outstanding balance under our previous credit facility. The 2017 Facility matures in October 2022 and includes an option to further increase the borrowing capacity to $175.0 million with the consent of the lenders. Costs incurred in connection with the 2017 Facility were capitalized and are being amortized as interest expense over the term of the 2017 Facility. The 2017 Facility is secured by substantially all of our assets, including our intelle ctual property. On March 25, 2020, we borrowed $50.0 million under the 2017 Facility as a precautionary measure in order to provide financial flexibility in light of current uncertainty in the financial markets resulting from the COVID- 19 pandemic. During the three and nine months ended September 30, 2020, we repaid $1.0 million and $2.0 million of the outstanding balance of the 2017 Facility, respectively. During the three and nine months ended September 30, 2019, we repaid $1.0 million and $3.0 million of the outstanding balance of the 2017 Facility, respectively. The outstanding principal balance on the 2017 Facility accrues interest at a rate equal to, at our option, either (1) LIBOR, plus an applicable margin based on our consolidated leverage ratio, or (2) the highest of (a) the Wall Street Journal prime rate, (b) the Federal Funds rate plus 0.50%, or (c) LIBOR plus 1.00% plus an applicable margin based on our consolidated leverage ratio. For each of the three and nine months ended September 30, 2020, we elected for the outstanding principal balance to accrue interest at LIBOR plus 1.50%, LIBOR plus 1.75%, LIBOR plus 2.00%, and LIBOR plus 2.50% when our consolidated leverage ratio is less than 1.00:1.00, greater than or equal to 1.00:1.00 but less than 2.00:1.00, greater than or equal to 2.00:1.00 but less than 3.00:1.00 and greater than or equal to 3.00:1.00, respectively. The 2017 Facility also carries an unused line commitment fee of 0.20%. For the nine months ended September 30, 2020, the effective interest rate on the 2017 Facility was 2.92%, as compared to 4.61% for the same period in the prior year. The carrying value of the 2017 Facility was $111.0 million and $63.0 million as of September 30, 2020 and December 31, 2019, respectively. The 2017 Facility includes a variable interest rate that approximates market rates and, as such, we classified the liability as Level 2 within the fair value hierarchy and determined that the carrying amount of the 2017 Facility approximated its fair value as of September 30, 2020 and December 31, 2019. The 2017 Facility contains various financial and other covenants that require us to maintain a maximum consolidated leverage ratio not to exceed 3.25:1.00 and a consolidated fixed charge coverage ratio of at least 1.25:1.00. As of September 30, 2020, we were in compliance with all financial and non-financial covenants and there were no events of default. On November 30, 2018, we amended the 2017 Facility to incorporate the parameters that must be met for us to repurchase our outstanding common stock under the stock repurchase program authorized by our board of directors on November 29, 2018. Commitments and Contingencies Contingent Consideration On October 21, 2019, we acquired 85% of the issued and outstanding capital stock of OpenEye. Certain stockholders of OpenEye have the right to receive an earn-out payment of up to an additional $11.0 million based upon satisfaction of certain calendar 2020 revenue targets. As of October 21, 2019, the fair value of the contingent consideration liability was $2.8 million. At each reporting date until the payment date in 2021, we will remeasure the liability, using the same valuation approach. Changes in the fair value resulting from information that existed subsequent to the acquisition date are recorded in the condensed consolidated statements of operations . During the nine months ended September 30, 2020, the contingent consideration liability decreased $2.6 million from December 31, 2019 to less than $0.1 million, primarily due to a change to OpenEye's 2020 projected revenue. The contingent consideration liab ility is included in accounts payable, accrued expenses and other current liabilities in our condensed consolidated balance sheets as of September 30, 2020, and included in other liabilities in our condensed consolidated balance sheets as of December 31, 2019 (see Note 9). Indemnification Agreements We have various agreements that may obligate us to indemnify the other party to the agreement with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business. Although we cannot predict the maximum potential amount of future payments that may become due under these indemnification agreements, we do not believe any potential liability that might arise from such indemnity provisions is probable or material. Letters of Credit As of September 30, 2020 and December 31, 2019, we had no outstanding letters of credit under the 2017 Facility. Legal Proceedings On June 2, 2015, Vivint, Inc., or Vivint, filed a lawsuit against us in U.S. District Court, District of Utah, alleging that our technology directly and indirectly infringes six patents that Vivint purchased. Vivint is seeking permanent injunctions, enhanced damages and attorneys' fees. We answered the complaint on July 23, 2015. Among other things, we asserted defenses based on non-infringement and invalidity of the patents in question. On August 19, 2016, the U.S. District Court, District of Utah stayed the litigation pending inter partes review by the U.S. Patent Trial and Appeal Board, or PTAB, of five of the patents in suit. In March 2017, the PTAB issued final written decisions relating to two patents finding all challenged claims unpatentable. In May 2017, the PTAB issued final written decisions relating to the remaining three patents that found certain claims unpatentable, while certain other claims were not found to be unpatentable. Vivint appealed the decisions to the U.S. Court of Appeals for the Federal Circuit, or the Federal Circuit, and we cross-appealed. In July 2018, the Federal Circuit issued orders affirming the PTAB’s March 2017 decisions that invalidated all challenged claims of two patents. The U.S. District Court, District of Utah lifted the stay on the litigation on June 26, 2017, with Vivint proceeding with its case on four of the six patents in its complaint. No trial date has been set. In September 2017, the U.S. Patent and Trademark Office, or PTO, ordered ex parte reexaminations of certain claims of two of the remaining patents in suit, at our request. On October 30, 2018 and November 5, 2018, the PTO issued final office actions in the pending reexaminations rejecting all claims being examined as unpatentable over the prior art. Nine claims asserted in the litigation were found unpatentable in the PTO rejections. Vivint appealed these rejections to the PTAB on March 29, 2019 and April 4, 2019. The PTAB issued decisions affirming the rejections on February 28, 2020 and May 4, 2020. Vivint appealed one of these decisions to the Federal Circuit on July 1, 2020, and requested rehearing from the PTAB on the other decision. On December 20, 2018, the Federal Circuit issued an order regarding the inter partes review of three of the remaining patents in suit that vacated, reversed and remanded the PTAB’s ruling with regard to the construction of a term (“communication device identification code”) as requested by Alarm.com and affirmed the PTAB’s May 2017 rulings invalidating certain of the Vivint patents in all other respects. On July 24, 2019, the PTAB issued further decisions with respect to two of the remaining patents in suit, finding additional claims unpatentable in view of the Federal Circuit’s December 20, 2018 decision. One of the claims asserted in the litigation was found unpatentable in the July 14, 2019 decisions. Vivint appealed the July 24, 2019 decisions to the Federal Circuit on September 25, 2019. Oral argument of the appeal is scheduled for December 8, 2020. Should Vivint prevail in proving Alarm.com infringes one or more of its patent claims, we could be required to pay damages of Vivint’s lost profits and/or a reasonable royalty for sales of our solution. Since all remaining patent claims in the litigation have expired, Vivint shall not be entitled to injunctive relief as a remedy in this matter. While we believe we have valid defenses to Vivint’s claims, any of these outcomes could result in a material adverse effect on our business. Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time. On October 22, 2019, EcoFactor, Inc., or EcoFactor, filed a complaint with the U.S. International Trade Commission, or ITC, naming Alarm.com Incorporated and Alarm.com Holdings, Inc., among others, as proposed respondents. The complaint alleges that Alarm.com’s smart thermostats infringe three U.S. patents owned by EcoFactor. EcoFactor is seeking a permanent limited exclusion order and permanent cease and desist order. On November 22, 2019, the ITC instituted an investigation into EcoFactor’s allegations naming Alarm.com Incorporated, Alarm.com Holdings, Inc. and others as respondents. We answered the complaint on December 19, 2019. Among other things, we asserted defenses based on non-infringement and invalidity of the patents in question. The administrative law judge presiding over the investigation scheduled an evidentiary hearing to begin on November 16, 2020 and set March 15, 2021 as the target date for completion of the investigation. On November 11, 2019, EcoFactor filed a lawsuit against us in U.S. District Court, District of Massachusetts, alleging infringement of the same three patents asserted against us in the ITC. EcoFactor is seeking permanent injunctions, enhanced damages and attorneys' fees. On December 26, 2019, the court issued an order staying the lawsuit pending the conclusion of the related ITC investigation. On May 26, 2020, EcoFactor filed a second lawsuit against us in U.S. District Court, District of Massachusetts, alleging Alarm.com’s products and services infringe four additional U.S. patents owned by EcoFactor. EcoFactor is seeking permanent injunctions, enhanced damages and attorneys' fees. On October 27, 2020, the court issued an order staying the lawsuit until January 25, 2021 in light of the related ITC investigation. Should EcoFactor prevail in the ITC investigation, Alarm.com thermostats manufactured abroad could be excluded from importation into the United States. Should EcoFactor prevail in its district court lawsuits we could be required to pay damages and/or a reasonable royalty for sales of our solution, we could be enjoined from making, using and selling our solution if a license or other right to continue selling such elements is not made available to us, and we could be required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us. While we believe we have valid defenses to EcoFactor’s claims, the outcome of these legal claims cannot be predicted with certainty and any of these outcomes could result in an adverse effect on our business. Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time. On May 8, 2020, a putative class action lawsuit was filed against us by Craig Hicks in the U.S. District Court for the Eastern District of Virginia, alleging violations of the Telephone Consumer Protection Act, or the TCPA, and the Virginia Telephone Privacy Protection Act, or the VTPPA. The complaint seeks statutory damages under the TCPA and VTPPA, injunctive relief, and other relief, including attorneys' fees. We filed a motion to dismiss the complaint on July 2, 2020, and plaintiff filed his response on July 16, 2020. We filed our reply on July 22, 2020. On August 6, 2020, the Court granted our motion to dismiss the complaint in its entirety. On July 29, 2020, a putative class action was filed against Alarm.com Incorporated d/b/a ICN Acquisition, among other defendants, by Abante Rooter and Plumbing Inc. and Sidney Naiman in the U.S. District Court for the Northern District of California, alleging violations of the TCPA. The complaint seeks statutory damages under the TCPA, injunctive relief, and other relief. We have agreed to waive service of the complaint, and our response is due November 20, 2020. Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time. In addition to the matters described above, we may be required to provide indemnification to certain of our service provider partners for certain claims regarding our solutions. For example, we are incurring costs associated with the indemnification of our service provider ADT, LLC in ongoing patent infringement suits. On July 13, 2016, Applied Capital, Inc., or Applied Capital, filed a lawsuit against ADT, LLC, the ADT Corporation, and Icontrol Networks, Inc. in U.S. District Court, the District of New Mexico. Applied Capital, Inc v. The ADT Corporation et al. , D. New Mexico Case No. 1-16-cv-00815. Icontrol was dismissed without prejudice on May 22, 2017. Applied Capital alleges that ADT’s sales of ADT Pulse directly and indirectly infringes U.S. Patent Nos. 8,378,817 and 9,728,082, which were allegedly purchased by Applied Capital. Applied Capital is seeking damages and attorneys’ fees. ADT answered Applied Capital’s amended complaint on July 16, 2018. Among other things, ADT has asserted defenses based on non-infringement and invalidity of the patents-in-suit. On April 5, 2019, Applied Capital filed a lawsuit for breach of contract against Rodney Fox, the inventor of the patents-in-suit, in the Second Judicial District Court, County of Bernalillo in New Mexico State Court (No. D-202-CV-2019-02841). Mr. Fox counterclaimed, alleging that he is the rightful owner of the patents-in-suit. Based on the dispute of ownership, on October 15, 2019, ADT filed a motion to stay in this matter pending its resolution. Applied Capital and Mr. Fox reached settlement and stipulated to dismissal of the New Mexico State Court action on October 31, 2019. Applied Capital filed its Second Amended Complaint on January 27, 2020 and ADT answered, adding a claim of inequitable conduct, on February 10, 2020. The court issued its claim construction order on August 12, 2019, fact discovery closed on November 12, 2019, expert discovery closed on March 9, 2020, and summary judgment and Daubert motions briefing closed on June 3, 2020 and are pending. The pretrial conference is scheduled for March 22, 2021, and trial is set for April 5, 2021. On July 2, 2020, Port us Singapore Pte. Ltd. and Portus Pty. Ltd., or Portus, sued ADT, LLC d/b/a ADT Security Services in U.S. District Court for the Western District of Texas. Portus alle ges that ADT’s sales of ADT Pulse directly and indirectly infringe U.S. Patent Nos. 8,914,526 and 9,961,097, which were assigned to Portus. Portus is seeking damages and attorneys’ fees. ADT answered the complaint on August 31, 2020. The claim construction hearing is set for March 19, 2021. The court has not yet otherwise entered a schedule. Should the plaintiffs prevail on the claims that one or more elements of ADT’s products infringe, we could be required to indemnify ADT for damages in the form of a reasonable royalty or ADT could be enjoined from making, using and selling our solution if a license or other right to continue selling our technology is not made available to us or we are unable to design around such patents, and required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us. The outcome of these legal claims cannot be predicted with certainty. We believe there are valid defenses to the claims made by Applied Capital and Portus. Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time. We may also be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Other than the preceding matters, we are not a party to any lawsuit or proceeding that, in the opinion of management, is reasonably possible or probable of having a material adverse effect on our financial position, results of operations or cash flows. We reserve for contingent liabilities based on ASC 450, " Contingencies ," when it is determined that a liability, inclusive of defense costs, is probable and reasonably estimable. Litigation is subject to many factors that are difficult to predict, so there can be no assurance that, in the event of a material unfavorable result in one or more claims, we will not incur material costs. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Stock Repurchase Program On November 29, 2018, our board of directors authorized a stock repurchase program, under which we are authorized to purchase up to an aggregate of $75.0 million of our outstanding common stock during the two-year period ending November 29, 2020. During the three months ended March 31, 2020, we repurchased 147,153 shares of our common stock under this program for $5.1 million, which includes applicable commissions and fees. No shares of our common stock were repurchased under this program during the three months ended September 30, 2020 or during each of the three and nine months ended September 30, 2019. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is included in the following line items in the condensed consolidated statements of operations (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Sales and marketing $ 734 $ 534 $ 2,263 $ 1,385 General and administrative 2,154 1,714 6,033 4,762 Research and development 4,560 2,787 12,605 8,574 Total stock-based compensation expense $ 7,448 $ 5,035 $ 20,901 $ 14,721 The following table summarizes the components of non-cash stock-based compensation expense (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Stock options and assumed options $ 879 $ 941 $ 2,695 $ 2,836 Restricted stock units 6,531 4,046 18,089 11,746 Employee stock purchase plan 38 48 117 139 Total stock-based compensation expense $ 7,448 $ 5,035 $ 20,901 $ 14,721 Tax benefit from stock-based awards $ 1,658 $ 565 $ 3,846 $ 4,050 We granted an aggregate of 2,000 and 143,650 stock options pursuant to our 2015 Equity Incentive Plan, or the 2015 Plan, during the three and nine months ended September 30, 2020, respectively, as compared to an aggregate of 30,000 and 140,500 stock options for the same periods in the prior year. There were 139,225 and 397,416 stock options exercised during the three and nine months ended September 30, 2020, respectively, as compared to 60,043 and 258,668 stock options for the same periods in the prior year. We granted an aggregate of 169,699 and 488,771 restricted stock units during the three and nine months ended September 30, 2020, respectively, as compared to an aggregate of 88,308 and 425,324 restricted stock units for the same periods in the prior year. There were 34,136 and 121,259 restricted stock units that vested during the three and nine months ended September 30, 2020, respectively, as compared to 15,880 and 177,946 restricted stock units vested during the same periods in the prior year. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and Diluted Earnings Per Share The components of basic and diluted earnings per share are as follows (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Net income $ 35,825 $ 17,690 $ 61,021 $ 40,496 Net loss attributable to redeemable noncontrolling interest 259 — 865 — Net income attributable to common stockholders (A) $ 36,084 $ 17,690 $ 61,886 $ 40,496 Weighted average common shares outstanding — basic (B) 49,007,343 48,518,041 48,842,333 48,360,927 Dilutive effect of stock options and restricted stock units 1,972,336 1,634,766 1,831,419 1,877,482 Weighted average common shares outstanding — diluted (C) 50,979,679 50,152,807 50,673,752 50,238,409 Net income per share: Basic (A/B) $ 0.74 $ 0.36 $ 1.27 $ 0.84 Diluted (A/C) $ 0.71 $ 0.35 $ 1.22 $ 0.81 The following securities have been excluded from the calculation of diluted weighted average common shares outstanding as the inclusion of these securities would have an anti-dilutive effect: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Stock options 136,434 187,792 282,595 177,292 Restricted stock units 27,199 325,108 149,699 239,450 Common stock subject to repurchase — 410 — 410 Our redeemable noncontrolling interest relates to our 85% equity ownership interest in OpenEye. The OpenEye stockholder agreement contains a put option that gives the minority OpenEye stockholders the right to sell their OpenEye shares to us based on the fair value of the shares. The OpenEye stockholder agreement also contains a call option that gives us the right to purchase the remaining OpenEye shares from the minority OpenEye stockholders based on the fair value of the shares. The put and call options can each be exercised beginning in the first quarter of 2023. This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the condensed consolidated balance sheets. The amount of the net income or loss attributable to redeemable noncontrolling interests is recorded in the condensed consolidated statements of operations. |
Significant Service Providers
Significant Service Providers | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Significant Service Providers | Significant Service Providers During the three and nine months ended September 30, 2020, our 10 largest revenue service provider partners accounted for 50% and 49% of our consolidated revenue, respectively, as compared to 52% for the same periods in the prior year. One of our service provider partners within the Alarm.com segment individually represented greater than 15% but not more than 20% of our revenue for the three and nine months ended September 30, 2020 and 2019. One individual serv ice provider partner in the Alarm.com segment represented more than 10% of accounts receivable as of September 30, 2020 and December 31, 2019. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For purposes of interim reporting, our annual effective income tax rate is estimated in accordance with ASC 740-270, "Interim Reporting." This rate is applied to the pre-tax book income of the entities expected to be benefited during the year. Discrete items that impact the tax provision are recorded in the period incurred. For the three and nine months ended September 30, 2020, we recorded a provision for income taxes of $6.5 million and $5.5 million, respectively, resulting in an effective income tax rate of 15.4% and 8.2% for those periods. For the three and nine months ended September 30, 2019, we recorded a provision for income taxes of $2.9 million and $3.4 million, respectively, resulting in an effective income tax rate of 14.0% and 7.8% for those periods. Our effective tax rates were different from the statutory rate primarily due to research and development tax credits claimed, tax windfall benefits from employee stock-based payment transactions and foreign derived intangible income deductions, partially offset by the impact of state taxes and non-deductible meal and entertainment expenses. We recognize a valuation allowance if, based on the weight of available evidence, both positive and negative, it is more likely than not that some portion, or all, of net deferred tax assets will not be realized. Due to the uncertainty of realization of certain deferred tax assets acquired in 2017 related to our Canadian net operating losses and research a nd development tax credits, we established a valuation allowance of $0.3 million during the second quarter of 2019, which remained at $0.3 million as of September 30, 2020 and December 31, 2019. We apply guidance for uncertainty in income taxes that requires the application of a more likely than not threshold to the recognition and de-recognition of uncertain tax positions. If the recognition threshold is met, this guidance permits us to recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is more likely than not to be realized upon settlement. We recorded an increase to the unrecognized tax benefits of $1.1 million primarily for research and development tax credits claimed during the nine months ended September 30, 2020. We recorded a reduction to the unrecognized tax benefits of $0.2 million for research and development tax credits claimed during the nine months ended September 30, 2019. As of September 30, 2020 and December 31, 2019, we accrued $0.2 million of total interest expense related to unrecognized tax benefits. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We have two reportable segments: • Alarm.com segment • Other segment Our chief operating decision maker is our chief executive officer. Management determined the operational data used by the chief operating decision maker is that of the two reportable segments. Management bases strategic goals and decisions on these segments and the data presented below is used to measure financial results. Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 94% of our revenue for each of the three and nine months ended September 30, 2020, as compared to 94% and 93% for the same periods in the prior year. Our Other segment is focused on researching, developing and offering residential and commercial automation solutions and energy management products and services in adjacent markets. Inter-segment revenue includes sales of hardware between our segments. Management evaluates the performance of its segments and allocates resources to them based on operating income / (loss) as compared to prior periods and current performance levels. The reportable segment operational data is presented in the tables below (in thousands): Three Months Ended September 30, 2020 Alarm.com Other Intersegment Alarm.com Intersegment Other Total SaaS and license revenue $ 92,834 $ 7,292 $ — $ — $ 100,126 Hardware and other revenue 57,726 2,545 (554) (992) 58,725 Total revenue 150,560 9,837 (554) (992) 158,851 Operating income / (loss) 18,810 (889) 189 (54) 18,056 Three Months Ended September 30, 2019 Alarm.com Other Intersegment Alarm.com Intersegment Other Total SaaS and license revenue $ 79,954 $ 4,970 $ — $ — $ 84,924 Hardware and other revenue 41,016 5,484 (1,287) (2,257) 42,956 Total revenue 120,970 10,454 (1,287) (2,257) 127,880 Operating income / (loss) 12,772 (561) 62 (78) 12,195 Nine Months Ended September 30, 2020 Alarm.com Other Intersegment Intersegment Total SaaS and license revenue $ 269,168 $ 18,612 $ — $ — $ 287,780 Hardware and other revenue 159,800 13,030 (2,118) (6,065) 164,647 Total revenue 428,968 31,642 (2,118) (6,065) 452,427 Operating income / (loss) 45,427 (2,370) 246 (386) 42,917 Nine Months Ended September 30, 2019 Alarm.com Other Intersegment Intersegment Total SaaS and license revenue $ 233,459 $ 13,854 $ — $ — $ 247,313 Hardware and other revenue 107,884 15,810 (3,364) (5,768) 114,562 Total revenue 341,343 29,664 (3,364) (5,768) 361,875 Operating income / (loss) 37,182 (1,782) 71 (10) 35,461 Alarm.com Other Intersegment Alarm.com Intersegment Other Total Assets as of September 30, 2020 $ 729,845 $ 24,527 $ (56,356) $ 29 $ 698,045 Assets as of December 31, 2019 589,952 17,844 (49,997) — 557,799 Our SaaS and license revenue for the Alarm.com segment included software license revenue of $9.5 million and $29.0 million for the three and nine months ended September 30, 2020, respectively, as compared to $10.8 million and $32.8 million for the same periods in the prior year. There w as no softwar e license revenue recorded for the Other segment during the three and nine months ended September 30, 2020 and 2019. Depreciation and amortization expense was $6.7 million and $19.8 million for the Alarm.com segment for the three and nine months ended September 30, 2020, respectively, as compared to $5.5 million and $15.8 million for the same periods in the prior year. Depreciation and amortization expense was $0.1 million and $0.2 million for the Other segment for the three and nine months ended September 30, 2020 and less than $0.1 million for each of the three and nine months ended September 30, 2019. Additions to property and equipment were $4.7 million and $11.2 million for the Alarm.com segment for the three and nine months ended September 30, 2020, respectively, as compared to $4.7 million and $8.5 million for the same periods in the prior year. Additions to property and equipment were $0.1 million and $1.0 million for the Other segment for the three and nine months ended September 30, 2020, respectively, as compared to $0.1 million for the same periods in the prior year. We derived substantia lly all of our revenue from North America for the three and nine months ended September 30, 2020 and 2019. Substantially all of our long-lived assets wer e in North America as of September 30, 2020 and December 31, 2019. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Installation Partner Our installation partner in which we have a 48.2% ownership interest performs installation services for security dealers and also provides installation services for us and certain of our subsidiaries. We account for this investment using the equity method. As of September 30, 2020 and December 31, 2019, our investment balance in our installation partner was zero. During the three and nine months ended September 30, 2020 and 2019, we recorded $0.1 million and $0.3 million of cost of hardware and other revenue in connection with this installation partner, respectively. As of September 30, 2020 and December 31, 2019, the accounts payable balance to our installation partner was less than $0.1 million. Affiliate Lease OpenEye leases its production and administration operations facility from a company that is controlled by certain employees of OpenEye, or the Landlord. The one year lease term expired on October 20, 2020 and was subsequently converted to a month-to-month lease. OpenEye can terminate the lease at any time by providing 30 days' prior written notice and the Landlord can terminate the lease by providing 90 days' prior written notice. Total minimum lease payments over the term of the lease are $0.2 million. During the three and nine months ended September 30, 2020, we recorded $0.1 million and $0.2 million of rent expense in connection with this lease arrangement. There was no rent expense recorded in connection with the lease arrangement during the three and nine months ended September 30, 2019. There was no accounts payable balance due to the Landlord under this lease arrangement as of September 30, 2020 or December 31, 2019. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent EventOn November 4, 2020, we and ADT LLC, or ADT, entered into an amendment to our existing master service agreement, the Amendment. The Amendment extends the initial term of the master service agreement through January 1, 2023 and sets forth certain terms relating to the integration of certain Google Nest products and services into the platform we operate on behalf of ADT, and assures that subject to certain conditions and exceptions, ADT will enable its end customers to continue as subscribers on an Alarm.com platform after the initial term expires for the natural lifetime of such end customer account. Concurrently with the Amendment, we entered into a patent license agreement pursuant to which we granted ADT a license to use certain Alarm.com intellectual property following the termination or expiration of the initial term of the master service agreement. Under the terms of the patent license, ADT will pay us a monthly royalty for each subscriber to its branded residential interactive security, automation and video service offerings that is covered by any of our licensed patents and not supported on our platforms. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include our accounts and those of our majority-owned and controlled subsidiaries after elimination of intercompany accounts and transactions. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual financial statements. They should be read together with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K filed with the SEC on February 26, 2020, or the Annual Report. The condensed consolidated balance sheet as of December 31, 2019 was derived from our audited financial statements, but does not include all disclosures required by GAAP for annual financial statements. In the opinion of management, these condens ed consolidated fin |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, assumptions and judgments or revise the carrying value of our assets or liabilities. However, our estimates, judgments and assumptions are continually evaluated based on available information and experience and may change as new events occur and additional information is obtained. Because of the use of estimates inherent in the financial reporting process and given the additional unknowable duration and effects of the COVID-19 pandemic, actual results could differ from those estimates and any such differences may be material. Estimates are used when accounting for revenue recognition, allowances for credit losses, allowance for hardware returns, estimates of obsolete inventory, long-term incentive compensation, stock-based compensation, income taxes, legal reserves, contingent consideration and goodwill and intangible assets. |
Reclassifications | Reclassifications Certain previously reported amounts in the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 have been reclassified to conform to our current presentation, including the addition of a provision for excess and obsolete inventory separate line item, which was previously included in inventory, as well as changes to the presentation of line items related to operating leases. |
Treasury Stock | Treasury Stock We account for treasury stock under the cost method and present treasury stock, including any applicable commissions and fees, as a component of stockholders’ equity in the condensed consolidated balance sheets and statements of equity. Treasury stock held by us may be retired or reissued in the future. |
Credit Losses | Credit Losses The allowance for credit losses is a valuation account that is deducted from the accounts receivable and notes receivable amortized cost basis to present the net amount expected to be collected. We estimate the allowance balance by applying the loss-rate method using relevant available information from internal and external sources, including historical write-off activity, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes in economic conditions, such as changes in unemployment rates. We use projected economic conditions over a period no more than twelve months based on data from external sources. For periods beyond the twelve-month reasonable and supportable forecast period, we revert to historical loss information immediately. The allowance for credit losses is measured on a pooled basis when similar risk characteristics exist. When assessing whether to measure certain financial assets on a pooled basis, we considered various risk characteristics, including the financial asset type, size and the historical or expected credit loss pattern. These risk characteristics are relevant to accounts receivable and notes receivable. We identified the following two portfolio segments for our accounts receivable: (i) outstanding accounts receivable balances within Alarm.com and certain subsidiaries and (ii) outstanding accounts receivable balances within all other subsidiaries. We identified the following two portfolio segments for our notes receivable: (i) loan receivables and (ii) hardware financing receivables. There were no changes to our portfolio segments since the adoption of Accounting Standards Update, or ASU, 2016-13, " Financial Instruments - Credit Losses (Topic 326)," or Topic 326, and no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses. Additionally, there were no significant changes in the amount of write-offs during the three and nine months ended September 30, 2020 as compared to historical periods. There were no purchases or sales of financial assets during the three and nine months ended September 30, 2020 and 2019. Expected credit losses are estimated over the contractual term of the financial assets and we adjust the term for expected prepayments when appropriate. For the three and nine months ended September 30, 2020, we recorded a reduction of credit loss expense of $1.2 million and $0.7 million in general and administrative expense in our condensed consolidated statements of operations. The contractual term excludes expected extensions, renewals and modifications because extension and renewal options are unconditionally cancelable by us. Write-offs of the amortized cost basis are recorded to the allowance for credit losses. Any subsequent recoveries of previously written off balances are recorded as a reduction to credit loss expense. We do not accrue interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms. Notes receivable that are 90 days or greater past due are placed on nonaccrual status. Notes receivable may be placed on nonaccrual status earlier if, in management’s opinion, a timely collection of the full principal and interest becomes uncertain. After a note receivable has been placed on nonaccrual status, interest will be recognized when cash is received. A note receivable may be returned to accrual status after all of the customer’s delinquent balances of principal and interest have been settled, and collection of all remaining contractual amounts due is reasonably assured. We have elected not to measure an allowance for credit losses for accrued interest receivables . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted On June 16, 2016, the Financial Accounting Standards Board, or FASB, issued Topic 326 which provides guidance designed to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. From November 2018 to February 2020, amendments to Topic 326 were issued to clarify numerous accounting topics. When determining such expected credit losses, the guidance requires companies to apply a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendment was effective for us beginning on January 1, 2020. On January 1, 2020, we adopted Topic 326 by applying the modified retrospective approach to our trade receivables and our notes receivable that were outstanding as of that date, which required us to record the initial effect of Topic 326 as a cumulative-effect adjustment to retained earnings on January 1, 2020. The adoption of Topic 326 Balance Sheet Caption As of January 1, 2020 Accumulated deficit $ 816 Accounts receivable, net (367) Other current assets (83) Other assets (366) The adoption of Topic 326 did not materially impact our condensed consolidated statements of operations, condensed consolidated statement of equity or our condensed consolidated statements of cash flows. On August 28, 2018, the FASB issued ASU 2018-13, " Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which provides guidance designed to improve the effectiveness of fair value measurement disclosures in notes to the financial statements. The update removes several existing disclosure requirements, including, but not limited to: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements. The update also adds additional disclosure requirements for public companies, including but not limited to: (i) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The update also modifies and clarifies several existing disclosure requirements. The amendment in this update was effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. On January 1, 2020, we adopted Topic 820 and updated our fair value measurement disclosures (see Note 9). This pronouncement did not have a material impact on our condensed consolidated financial statements or disclosures. On January 16, 2020, the FASB issued ASU 2020-1, " Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 ," which provides guidance on the interaction between accounting standards related to equity securities, equity method investments and certain derivatives. This amendment clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative immediately before applying, or upon discontinuing, the equity method. The amendment also clarifies that an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method or the fair value option in accordance with the financial instruments guidance. The amendment in this update is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. On January 1, 2020, we adopted this amendment on a prospective basis and the adoption did not have a material impact on our consolidated financial statements. Not Yet Adopted On December 18, 2019, the FASB issued ASU 2019-12, " Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, " which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The update also simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance to improve consistent application. The amendment in this update is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact this pronouncement may have on our consolidated financial statements. On March 12, 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued such as the Eurodollar Base Rate, or LIBOR. The update allows entities to elect not to apply certain modification accounting requirements to contracts affected by the discontinuation of a reference rate if certain criteria are met. The amendment was effective beginning March 12, 2020 and will continue to be effective through December 31, 2022. We are currently assessing the impact this pronouncement may have on our consolidated financial statements. |
Revenue Recognition | Revenue Recognition We derive our revenue from three primary sources: the sale of cloud-based SaaS services on our integrated Alarm.com platform, the sale of licenses and services on our non-hosted software platform, or Software platform, and the sale of hardware products. We sell our platform and hardware solutions to service provider partners that resell our solutions and hardware to residential and commercial property owners, who are the service provider partners’ customers. Our subscribers consist of all of the properties maintained by those residential and commercial property owners to which we are delivering at least one of our solutions. We also sell our hardware to distributors who resell the hardware to service provider partners. We enter into contracts with our service provider partners that establish pricing for access to our platform solutions and for the sale of hardware. These service provider c ontracts typically have an initial term of one year, with subsequent renewal terms of one year. Our service provider partners typically enter into contracts with our subscribers, which our service provider partners have indicated range from three in length. When determining the amount of consideration we expect to be entitled to for the sale of our hardware, we estimate the variable consideration associated with customer returns. We record a reserve against revenue for hardware returns based on historical returns. For the twelve months ended September 30, 2020 and 2019, our reserve against revenue for hardware returns was 1%. We evaluate our h ardware reserve on a quarterly basis or if there is an indication of significant changes in return experience. Historically, our returns of hardware have not significantly differed from our estimated reserve. Additionally, we provide warranties related to the intended functionality of the products and services provided and those warranties typically allow for the return of hardware up to one year past the date of sale. We determined these warranties are not separate performance obligations as they cannot be purchased separately and do not provide a service in addition to an assurance the hardware will function as expected. Our hardware and other revenue also includes our revenue from the sale of perpetual licenses that provide our customers in the commercial market the right to use our OpenEye video surveillance software for an indefinite period of time in exchange for a one-time license fee, which is generally paid at contract inception. Our perpetual licenses provide a right to use intellectual property that is functional in nature and has significant stand-alone functionality. Accordingly, for perpetual licenses of functional intellectual property, revenue is recognized at the point-in-time when control has been transferred to the customer, which occurs once the software has been made available to the customer. Hardware and other revenue may also include activation fees charged to some of our service provider partners for activation of a new subscriber account on our platforms, as well as fees paid by service provider partners for our marketing services. Our service provider partners use services on our platforms, such as support tools and applications, to assist in the installation of our solutions in subscriber properties. This installation marks the beginning of the service period on our platforms and, on occasion, we earn activation revenue for fees charged for this service. The activation fee is non-refundable, separately negotiated and specified in our contractual arrangements with our service provider partners and is charged to the service provider partner for each subscriber activated on our platforms. The decision whether to charge an activation fee is based in part on the expected number of subscribers to be added by our service provider partners and as a result, many of our largest service provider partners do not pay an activation fee. Activation fees are not offered on a stand-alone basis separate from our SaaS offering and are billed and received at the beginning of the arrangement. We record activation fees initially as deferred revenue and we recognize these fees ratably over the expected term of the subscribers’ account which we estimate is ten years based on our annual attrition rate. The portion of these activation fees included in current and long-term deferred revenue as of our balance sheet date represents the amounts that will be recognized ratably as revenue over the following twelve months, or longer as approp riate, until the ten-year expected term is complete. The balance of deferred revenue for activation fees was $7.2 million and $8.1 million as of September 30, 2020 and December 31, 2019, respectively, which combines current and long-term balances. SaaS and license revenue associated with our contracts is invoiced and revenue is recognized at an amount that corresponds directly with the value of the performance completed to date. Additionally, the consideration received from hardware |
Contract Assets and Contract Liabilities | Contract Assets At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each distinct promise to transfer a good or service, or bundle of goods or services. To identify the performance obligations, we consider all of the goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. We record a contract asset when we satisfy a performance obligation by transferring a promised good or service. Contract assets can be conditional or unconditional depending on whether another performance obligation must be satisfied before payment can be received. We receive payments from our service provider partners based on the billing schedule established in our contracts. All of the accounts receivable presented in the condensed consolidated balance sheets represent unconditional rights to consideration. We do not have any assets from contracts containing conditional rights and we do not have any assets from satisfied performance obligations that have not been invoiced. We recognize an asset related to the costs incurred to obtain a contract only if we expect to recover those costs and we would not have incurred those costs if the contract had not been obtained. We recognize an asset from the costs incurred to fulfill a contract if the costs (i) are specifically identifiable to a contract, (ii) enhance resources that will be used in satisfying performance obligations in future and (iii) are expected to be recovered. Our contract assets consist of capitalized commission costs and upfront payments made to a customer. Based on the policy above, we capitalize a portion of our commission costs as an incremental cost of obtaining a contract. When calculating the incremental cost of obtaining a contract, we exclude any commission costs related to metrics that could be satisfied without obtaining a contract, including training-related metrics. We amortize our commission costs over a period of three years, which is consistent with the period over which the products and services related to the commission are transferred to the customer. The three-year period was determined based on our review of historical enhancements and upgrades to our products and services. We applied the portfolio approach to account for the amortization of contract costs as each contract has similar characteristics. Upfront payments made to a customer are capitalized and amortized over the expected period of benefit and are recorded as a reduction to revenue. Contract Liabilities Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract. All of the deferred revenue presented in the condensed consolidated balance sheets represents contract liabilities resulting from advance cash receipts from customers or amounts billed in advance to customers from the sale of services. Changes in deferred revenue are due to our performance under the contract as well as to cash received from new contracts for which services have not been provided. |
Income Taxes | We recognize a valuation allowance if, based on the weight of available evidence, both positive and negative, it is more likely than not that some portion, or all, of net deferred tax assets will not be realized. Due to the uncertainty of realization of certain deferred tax assets acquired in 2017 related to our Canadian net operating losses and research a nd development tax credits, we established a valuation allowance of $0.3 million during the second quarter of 2019, which remained at $0.3 million as of September 30, 2020 and December 31, 2019. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements | The adoption of Topic 326 Balance Sheet Caption As of January 1, 2020 Accumulated deficit $ 816 Accounts receivable, net (367) Other current assets (83) Other assets (366) |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract Assets and Contract Liabilities | The changes in our contract assets are as follows (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Beginning of period balance $ 4,718 $ 3,849 $ 4,578 $ 2,881 Commission costs and upfront payments to a customer capitalized in period 607 333 2,429 2,438 Amortization of contract assets (1,046) (613) (2,728) (1,750) End of period balance $ 4,279 $ 3,569 $ 4,279 $ 3,569 The changes in our contract liabilities are as follows (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Beginning of period balance $ 11,537 $ 10,980 $ 10,498 $ 11,176 Revenue deferred in period 3,425 542 9,118 3,013 Revenue recognized from amounts included in contract liabilities (2,090) (1,499) (6,744) (4,166) End of period balance $ 12,872 $ 10,023 $ 12,872 $ 10,023 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Schedule of Components of Accounts Receivable | The components of accounts receivable, net are as follows (in thousands): September 30, December 31, Accounts receivable $ 85,624 $ 80,032 Allowance for credit losses (2,400) (2,584) Allowance for product returns (1,341) (1,075) Accounts receivable, net $ 81,883 $ 76,373 |
Schedule of Changes in Allowance for Credit Losses for Accounts Receivable | The changes in our allowance for credit losses for accounts receivable are as follows (in thousands): Three Months Ended Nine Months Ended Alarm.com All Other Alarm.com All Other Beginning of period balance $ (3,550) $ (238) $ (2,500) $ (84) Impact of adopting Topic 326 — — (212) (155) Recovery of expected credit losses 1,146 56 195 42 Write-offs 170 16 283 31 End of period balance $ (2,234) $ (166) $ (2,234) $ (166) The changes in our allowance for credit losses for notes receivable are as follows (in thousands): Three Months Ended Nine Months Ended Loan Hardware Loan Hardware Beginning of period balance $ (46) $ (37) $ — $ (16) Impact of adopting Topic 326 — — (434) (15) Recovery of / (provision for) expected credit losses (20) 6 368 — Write-offs 1 — 1 — End of period balance $ (65) $ (31) $ (65) $ (31) |
Inventory, Net (Tables)
Inventory, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Components of Inventory | The components of inventory, net are as follows (in thousands): September 30, December 31, Raw materials $ 8,776 $ 8,921 Finished goods 31,423 25,247 Total inventory, net $ 40,199 $ 34,168 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Consideration Paid and Estimated Fair Value of Tangible and Intangible Net Assets Acquired | The table below sets forth the purchase consideration and the fair value allocation of the tangible and intangible net assets acquired (in thousands): October 21, 2019 Calculation of Purchase Consideration: Cash paid, net of working capital adjustment $ 61,403 Holdback consideration 2,820 Contingent consideration 2,793 Total consideration $ 67,016 Tangible and Intangible Net Assets: Cash $ 2,352 Accounts receivable 5,742 Inventory 4,687 Other current assets 216 Property and equipment 296 Customer relationships 19,805 Developed technology 16,583 Trade name 2,219 Accounts payable (2,746) Accrued expenses (1,017) Other current liabilities (1,683) Deferred tax liability (9,209) Deferred revenue (889) Redeemable noncontrolling interest (11,411) Goodwill 42,071 Total tangible and intangible net assets $ 67,016 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in goodwill by reportable segment are outlined below (in thousands): Alarm.com Other Total Balance as of January 1, 2020 $ 104,963 $ — $ 104,963 Goodwill acquired — — — Measurement period adjustment 699 — 699 Balance as of September 30, 2020 $ 105,662 $ — $ 105,662 |
Schedule of Intangible Assets | The following table reflects changes in the net carrying amount of the components of intangible assets (in thousands): Customer Developed Trade Name Total Balance as of January 1, 2020 $ 84,396 $ 16,820 $ 2,222 $ 103,438 Amortization (10,412) (1,371) (271) (12,054) Balance as of September 30, 2020 $ 73,984 $ 15,449 $ 1,951 $ 91,384 The following tables reflect the weighted average remaining life and carrying value of finite-lived intangible assets (in thousands, except weighted-average remaining life): September 30, 2020 Gross Accumulated Net Weighted- Customer relationships $ 123,731 $ (49,747) $ 73,984 9.2 Developed technology 30,542 (15,093) 15,449 7.9 Trade name 3,304 (1,353) 1,951 4.0 Other 234 (234) — 0.0 Total intangible assets $ 157,811 $ (66,427) $ 91,384 December 31, 2019 Gross Accumulated Net Weighted- Customer relationships $ 123,731 $ (39,335) $ 84,396 9.8 Developed technology 30,542 (13,722) 16,820 8.7 Trade name 3,304 (1,082) 2,222 4.8 Other 234 (234) — 0.0 Total intangible assets $ 157,811 $ (54,373) $ 103,438 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Changes in Allowance for Credit Losses for Accounts Receivable | The changes in our allowance for credit losses for accounts receivable are as follows (in thousands): Three Months Ended Nine Months Ended Alarm.com All Other Alarm.com All Other Beginning of period balance $ (3,550) $ (238) $ (2,500) $ (84) Impact of adopting Topic 326 — — (212) (155) Recovery of expected credit losses 1,146 56 195 42 Write-offs 170 16 283 31 End of period balance $ (2,234) $ (166) $ (2,234) $ (166) The changes in our allowance for credit losses for notes receivable are as follows (in thousands): Three Months Ended Nine Months Ended Loan Hardware Loan Hardware Beginning of period balance $ (46) $ (37) $ — $ (16) Impact of adopting Topic 326 — — (434) (15) Recovery of / (provision for) expected credit losses (20) 6 368 — Write-offs 1 — 1 — End of period balance $ (65) $ (31) $ (65) $ (31) |
Schedule of Financing Receivable Credit Quality Indicators | We manage our notes receivables using delinquency as a key credit quality indicator. Current and delinquent notes receivable by class of financing receivables and by year of origination as of September 30, 2020 are as follows (in thousands): Loan Receivables: 2020 2019 2018 2017 2016 Prior Total Current $ 600 $ 20 $ — $ 4,113 $ — $ — $ 4,733 30-59 days past due — — — — — — — 60-89 days past due — — — — — — — 90-119 days past due — — — — — — — 120+ days past due — — — — — — — Total $ 600 $ 20 $ — $ 4,113 $ — $ — $ 4,733 Hardware Financing Receivables: Current $ — $ 81 $ 98 $ 7 $ — $ — $ 186 30-59 days past due — — — — — — — 60-89 days past due — 67 — — — — 67 90-119 days past due — — — 9 — — 9 120+ days past due — — — 16 — — 16 Total $ — $ 148 $ 98 $ 32 $ — $ — $ 278 |
Schedule of Amortized Cost of Notes Receivable | The amortized cost of notes receivables placed on nonaccrual status is as follows (in thousands): September 30, 2020 December 31, 2019 Loan receivables $ — $ — Hardware financing receivables 25 16 Total $ 25 $ 16 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present our assets and liabilities measured at fair value on a recurring basis (in thousands): Fair Value Measurements on a Recurring Basis as of September 30, 2020 Fair value measurements in: Level 1 Level 2 Level 3 Total Assets: Money market accounts $ 224,957 $ — $ — $ 224,957 Total $ 224,957 $ — $ — $ 224,957 Liabilities: Contingent consideration liability from acquisitions $ — $ — $ 2 $ 2 Total $ — $ — $ 2 $ 2 Fair Value Measurements on a Recurring Basis as of December 31, 2019 Fair value measurements in: Level 1 Level 2 Level 3 Total Assets: Money market accounts $ 93,303 $ — $ — $ 93,303 Total $ 93,303 $ — $ — $ 93,303 Liabilities: Contingent consideration liability from acquisitions $ — $ — $ 2,595 $ 2,595 Total $ — $ — $ 2,595 $ 2,595 |
Summary of Fair Value of Level 3 Liability | The following table summarizes the change in fair value of the Level 3 liabilities for contingent consideration liabilities from acquisitions with significant unobservable inputs (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Beginning of period balance $ 306 $ — $ 2,595 $ — Changes in fair value included in earnings (304) — (2,593) — End of period balance $ 2 $ — $ 2 $ — |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Supplemental Information Related to Leases | Supplemental information related to leases is presented in the table below (in thousands, except weighted-average term and discount rate): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Operating lease cost $ 2,329 $ 1,932 $ 6,562 $ 5,570 Cash paid for amounts included in the measurement of operating lease liabilities 2,699 2,211 7,427 6,139 Operating lease right-of-use assets obtained in exchange for new operating lease liabilities 1,998 1,133 8,645 3,384 September 30, December 31, Weighted-average remaining lease term — operating leases 5.2 years 5.7 years Weighted-average discount rate — operating leases 3.7 % 4.0 % |
Maturities of Lease Liabilities | Maturities of lease liabilities are as follows (in thousands): Year Ended December 31, Operating Leases (1) Remainder of 2020 $ 2,746 2021 11,042 2022 9,831 2023 9,071 2024 8,299 2025 and thereafter 11,840 Total lease payments 52,829 Less: imputed interest (2) 4,754 Present value of lease liabilities $ 48,075 _______________ (1) Operating lease payments exclude less than $0.1 million of legally binding minimum lease payments for leases executed but not yet commenced and includes $0.6 million for options to extend lease terms that were reasonably certain of being exercised. (2) Imputed interest was calculated using the incremental borrowing rate applicable for each lease. |
Liabilities (Tables)
Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable, Accrued Expenses and Other Current Liabilities | The components of accounts payable, accrued expenses and other current liabilities are as follows (in thousands): September 30, December 31, Accounts payable $ 32,300 $ 32,878 Accrued expenses 12,575 10,092 Other current liabilities 5,154 5,757 Accounts payable, accrued expenses and other current liabilities $ 50,029 $ 48,727 The components of other liabilities are as follows (in thousands): September 30, December 31, Contingent consideration liability from acquisitions $ — $ 2,595 Holdback liability from acquisitions 1,789 1,650 Other liabilities 5,935 3,244 Other liabilities $ 7,724 $ 7,489 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense is included in the following line items in the condensed consolidated statements of operations (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Sales and marketing $ 734 $ 534 $ 2,263 $ 1,385 General and administrative 2,154 1,714 6,033 4,762 Research and development 4,560 2,787 12,605 8,574 Total stock-based compensation expense $ 7,448 $ 5,035 $ 20,901 $ 14,721 The following table summarizes the components of non-cash stock-based compensation expense (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Stock options and assumed options $ 879 $ 941 $ 2,695 $ 2,836 Restricted stock units 6,531 4,046 18,089 11,746 Employee stock purchase plan 38 48 117 139 Total stock-based compensation expense $ 7,448 $ 5,035 $ 20,901 $ 14,721 Tax benefit from stock-based awards $ 1,658 $ 565 $ 3,846 $ 4,050 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted EPS | The components of basic and diluted earnings per share are as follows (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Net income $ 35,825 $ 17,690 $ 61,021 $ 40,496 Net loss attributable to redeemable noncontrolling interest 259 — 865 — Net income attributable to common stockholders (A) $ 36,084 $ 17,690 $ 61,886 $ 40,496 Weighted average common shares outstanding — basic (B) 49,007,343 48,518,041 48,842,333 48,360,927 Dilutive effect of stock options and restricted stock units 1,972,336 1,634,766 1,831,419 1,877,482 Weighted average common shares outstanding — diluted (C) 50,979,679 50,152,807 50,673,752 50,238,409 Net income per share: Basic (A/B) $ 0.74 $ 0.36 $ 1.27 $ 0.84 Diluted (A/C) $ 0.71 $ 0.35 $ 1.22 $ 0.81 |
Schedule of Securities Excluded from Calculation of Diluted Weighted Average Common Shares Outstanding Due to Anti-dilutive Effect | The following securities have been excluded from the calculation of diluted weighted average common shares outstanding as the inclusion of these securities would have an anti-dilutive effect: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Stock options 136,434 187,792 282,595 177,292 Restricted stock units 27,199 325,108 149,699 239,450 Common stock subject to repurchase — 410 — 410 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Reportable Segment Operational Data | The reportable segment operational data is presented in the tables below (in thousands): Three Months Ended September 30, 2020 Alarm.com Other Intersegment Alarm.com Intersegment Other Total SaaS and license revenue $ 92,834 $ 7,292 $ — $ — $ 100,126 Hardware and other revenue 57,726 2,545 (554) (992) 58,725 Total revenue 150,560 9,837 (554) (992) 158,851 Operating income / (loss) 18,810 (889) 189 (54) 18,056 Three Months Ended September 30, 2019 Alarm.com Other Intersegment Alarm.com Intersegment Other Total SaaS and license revenue $ 79,954 $ 4,970 $ — $ — $ 84,924 Hardware and other revenue 41,016 5,484 (1,287) (2,257) 42,956 Total revenue 120,970 10,454 (1,287) (2,257) 127,880 Operating income / (loss) 12,772 (561) 62 (78) 12,195 Nine Months Ended September 30, 2020 Alarm.com Other Intersegment Intersegment Total SaaS and license revenue $ 269,168 $ 18,612 $ — $ — $ 287,780 Hardware and other revenue 159,800 13,030 (2,118) (6,065) 164,647 Total revenue 428,968 31,642 (2,118) (6,065) 452,427 Operating income / (loss) 45,427 (2,370) 246 (386) 42,917 Nine Months Ended September 30, 2019 Alarm.com Other Intersegment Intersegment Total SaaS and license revenue $ 233,459 $ 13,854 $ — $ — $ 247,313 Hardware and other revenue 107,884 15,810 (3,364) (5,768) 114,562 Total revenue 341,343 29,664 (3,364) (5,768) 361,875 Operating income / (loss) 37,182 (1,782) 71 (10) 35,461 Alarm.com Other Intersegment Alarm.com Intersegment Other Total Assets as of September 30, 2020 $ 729,845 $ 24,527 $ (56,356) $ 29 $ 698,045 Assets as of December 31, 2019 589,952 17,844 (49,997) — 557,799 |
Organization (Details)
Organization (Details) service_provider in Thousands | Sep. 30, 2020service_provider |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of trusted service providers (more than) | 9 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies - Supplemental Balance Sheet Information Regarding Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Credit loss expense (reversal) for accounts and notes receivable | $ (1,200) | $ (700) | |||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member | ||
Accumulated deficit | (50,607) | $ (50,607) | $ 10,463 | ||
Accounts receivable, net | 81,883 | 81,883 | 76,373 | ||
Other current assets | 17,854 | 17,854 | 13,504 | ||
Other assets | 16,600 | 16,600 | 17,516 | ||
Maximum | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Interest receivable | $ 100 | $ 100 | $ 100 | ||
Impact of adopting Topic 326 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accumulated deficit | $ 816 | ||||
Accounts receivable, net | (367) | ||||
Other current assets | (83) | ||||
Other assets | $ (366) |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)numberOfSources | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | ||||||||||
Sources of revenue | numberOfSources | 3 | |||||||||
Deferred revenue | $ 12,872 | $ 10,023 | $ 12,872 | $ 10,023 | $ 12,872 | $ 10,023 | $ 11,537 | $ 10,498 | $ 10,980 | $ 11,176 |
Amortization of capitalized commission costs | 1,046 | 613 | 2,728 | 1,750 | ||||||
Hardware and other | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Reserve for hardware returns | 1.00% | 1.00% | ||||||||
Commissions and upfront payments made to a customer | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Amortization of capitalized commission costs | 1,000 | $ 600 | 2,700 | $ 1,800 | ||||||
Activation Fees | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Deferred revenue | $ 7,200 | $ 7,200 | $ 7,200 | $ 8,100 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Additional Information (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | 9 Months Ended |
Sep. 30, 2020 | |
Hardware and other | |
Disaggregation of Revenue [Line Items] | |
Term of contract | 1 year |
Renewal term | 1 year |
SaaS and license | Minimum | |
Disaggregation of Revenue [Line Items] | |
Term of contract | 3 years |
SaaS and license | Maximum | |
Disaggregation of Revenue [Line Items] | |
Term of contract | 5 years |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Contract Asset and Liability Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Change in Contract Asset Balance | ||||
Beginning of period balance | $ 4,718 | $ 3,849 | $ 4,578 | $ 2,881 |
Commission costs and upfront payments to a customer capitalized in period | 607 | 333 | 2,429 | 2,438 |
Amortization of contract assets | (1,046) | (613) | (2,728) | (1,750) |
End of period balance | 4,279 | 3,569 | 4,279 | 3,569 |
Change In Contract With Customer, Liability [Roll Forward] | ||||
Beginning of period balance | 11,537 | 10,980 | 10,498 | 11,176 |
Revenue deferred in period | 3,425 | 542 | 9,118 | 3,013 |
Revenue recognized from amounts included in contract liabilities | (2,090) | (1,499) | (6,744) | (4,166) |
End of period balance | $ 12,872 | $ 10,023 | $ 12,872 | $ 10,023 |
Accounts Receivable, Net - Sche
Accounts Receivable, Net - Schedule of Components of Accounts Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Accounts receivable | $ 85,624 | $ 80,032 |
Allowance for credit losses | (2,400) | (2,584) |
Allowance for product returns | (1,341) | (1,075) |
Accounts receivable, net | $ 81,883 | $ 76,373 |
Accounts Receivable, Net - Narr
Accounts Receivable, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Provision (provision reduction) for doubtful accounts | $ (1,200) | $ 200 | $ (237) | $ 722 |
Reserve (reduction to reserve) for product returns | 1,491 | (105) | ||
Hardware and other revenue | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Reserve (reduction to reserve) for product returns | $ 500 | $ (100) | $ 1,500 | $ (100) |
Accounts Receivable, Net - Sc_2
Accounts Receivable, Net - Schedule of Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member | |||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Beginning of period balance | $ (2,584) | |||||
Recovery of expected credit losses | $ 1,200 | $ (200) | 237 | $ (722) | ||
End of period balance | (2,400) | (2,400) | $ (2,584) | |||
Alarm.com and Certain Subsidiaries | ||||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Beginning of period balance | (3,550) | (2,500) | ||||
Recovery of expected credit losses | 1,146 | 195 | ||||
Write-offs | 170 | 283 | ||||
End of period balance | (2,234) | (2,234) | (2,500) | |||
Alarm.com and Certain Subsidiaries | Impact of adopting Topic 326 | ||||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Beginning of period balance | 0 | (212) | ||||
End of period balance | (212) | |||||
All Other Subsidiaries | ||||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Beginning of period balance | (238) | (84) | ||||
Recovery of expected credit losses | 56 | 42 | ||||
Write-offs | 16 | 31 | ||||
End of period balance | (166) | (166) | (84) | |||
All Other Subsidiaries | Impact of adopting Topic 326 | ||||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||||
Beginning of period balance | $ 0 | $ (155) | ||||
End of period balance | $ (155) |
Inventory, Net (Details)
Inventory, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 8,776 | $ 8,921 |
Finished goods | 31,423 | 25,247 |
Total inventory, net | $ 40,199 | $ 34,168 |
Acquisitions - Acquisition of a
Acquisitions - Acquisition of a Business (Details) - USD ($) $ in Thousands | Oct. 21, 2019 | Jun. 30, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||||
Holdback consideration | $ 1,789 | $ 1,650 | |||
Contingent earnout | 0 | 2,595 | |||
Goodwill acquired | $ 42,100 | 0 | |||
Increase (decrease) in goodwill | 699 | ||||
Redeemable noncontrolling interest | $ 11,400 | $ 10,716 | 10,711 | $ 10,974 | 11,210 |
OpenEye | |||||
Business Acquisition [Line Items] | |||||
Ownership by noncontrolling owners | 15.00% | ||||
OpenEye | |||||
Business Acquisition [Line Items] | |||||
Percentage of business acquired | 85.00% | ||||
Consideration | $ 61,200 | ||||
Holdback consideration | 2,820 | ||||
Purchase price adjustment | 200 | ||||
Additional earn-out | 11,000 | ||||
Increase in deferred tax liability | 700 | ||||
Increase (decrease) in goodwill | $ 700 | ||||
Fair Value, Measurements, Recurring | |||||
Business Acquisition [Line Items] | |||||
Contingent earnout | 2 | $ 2,595 | |||
Fair Value, Measurements, Recurring | OpenEye | |||||
Business Acquisition [Line Items] | |||||
Contingent earnout | 2,800 | $ 100 | |||
Customer Relationships | OpenEye | |||||
Business Acquisition [Line Items] | |||||
Intangible assets acquired | $ 19,805 | ||||
Weighted-average estimated useful life of intangible assets acquired | 13 years | ||||
Developed Technology | OpenEye | |||||
Business Acquisition [Line Items] | |||||
Intangible assets acquired | $ 16,583 | ||||
Weighted-average estimated useful life of intangible assets acquired | 9 years | ||||
Trade Name | OpenEye | |||||
Business Acquisition [Line Items] | |||||
Intangible assets acquired | $ 2,219 | ||||
Weighted-average estimated useful life of intangible assets acquired | 5 years |
Acquisitions - OpenEye - Consid
Acquisitions - OpenEye - Consideration Paid and Estimated Fair Value of Assets Acquired (Details) - USD ($) $ in Thousands | Oct. 21, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Calculation of Purchase Consideration: | |||
Holdback consideration | $ 1,789 | $ 1,650 | |
Estimated Tangible and Intangible Net Assets: | |||
Goodwill | $ 105,662 | $ 104,963 | |
OpenEye | |||
Calculation of Purchase Consideration: | |||
Cash paid, net of working capital adjustment | $ 61,403 | ||
Holdback consideration | 2,820 | ||
Contingent consideration | 2,793 | ||
Total consideration | 67,016 | ||
Estimated Tangible and Intangible Net Assets: | |||
Cash | 2,352 | ||
Accounts receivable | 5,742 | ||
Inventory | 4,687 | ||
Other current assets | 216 | ||
Property and equipment | 296 | ||
Accounts payable | (2,746) | ||
Accrued expenses | (1,017) | ||
Other current liabilities | (1,683) | ||
Deferred tax liability | (9,209) | ||
Deferred revenue | (889) | ||
Redeemable noncontrolling interest | (11,411) | ||
Goodwill | 42,071 | ||
Total estimated tangible and intangible net assets | 67,016 | ||
Customer Relationships | OpenEye | |||
Estimated Tangible and Intangible Net Assets: | |||
Intangible assets acquired | 19,805 | ||
Developed Technology | OpenEye | |||
Estimated Tangible and Intangible Net Assets: | |||
Intangible assets acquired | 16,583 | ||
Trade Name | OpenEye | |||
Estimated Tangible and Intangible Net Assets: | |||
Intangible assets acquired | $ 2,219 |
Acquisitions - Asset Acquisitio
Acquisitions - Asset Acquisition (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Mar. 12, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Business Acquisition [Line Items] | |||||
Consideration transferred | $ 3,297 | $ 850 | |||
IPR&D | |||||
Business Acquisition [Line Items] | |||||
Consideration transferred | $ 2,100 | $ 1,200 | $ 100 | ||
Future payments for asset acquisition | $ 700 | $ 300 | |||
Expected repayment time period | 12 months | 18 months | |||
Payments for asset acquisition | $ 2,900 | $ 1,500 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Schedule of Goodwill (Details) - USD ($) $ in Thousands | Oct. 21, 2019 | Sep. 30, 2020 |
Goodwill [Roll Forward] | ||
Beginning balance | $ 104,963 | |
Goodwill acquired | $ 42,100 | 0 |
Measurement period adjustment | 699 | |
Ending balance | 105,662 | |
Alarm.com | ||
Goodwill [Roll Forward] | ||
Beginning balance | 104,963 | |
Goodwill acquired | 0 | |
Measurement period adjustment | 699 | |
Ending balance | 105,662 | |
Other | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | |
Goodwill acquired | 0 | |
Measurement period adjustment | 0 | |
Ending balance | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill impairment | $ 0 | $ 0 | $ 0 | $ 0 |
Amortization | 4,000,000 | 3,400,000 | 12,054,000 | 10,300,000 |
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net - Schedule of Net Carrying Amount of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning balance | $ 103,438 | |||
Amortization | $ (4,000) | $ (3,400) | (12,054) | $ (10,300) |
Ending balance | 91,384 | 91,384 | ||
Customer Relationships | ||||
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning balance | 84,396 | |||
Amortization | (10,412) | |||
Ending balance | 73,984 | 73,984 | ||
Developed Technology | ||||
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning balance | 16,820 | |||
Amortization | (1,371) | |||
Ending balance | 15,449 | 15,449 | ||
Trade Name | ||||
Finite-lived Intangible Assets [Roll Forward] | ||||
Beginning balance | 2,222 | |||
Amortization | (271) | |||
Ending balance | $ 1,951 | $ 1,951 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets, Net - Schedule of Weighted Average Remaining Life and Carrying Value of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 157,811 | $ 157,811 |
Accumulated Amortization | (66,427) | (54,373) |
Net Carrying Value | 91,384 | 103,438 |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 123,731 | 123,731 |
Accumulated Amortization | (49,747) | (39,335) |
Net Carrying Value | $ 73,984 | $ 84,396 |
Customer Relationships | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted- Average Remaining Life | 9 years 2 months 12 days | 9 years 9 months 18 days |
Developed Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 30,542 | $ 30,542 |
Accumulated Amortization | (15,093) | (13,722) |
Net Carrying Value | $ 15,449 | $ 16,820 |
Developed Technology | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted- Average Remaining Life | 7 years 10 months 24 days | 8 years 8 months 12 days |
Trade Name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 3,304 | $ 3,304 |
Accumulated Amortization | (1,353) | (1,082) |
Net Carrying Value | $ 1,951 | $ 2,222 |
Trade Name | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted- Average Remaining Life | 4 years | 4 years 9 months 18 days |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 234 | $ 234 |
Accumulated Amortization | (234) | (234) |
Net Carrying Value | $ 0 | $ 0 |
Other | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted- Average Remaining Life | 0 years | 0 years |
Other Assets - Patent Licenses
Other Assets - Patent Licenses (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Oct. 31, 2020USD ($)patent | Apr. 30, 2020USD ($)patent | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||||||
Finite-lived, intangible assets, net | $ 91,384 | $ 91,384 | $ 103,438 | ||||
Finite-lived intangible assets, gross | 157,811 | 157,811 | 157,811 | ||||
Amortization on patents and tooling | 604 | $ 506 | |||||
Patent Licenses | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Patents purchased | patent | 30 | ||||||
Assets acquired | $ 900 | ||||||
Finite-lived, intangible assets, net | 2,900 | 2,900 | 2,400 | ||||
Finite-lived intangible assets, gross | 6,800 | 6,800 | |||||
Patent Licenses | Subsequent Event | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Patents purchased | patent | 1 | ||||||
Assets acquired | $ 200 | ||||||
Patent Licenses | Cost of SaaS and License Revenue | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Amortization on patents and tooling | 100 | $ 100 | 300 | 300 | |||
Patent Licenses | Amortization and depreciation expense | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Amortization on patents and tooling | 100 | $ 100 | $ 200 | $ 100 | |||
Patent Licenses | Minimum | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Finite-lived intangible asset, useful life | 3 years | ||||||
Patent Licenses | Maximum | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Finite-lived intangible asset, useful life | 12 years | ||||||
Other Current Assets | Patent Licenses | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Finite-lived, intangible assets, net | 700 | $ 700 | 500 | ||||
Other Assets | Patent Licenses | |||||||
Finite-Lived Intangible Assets [Line Items] | |||||||
Finite-lived, intangible assets, net | $ 2,200 | $ 2,200 | $ 1,900 |
Other Assets - Loan to a Distri
Other Assets - Loan to a Distribution Partner and Prepaid Expenses (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||
Sep. 30, 2016USD ($)renewal_option | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 29, 2020USD ($) | Jun. 09, 2020USD ($) | Dec. 31, 2019USD ($) | Jul. 31, 2019USD ($) | Jul. 01, 2018 | Jun. 30, 2018 | May 31, 2018USD ($) | Apr. 30, 2017USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Revenue from distribution partners | $ 158,851,000 | $ 127,880,000 | $ 452,427,000 | $ 361,875,000 | |||||||||
Distribution Partner Two | Term Loan | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Loan, interest rate | 6.00% | ||||||||||||
Receivable, face amount | $ 4,000,000 | ||||||||||||
Annual principal repayment on loan | $ 2,000,000 | $ 1,000,000 | |||||||||||
Loan receivable, noncurrent | $ 3,000,000 | ||||||||||||
Distribution Partner Two | Loan Receivables | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Notes receivable, maximum available | $ 4,000,000 | ||||||||||||
Loan, interest rate | 6.00% | ||||||||||||
Number of renewal options | renewal_option | 2 | ||||||||||||
Renewal term | 1 year | ||||||||||||
Loan receivable, current | $ 4,000,000 | ||||||||||||
Distribution Partner Two | London Interbank Offered Rate (LIBOR) | Term Loan | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Basis spread on variable rate | 7.00% | ||||||||||||
Distribution Partner Two | London Interbank Offered Rate (LIBOR) | Loan Receivables | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Basis spread on variable rate | 4.00% | ||||||||||||
Distribution Partner Three | Loan Receivables | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Loan receivable, current | $ 1,000,000 | ||||||||||||
Loan receivable, noncurrent | $ 3,000,000 | $ 3,000,000 | |||||||||||
Debt instrument, interest rate | 9.00% | 9.00% | 8.50% | ||||||||||
Distribution Partners Two and Three | Loan Receivables | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Revenue from distribution partners | $ 500,000 | $ 400,000 | $ 1,800,000 | $ 1,300,000 | |||||||||
Other Assets | Distribution Partner Two | Term Loan | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Loan receivable, noncurrent | $ 2,000,000 | ||||||||||||
Other Assets | Distribution Partner Three | Loan Receivables | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Loan receivable, noncurrent | 4,100,000 | 4,100,000 | 3,000,000 | ||||||||||
Other Current Assets | Distribution Partner Two | Term Loan | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Loan receivable, current | $ 1,000,000 | ||||||||||||
Other Current Assets | Distribution Partner Three | Loan Receivables | |||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||
Loan receivable, current | $ 0 | $ 0 |
Other Assets - Loan to a Hardwa
Other Assets - Loan to a Hardware Supplier (Details) - USD ($) | Jul. 15, 2019 | Jun. 24, 2019 | Mar. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||
Payments to acquire notes receivable | $ 600,000 | $ 26,074,000 | |||||||||
Expense (reversal) related to promissory note | (368,000) | (3,319,000) | |||||||||
Interest income | $ 118,000 | $ 2,703,000 | 734,000 | 4,317,000 | |||||||
Notes Receivable | |||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||
Payments to acquire notes receivable | $ 16,400,000 | ||||||||||
Accrued contingent liability | 6,000,000 | 6,000,000 | |||||||||
Fair value of acquired note | $ 22,400,000 | ||||||||||
Hardware Supplier | |||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||
Receipt of payment on notes receivable | $ 25,000,000 | $ 7,400,000 | |||||||||
Conversion of outstanding notes receivable | $ 5,600,000 | $ 5,600,000 | $ 5,600,000 | $ 5,600,000 | |||||||
Conversion of outstanding notes receivable (in shares) | 9,520,832 | ||||||||||
Interest income | 1,700,000 | 1,700,000 | |||||||||
Gain recorded within other income, net | 6,900,000 | 6,900,000 | |||||||||
Hardware Supplier | Notes Receivable | |||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||
Notes receivable, maximum available | $ 7,400,000 | ||||||||||
Expense (reversal) related to promissory note | $ (3,300,000) | ||||||||||
Hardware Supplier | Other Current Assets | Notes Receivable | |||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||
Loan receivable, current | $ 0 | $ 0 | |||||||||
Hardware Supplier | Other Third-Party Secured Creditor | |||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||
Outstanding balance | $ 26,600,000 |
Other Assets - Loan to a Servic
Other Assets - Loan to a Service Provider Partner (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jul. 31, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total revenue | $ 158,851 | $ 127,880 | $ 452,427 | $ 361,875 | |
Service Provider | Loan Receivables | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Notes receivable, maximum available | $ 2,500 | ||||
Debt instrument, interest rate | 9.00% | ||||
Loan receivable, noncurrent | 600 | 600 | |||
Total revenue | $ 100 | $ 100 | $ 100 | $ 100 |
Other Assets - Investment in a
Other Assets - Investment in a Platform Partner (Details) - USD ($) | Jul. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2013 | Dec. 31, 2019 |
Financing Receivable, Nonaccrual [Line Items] | ||||||
Proceeds from sale of investment | $ 25,687,000 | $ 0 | ||||
Platform Partner | Series A Convertible Preferred Membership Units | Variable Interest Entity, Not Primary Beneficiary | ||||||
Financing Receivable, Nonaccrual [Line Items] | ||||||
Cash purchase of shares | $ 3,500,000 | |||||
Shares purchased (in shares) | 3,548,820 | |||||
Platform Partner | Common Stock | Variable Interest Entity, Not Primary Beneficiary | ||||||
Financing Receivable, Nonaccrual [Line Items] | ||||||
Shares issued upon conversion (in shares) | 3,548,820 | |||||
Proceeds from sale of investment | $ 25,700,000 | |||||
Gain on sale | $ 24,700,000 | 24,700,000 | ||||
Platform Partner | Common Stock | Variable Interest Entity, Not Primary Beneficiary | Other Assets | ||||||
Financing Receivable, Nonaccrual [Line Items] | ||||||
Investment | $ 0 | $ 0 | $ 1,000,000 |
Other Assets - Schedule of Note
Other Assets - Schedule of Notes Receivable Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||||
Recovery of / (provision for) expected credit losses | $ 368 | $ 3,319 | |||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member | ||
Loan Receivables | |||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||||
Beginning of period balance | $ (46) | $ 0 | |||
Recovery of / (provision for) expected credit losses | (20) | 368 | |||
Write-offs | 1 | 1 | |||
End of period balance | (65) | (65) | $ 0 | ||
Loan Receivables | Impact of adopting Topic 326 | |||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||||
Beginning of period balance | 0 | (434) | |||
End of period balance | (434) | ||||
Hardware Financing Receivables | |||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||||
Beginning of period balance | (37) | (16) | |||
Recovery of / (provision for) expected credit losses | 6 | 0 | |||
Write-offs | 0 | 0 | |||
End of period balance | (31) | (31) | (16) | ||
Hardware Financing Receivables | Impact of adopting Topic 326 | |||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||||
Beginning of period balance | $ 0 | $ (15) | |||
End of period balance | $ (15) |
Other Assets - Credit Quality I
Other Assets - Credit Quality Indicators (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Loan Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | $ 600 |
2019 | 20 |
2018 | 0 |
2017 | 4,113 |
2016 | 0 |
Prior | 0 |
Total | 4,733 |
Hardware Financing Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 148 |
2018 | 98 |
2017 | 32 |
2016 | 0 |
Prior | 0 |
Total | 278 |
Current | Loan Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 600 |
2019 | 20 |
2018 | 0 |
2017 | 4,113 |
2016 | 0 |
Prior | 0 |
Total | 4,733 |
Current | Hardware Financing Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 81 |
2018 | 98 |
2017 | 7 |
2016 | 0 |
Prior | 0 |
Total | 186 |
30-59 days past due | Loan Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Total | 0 |
30-59 days past due | Hardware Financing Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Total | 0 |
60-89 days past due | Loan Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Total | 0 |
60-89 days past due | Hardware Financing Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 67 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Total | 67 |
90-119 days past due | Loan Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Total | 0 |
90-119 days past due | Hardware Financing Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 9 |
2016 | 0 |
Prior | 0 |
Total | 9 |
120+ days past due | Loan Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 0 |
Total | 0 |
120+ days past due | Hardware Financing Receivables | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 16 |
2016 | 0 |
Prior | 0 |
Total | $ 16 |
Other Assets - Amortized Cost (
Other Assets - Amortized Cost (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Amortized cost of nonaccrual notes receivable | $ 25 | $ 16 |
Loan Receivables | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Amortized cost of nonaccrual notes receivable | 0 | 0 |
Hardware Financing Receivables | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Amortized cost of nonaccrual notes receivable | $ 25 | $ 16 |
Other Assets - Allowance For Cr
Other Assets - Allowance For Credit Losses Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Financing Receivable, Nonaccrual [Line Items] | |||||
Interest income recognized for notes receivables in nonaccrual status | $ 0 | $ 0 | $ 0 | $ 0 | |
Prepaid expense | 10,900,000 | 10,900,000 | $ 6,100,000 | ||
Notes Receivable | |||||
Financing Receivable, Nonaccrual [Line Items] | |||||
Nonaccrual notes receivable without related allowance for credit loss | 0 | 0 | 0 | ||
Notes receivable 90 days or more past due still accruing | $ 0 | $ 0 | $ 0 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Liabilities: | ||
Contingent consideration liability from acquisitions | $ 0 | $ 2,595 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Total | 224,957 | 93,303 |
Liabilities: | ||
Contingent consideration liability from acquisitions | 2 | 2,595 |
Total | 2 | 2,595 |
Fair Value, Measurements, Recurring | Money market accounts | ||
Assets: | ||
Money market accounts | 224,957 | 93,303 |
Fair Value, Measurements, Recurring | Level 1 | ||
Assets: | ||
Total | 224,957 | 93,303 |
Liabilities: | ||
Contingent consideration liability from acquisitions | 0 | 0 |
Total | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Money market accounts | ||
Assets: | ||
Money market accounts | 224,957 | 93,303 |
Fair Value, Measurements, Recurring | Level 2 | ||
Assets: | ||
Total | 0 | 0 |
Liabilities: | ||
Contingent consideration liability from acquisitions | 0 | 0 |
Total | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Money market accounts | ||
Assets: | ||
Money market accounts | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | ||
Assets: | ||
Total | 0 | 0 |
Liabilities: | ||
Contingent consideration liability from acquisitions | 2 | 2,595 |
Total | 2 | 2,595 |
Fair Value, Measurements, Recurring | Level 3 | Money market accounts | ||
Assets: | ||
Money market accounts | $ 0 | $ 0 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value of Level 3 Subsidiary Unit Awards and Contingent Consideration (Details) - Contingent Consideration Liability From Acquisitions - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning of period balance | $ 306 | $ 0 | $ 2,595 | $ 0 |
Changes in fair value included in earnings | (304) | 0 | (2,593) | 0 |
End of period balance | $ 2 | $ 0 | $ 2 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Oct. 21, 2019USD ($) | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Contingent consideration liability from acquisitions | $ 0 | $ 0 | $ 2,595,000 | |||
Increase (decrease) in fair value of contingent liability | (2,593,000) | $ 0 | ||||
Other-than-temporary impairments | 0 | $ 0 | 0 | $ 0 | ||
OpenEye | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Percentage of business acquired | 85.00% | |||||
Additional earn-out | $ 11,000,000 | |||||
Increase (decrease) in fair value of contingent liability | (2,600,000) | |||||
Fair Value, Measurements, Recurring | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Contingent consideration liability from acquisitions | 2,000 | 2,000 | $ 2,595,000 | |||
Fair Value, Measurements, Recurring | OpenEye | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Contingent consideration liability from acquisitions | $ 100,000 | $ 100,000 | $ 2,800,000 | |||
Measurement Input, Revenue Volatility | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Measurement input | 0.64 | 0.64 | ||||
Measurement Input, Discount Rate | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Measurement input | 0.02 | 0.02 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Lessee, Lease, Description [Line Items] | ||
Available leasehold tenant improvement allowance | $ 11,800,000 | |
Finance leases | 0 | $ 0 |
Subleases | $ 0 | $ 0 |
Five Year Renewal Option | ||
Lessee, Lease, Description [Line Items] | ||
Lease renewal term | 5 years | |
March 2020 Lease Amendment | ||
Lessee, Lease, Description [Line Items] | ||
Available leasehold tenant improvement allowance | $ 700,000 |
Leases - Supplemental Informati
Leases - Supplemental Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Leases [Abstract] | |||||
Operating lease cost | $ 2,329 | $ 1,932 | $ 6,562 | $ 5,570 | |
Cash paid for amounts included in the measurement of operating lease liabilities | 2,699 | 2,211 | 7,427 | 6,139 | |
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | $ 1,998 | $ 1,133 | $ 8,645 | $ 3,384 | |
Weighted-average remaining lease term — operating leases | 5 years 2 months 12 days | 5 years 2 months 12 days | 5 years 8 months 12 days | ||
Weighted-average discount rate — operating leases | 3.70% | 3.70% | 4.00% |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Maturities of Lease Liabilities Under Topic 842 | |
Remainder of 2020 | $ 2,746 |
2021 | 11,042 |
2022 | 9,831 |
2023 | 9,071 |
2024 | 8,299 |
2025 and thereafter | 11,840 |
Total lease payments | 52,829 |
Less: imputed interest | 4,754 |
Present value of lease liabilities | 48,075 |
Legally binding minimum lease payments on leases not yet commenced (less than) | 100 |
Amount for options to extend lease | $ 600 |
Liabilities - Components of Acc
Liabilities - Components of Accounts Payable, Accrued Expenses, and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 32,300 | $ 32,878 |
Accrued expenses | 12,575 | 10,092 |
Other current liabilities | 5,154 | 5,757 |
Accounts payable, accrued expenses and other current liabilities | $ 50,029 | $ 48,727 |
Liabilities - Other Liabilities
Liabilities - Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Contingent consideration liability from acquisitions | $ 0 | $ 2,595 |
Holdback liability from acquisitions | 1,789 | 1,650 |
Other liabilities | 5,935 | 3,244 |
Total other liabilities | $ 7,724 | $ 7,489 |
Debt, Commitments and Conting_2
Debt, Commitments and Contingencies - Debt (Details) | Mar. 25, 2020USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Oct. 21, 2019USD ($) | Oct. 06, 2017USD ($) |
Debt Instrument [Line Items] | ||||||||
Proceeds from line of credit | $ 50,000,000 | $ 0 | ||||||
Repayments of lines of credit | 2,000,000 | 3,000,000 | ||||||
Contingent consideration liability from acquisitions | $ 0 | 0 | $ 2,595,000 | |||||
Increase (decrease) in fair value of contingent liability | (2,593,000) | 0 | ||||||
Revolving Credit Facility | 2017 Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from line of credit | $ 50,000,000 | |||||||
Repayments of lines of credit | 1,000,000 | $ 1,000,000 | 2,000,000 | $ 3,000,000 | ||||
Revolving Credit Facility | Line of Credit | 2017 Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Current borrowing capacity | $ 125,000,000 | |||||||
Long-term debt | $ 111,000,000 | $ 111,000,000 | 63,000,000 | 72,000,000 | ||||
Maximum borrowing capacity | $ 175,000,000 | |||||||
Effective interest rate (percent) | 2.92% | 4.61% | ||||||
Unused line commitment fee (percentage) | 0.20% | |||||||
Consolidated leverage ratio covenant (not to exceed) | 3.25 | 3.25 | ||||||
Consolidated fixed charge coverage ratio covenant (at least) | 1.25 | |||||||
Revolving Credit Facility | Line of Credit | 2017 Facility | Federal Funds Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (percent) | 0.50% | |||||||
Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (percent) | 1.00% | |||||||
Scenario One, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate terms, leverage ratio | 1 | 1 | ||||||
Scenario Two, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate terms, leverage ratio | 1 | 1 | ||||||
Scenario Two, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate terms, leverage ratio | 2 | 2 | ||||||
Scenario Three, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate terms, leverage ratio | 2 | 2 | ||||||
Scenario Three, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate terms, leverage ratio | 3 | 3 | ||||||
Scenario Four, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate terms, leverage ratio | 3 | 3 | ||||||
Less than 1.00 | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (percent) | 1.50% | 1.50% | ||||||
Greater than or equal to 1.00 but less than 2.00 | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (percent) | 1.75% | 1.75% | ||||||
Greater Than Or Equal To 2.00 But Less Than 3.00 | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (percent) | 2.00% | 2.00% | ||||||
Greater Than Or Equal To 3.00 | Revolving Credit Facility | Line of Credit | 2017 Facility | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (percent) | 2.50% | 2.50% | ||||||
Fair Value, Measurements, Recurring | ||||||||
Debt Instrument [Line Items] | ||||||||
Contingent consideration liability from acquisitions | $ 2,000 | $ 2,000 | $ 2,595,000 | |||||
OpenEye | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of business acquired | 85.00% | |||||||
Additional earn-out | $ 11,000,000 | |||||||
Increase (decrease) in fair value of contingent liability | (2,600,000) | |||||||
OpenEye | Fair Value, Measurements, Recurring | ||||||||
Debt Instrument [Line Items] | ||||||||
Contingent consideration liability from acquisitions | $ 100,000 | $ 100,000 | $ 2,800,000 |
Debt, Commitments and Conting_3
Debt, Commitments and Contingencies - Letters of Credit (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Line of Credit | Letter of Credit | 2017 Facility | ||
Line of Credit Facility [Line Items] | ||
Outstanding letters of credit | $ 0 | $ 0 |
Debt, Commitments and Conting_4
Debt, Commitments and Contingencies - Legal Proceedings (Details) - Pending Litigation - patent | May 26, 2020 | Nov. 11, 2019 | Oct. 22, 2019 | Jul. 24, 2019 | Jun. 26, 2017 | Aug. 19, 2016 | Jun. 02, 2015 | Sep. 30, 2017 | May 31, 2017 | Mar. 31, 2017 | Sep. 30, 2020 |
Vivint, Inc. vs. Alarm.com Holdings, Inc | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Number of patents allegedly infringed upon by the company | 2 | 4 | 5 | 6 | 3 | 2 | |||||
Number of patents under reexamination | 2 | ||||||||||
Number of patents found to be unpatentable | 9 | ||||||||||
Number of patents allegedly infringed by elements in solution | 1 | ||||||||||
EcoFactor, Inc. vs. Alarm.com Holdings, Inc. | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Number of patents allegedly infringed upon by the company | 4 | 3 | 3 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Nov. 29, 2018 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2019 |
Equity [Abstract] | |||||
Authorized repurchase amount | $ 75,000,000 | ||||
Purchases of treasury stock (in shares) | 0 | 147,153 | 0 | 0 | |
Purchases of treasury stock | $ 5,149,000 | ||||
Stock repurchase program, period | 2 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 7,448 | $ 5,035 | $ 20,901 | $ 14,721 |
Tax benefit from stock-based awards | 1,658 | 565 | 3,846 | 4,050 |
Stock options and assumed options | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 879 | 941 | 2,695 | 2,836 |
Restricted stock units | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 6,531 | 4,046 | 18,089 | 11,746 |
Employee stock purchase plan | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 38 | 48 | 117 | 139 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 734 | 534 | 2,263 | 1,385 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 2,154 | 1,714 | 6,033 | 4,762 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 4,560 | $ 2,787 | $ 12,605 | $ 8,574 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock options and assumed options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options exercised (in shares) | 139,225 | 60,043 | 397,416 | 258,668 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock units granted (in shares) | 169,699 | 88,308 | 488,771 | 425,324 |
Restricted stock units vested (in shares) | 34,136 | 15,880 | 121,259 | 177,946 |
2015 Equity Incentive Plan | Stock options and assumed options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options granted (in shares) | 2,000 | 30,000 | 143,650 | 140,500 |
Earnings Per Share - Components
Earnings Per Share - Components of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||||
Net income | $ 35,825 | $ 61,021 | $ 40,496 | |||||
Net loss attributable to redeemable noncontrolling interest | 259 | 865 | ||||||
Net income | $ 36,084 | $ 16,995 | $ 8,807 | $ 17,690 | $ 13,796 | $ 9,010 | $ 61,886 | 40,496 |
Net income attributable to common stockholders | $ 17,690 | $ 40,496 | ||||||
Weighted average common shares outstanding - basic (in shares) | 49,007,343 | 48,518,041 | 48,842,333 | 48,360,927 | ||||
Dilutive effect of stock options and restricted stock units (in shares) | 1,972,336 | 1,634,766 | 1,831,419 | 1,877,482 | ||||
Weighted average common shares outstanding - diluted (in shares) | 50,979,679 | 50,152,807 | 50,673,752 | 50,238,409 | ||||
Weighted average common shares outstanding — diluted (C) | ||||||||
Basic (in dollars per share) | $ 0.74 | $ 0.36 | $ 1.27 | $ 0.84 | ||||
Diluted (in dollars per share) | $ 0.71 | $ 0.35 | $ 1.22 | $ 0.81 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Securities Excluded from Calculation of Diluted Weighted Average Common Shares Outstanding Due to Anti-dilutive Effect (Details) - shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 21, 2019 | |
Stock options | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive securities excluded from the calculation of diluted weighted average common shares outstanding | 136,434 | 187,792 | 282,595 | 177,292 | |
Restricted stock units | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive securities excluded from the calculation of diluted weighted average common shares outstanding | 27,199 | 325,108 | 149,699 | 239,450 | |
Common stock subject to repurchase | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive securities excluded from the calculation of diluted weighted average common shares outstanding | 0 | 410 | 0 | 410 | |
OpenEye | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Percentage of business acquired | 85.00% |
Significant Service Providers (
Significant Service Providers (Details) - Service Provider Concentration Risk - Revenue | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Ten Largest Service Providers | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 50.00% | 52.00% | 49.00% | 52.00% |
Minimum | Service Provider A | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 15.00% | 15.00% | 15.00% | 15.00% |
Maximum | Service Provider A | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 20.00% | 20.00% | 20.00% | 20.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jun. 30, 2019 | |
Operating Loss Carryforwards [Line Items] | ||||||
Provision (benefit) for income taxes | $ 6,546,000 | $ 2,873,000 | $ 5,471,000 | $ 3,428,000 | ||
Effective income tax rate (percent) | 15.40% | 14.00% | 8.20% | 7.80% | ||
Valuation allowance | $ 300,000 | $ 300,000 | $ 300,000 | $ 300,000 | ||
Accrued interest and penalties related to unrecognized tax benefits | $ 200,000 | 200,000 | $ 200,000 | |||
Research Tax Credit Carryforward | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Unrecognized tax benefits | $ 1,100,000 | $ (200,000) |
Segment Information (Details)
Segment Information (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Total revenue | $ 158,851,000 | $ 127,880,000 | $ 452,427,000 | $ 361,875,000 | |
Operating income / (loss) | 18,056,000 | 12,195,000 | 42,917,000 | 35,461,000 | |
Total Assets | 698,045,000 | 698,045,000 | $ 557,799,000 | ||
Amortization and depreciation | 6,878,000 | 5,467,000 | 20,023,000 | 15,833,000 | |
Additions to property and equipment | 10,677,000 | 10,660,000 | |||
Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Amortization and depreciation | 6,700,000 | 5,500,000 | 19,800,000 | 15,800,000 | |
Additions to property and equipment | 4,700,000 | 4,700,000 | 11,200,000 | 8,500,000 | |
Other | |||||
Segment Reporting Information [Line Items] | |||||
Amortization and depreciation | 100,000 | 100,000 | 200,000 | 100,000 | |
Additions to property and equipment | 100,000 | 100,000 | 1,000,000 | 100,000 | |
Operating Segments | Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 150,560,000 | 120,970,000 | 428,968,000 | 341,343,000 | |
Operating income / (loss) | 18,810,000 | 12,772,000 | 45,427,000 | 37,182,000 | |
Total Assets | 729,845,000 | 729,845,000 | 589,952,000 | ||
Operating Segments | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 9,837,000 | 10,454,000 | 31,642,000 | 29,664,000 | |
Operating income / (loss) | (889,000) | (561,000) | (2,370,000) | (1,782,000) | |
Total Assets | 24,527,000 | 24,527,000 | 17,844,000 | ||
Intersegment Eliminations | Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | (554,000) | (1,287,000) | (2,118,000) | (3,364,000) | |
Operating income / (loss) | 189,000 | 62,000 | 246,000 | 71,000 | |
Total Assets | (56,356,000) | (56,356,000) | (49,997,000) | ||
Intersegment Eliminations | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | (992,000) | (2,257,000) | (6,065,000) | (5,768,000) | |
Operating income / (loss) | (54,000) | $ (78,000) | (386,000) | $ (10,000) | |
Total Assets | $ 29,000 | $ 29,000 | $ 0 | ||
Segment Concentration Risk | Revenue | Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Concentration risk percentage | 94.00% | 94.00% | 94.00% | 93.00% | |
Software license revenue | Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | $ 9,500,000 | $ 10,800,000 | $ 29,000,000 | $ 32,800,000 | |
Software license revenue | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 0 | 0 | 0 | 0 | |
SaaS and license revenue | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 100,126,000 | 84,924,000 | 287,780,000 | 247,313,000 | |
SaaS and license revenue | Operating Segments | Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 92,834,000 | 79,954,000 | 269,168,000 | 233,459,000 | |
SaaS and license revenue | Operating Segments | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 7,292,000 | 4,970,000 | 18,612,000 | 13,854,000 | |
SaaS and license revenue | Intersegment Eliminations | Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 0 | 0 | 0 | 0 | |
SaaS and license revenue | Intersegment Eliminations | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 0 | 0 | 0 | 0 | |
Hardware and other revenue | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 58,725,000 | 42,956,000 | 164,647,000 | 114,562,000 | |
Hardware and other revenue | Operating Segments | Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 57,726,000 | 41,016,000 | 159,800,000 | 107,884,000 | |
Hardware and other revenue | Operating Segments | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 2,545,000 | 5,484,000 | 13,030,000 | 15,810,000 | |
Hardware and other revenue | Intersegment Eliminations | Alarm.com | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | (554,000) | (1,287,000) | (2,118,000) | (3,364,000) | |
Hardware and other revenue | Intersegment Eliminations | Other | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | $ (992,000) | $ (2,257,000) | $ (6,065,000) | $ (5,768,000) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||||
Minimum lease payments | $ 52,829,000 | $ 52,829,000 | |||
Installation Partner | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage in equity method investment | 48.20% | 48.20% | |||
Equity investment in installation partner | $ 0 | $ 0 | $ 0 | ||
Installation Partner | Equity Method Investee | |||||
Related Party Transaction [Line Items] | |||||
Accounts payable to related party (less than) | 100,000 | 100,000 | 100,000 | ||
Installation Partner | Equity Method Investee | Cost of Hardware and Other Revenue | |||||
Related Party Transaction [Line Items] | |||||
Expenses incurred from related party | 100,000 | $ 100,000 | 300,000 | $ 300,000 | |
OpenEye | |||||
Related Party Transaction [Line Items] | |||||
Accounts payable to related party (less than) | $ 0 | $ 0 | $ 0 | ||
Lease term | 1 year | 1 year | |||
Minimum lease payments | $ 200,000 | $ 200,000 | |||
Operating rent expense | $ 100,000 | $ 0 | $ 200,000 | $ 0 |