ALRM - Earnings call transcript Q3 2018 | Alarm.com Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen and welcome to the Alarm.com Q3 2018 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to introduce your host for today's conference call, Mr. David Trone.

You may begin.

Dave Trone

you. Thank and third everyone, conference XXXX to call. welcome afternoon, quarter Alarm.com’s earnings Good

this recorded. is a call As reminder, being

Joining us today and CEO; from Alarm.com are Steve CFO. Steve Valenzuela, and Trundle, President

as discussion and expect, this being company’s undertakes performance to or reminder use estimate, believes quarterly Before and obligation results today’s those management’s this the innovation contained a commentary include as isolation and press metrics the in including vision be directly meant can have our the anticipated such projected XX-Q including operating computer release, GAAP. be include include to words of reported future forward-looking we and during Reconciliations or forward-looking to events prepared and to which intend, with are accordance financial filed Commission financial we to Please the conference and continue, the subsequent circumstances, risks results financial substitute reflect with believe, other to in video business presentation our forward-looking any required GAAP except we updated comparable measures analytics, statements, or Also between call quick which our not date, in These of for artificial financial tables statements future listeners. non-GAAP metrics, Factors additional an note will the update begin, that identify financial products will today made services, and considered a anticipate, to uncertainties, will found including of statements. speak statements. call that subject intended for investors will Investor that section expansion; for recent expectations to earnings available during offering such our on The guidance. Management’s and and anticipated statements intelligence; and strategies, materially of similar Risk a Form statements most these statements non-GAAP measures differ beliefs Investor those posted our cause on anticipated law. to during are information filed Securities only the our results available and website but conference video video note may, telephone or webcast that Exchange the could statement actual use in and by opportunities, Commission at these website. and that are statements and extent in from financial expectations our or available market analytics the tool call, reports currently non-GAAP website. time Relations Securities call also be Exchange non-GAAP regarding investment contained time will in is to to from archived, subsequent with Relations also on Management replay statements. these report investors.alarm.com. of to and no Alarm.com call services; demand containing this of non-GAAP new and our These also based our This provide is be understanding other provides Statements measures our us. is current on and information other our forward-looking and forward-looking trends, forward-looking webcast on

the the out formalities call Trundle. to of With now turn way, I’d these Steve like over to

You may begin.

Steve Trundle

joining today. our everyone to call welcome And David. Thanks

from million, another up to quarter exceeded XX% was SaaS solid report $XX.X the $XX.X are QX our license We pleased of XXXX. expectations. in million in revenue that and third quarter

year. Our XX.X% non-GAAP $XX.X adjusted up in EBITDA the quarter million, was last third over

the our service breadth Alarm.com origination I better-than-expected team saw strengths to sold of their well want drove and slightly a results. we account being quarter, our during as the the These quarter. services During for thank and expanded both higher-than-expected providers contributions installed. as

Beyond our was product analytics, a have our We the of made financial just major progress achieved we some formally I announced want in video highlight release portfolio. which of recent to milestone also performance, week. computer with broader want new give update for also overview I the intelligence. capabilities an and fields innovation we've of these program you on development you and in ongoing to last artificial established the vision our of

and activity. classifier an Combined Our their Object with people, to video analyzes virtual object's built vehicles identifies and object and we frame and property. specific object now direction highly about each of is alert on subscribers service of around of events determine can The analytics technology. object tracking video tracking movement animals. zones tripwires, classification duration

movement sending backyard. a duration. front or example, for pet specific near for of scene, door For watch lingering on the in can We instead or to the an a watch routine a also sofa people can leaving for alert we for getting changes a kids now about

being building. a the exits turn, For time applications, loading can, devices notified commercial without that delivery customer business truck confirm These to the a manager dock a arrived be in used each at respond. trigger can to insights

night, analytics the to turn an on fully video if of opt demonstrates capabilities of as a sprinklers. the such with the person Meanwhile, combination the backyard the we animal can a spot lights we security to to a automation but same if not turn on turn user So area, deterrent. lights provide platform. can at entering on an player deer additional our power The integrated the our instead enters

in We is storage churn are and subscribers video new that and now deployed XXX analytics installs generate value time. and fee. for video existing new our a we'll more both subscription a offered and camera service includes which, engagement providers. with for the of acquisition offering be content video our January subscribers is believe support popular ObjectVideo a neural network. additional turn, available been real-world service analyzing for that and new over learning millions cameras, Since outdoor and convolutional will use This indoor from in and for and expanding optimized support smart plan is of XXX train To deep sales analytics a from required result technology is modest in capabilities our architecture video called that in video and for additional of release packaged Our reduces of network The derived This applications. XXXX. the first processing clips system, a the developed field. frames we video. neural we is market home has The proprietary data that captured acquisition, the

testing. neural from As network feedback at a and continue adopt to process and benefit scale, video continual direct our our subscribers validation will of training, user from analytics

trigger recently assistant our command. to iPhone. priorities. engage adjust reinforced learned through market. and interfaces with functionality continue shortcuts provider reinforced service expanded by Apple. about aligned system. that with fully provider during We capabilities we Siri held in for priorities. can our seeing allows products annual service the a presented with what future easily Subscribers strong our that our latest of provider of voice the that October, about for residential iOS In the of enhancements. heard professional are voice that feature, our partners address the single are Siri we This We Meanwhile, service security-first we Beyond system partners actions XX opportunities in use conversations summit and us the D.C. Overall, providers capability here devices aligned conversations new in the demand they part R&D our Partner the see the can now that a Alarm.com products the multiple video Apple's well positive and feature the our feedback enabled release and are With service subscribers. of These number Alarm.com and partners new latest phrases came to like platform I voice away-from-home quickly service. hosted the they I and convenience a we can control with combine during mobile we summit the our enabled well to also presented analytics, smart we had R&D through their Overall, Washington higher value with home grade custom for Scenes their were by had integrated additional and market, create to product business that our Summit

and sales set additional for initial outdoor analytics as A video a applications video of are services. cases professional where we number significant the also feature We video increase analytics new this help differentiator. discussed use installation can of how see

service Our good alignment, and this they opportunities see providers with growth appreciate for video. additional

also shared positive this on providers service we Our year. program consumer marketing implemented feedback the

smart can informs As to want that segment smart mentioned turn hear quarter. field to I for our and before, value. our I professional business campaigns highlight Arizona electric they full-scale the range help as broad solutions. our providers storage, the will its system grid licensed from validating the our a event Public expanded device" devices, market our feedback a reliable Public Arizona. your with EnergyHub's including battery Service, Services platform include "bring a in thermostats. like Arizona which utility its increasing energy with program of enables value EnergyHub provide manage will largest own edge expanding utility matching. connected these We from believe businesses It to solar service of and to provides partnership that customers and to renewables inverters, The home consumers long-term peak approach. water shifting also well-designed reduction, have they services heaters sell encouraging load one demand this EnergyHub and Other and was message breadth devices connected

performance you in and flexibility key products, moment and reminding a hard introduce of Steve that a to driving an drive high-level provider business. with focus our Steve? subsidized and progress things of cycle our focused adoption sales of let analytics their not fast very as our remain pleased for a video on the again the the over our service Thank services, investors team enabler run service XXXX. XXXX this This to to but target on us Alarm.com margin that, business. To particularly I'm committed strategic turn or partners either I subscribers. Valenzuela. we to And view hardware summarize, the promotions our to upgrade our me We trust range XX% hardware and offering. with for to are of amount to our to hardware the our and Next, their discounted an margins we've investors hardware with spend EBITDA into the wrapping existing new of gives work or made recurring quarter new look want as of framework up XX% or to revenue. We we overly adjusted

Steve Valenzuela

guidance XXXX I revenue year license before the our Thank for of approximately for the license XX% opening will last full $XX.X everyone. the provide And our the the quarter in afternoon you of $X.X review third This for to Steve. for XXXX then financial outlook Connect for and fourth revenue to grew quarter begin of compared from raised call year quarter quarter questions. good and million results software with and million the quarter million. third $XX.X QX SaaS the includes same third XXXX.

quarter due license add revenue primarily down visibility XX.X% an last cameras. was due a believe the of was for XX.X% was with or Total gross higher sales for to XX% of are and the XXXX. third XX% to quarter remains in for margin time. the same last hardware XX% with gross of gross of SaaS the million. $XX.X quarter, our the XX%. Hardware historical from third our newer margin mix Our $XX gross our We from XX.X% year, third Total the video in to and of year. for upgrade $XXX.X million third in subscribers year to cameras QX XX.X%, quarter margin same The XX% existing along high quarter to grew and revenue SaaS from approximately the high revenue systems increase due of last for as to first increase sales third license for the they mix. was quarter was rate for same QX revenue XX.X% their with hardware the video consistent of primarily end quarter Hardware hardware up margins of revenue the in other XXXX third video in our quarter to range for at XX.X% the compared the the margin million, renewal revenue quarter revenue.

our compared with the quarter R&D quarter marketing we continued the revenue the revenue, compared employees planned million our employees $XX.X million $XX.X ended XXXX, to in operating in to XXX end expenses year. quarter of the the in XXX $XX.X the we markets. of at of Sales same were million Turning R&D, given were significant in employees in to or last $XX.X or million, third expenses. investment expenses year. in headcount in compared XXX R&D, as We QX third the opportunities XXXX. XX.X% see total same from up in of last XX.X% quarter Total and to increased XXX quarter the quarter employees to third third

third Our $XX.X million $XX G&A of million settlement were previously expenses in which announced. legal quarter the as a includes we

our quarter. non-ordinary $X.X legal G&A to expenses quarter in In compared G&A to quarter expenses million third net GAAP $XX.X of the $X.X quarter the the quarter course the to from litigation million million XX.X% and legal year. settlement $XX increased million the of quarter. in are year ago expense financial in we of from XXXX. to had loss Non-GAAP quarter adjusted million and $X.X the to $XX $XX.X are measures of the performance. the this, compared Excluding of income part for increased in in EBITDA includes compared course compared million third quarter of third $XX.X GAAP Non-GAAP income for third were the adjusted in excluded year million third Non-ordinary expenses million up our same ago to XXXX. million, of to quarter, the net last $XX.X in adjusted settlement, million our our QX due a measurement litigation net third the $XX.X $XX.X non-GAAP

Therefore, We to as pay million cash and Turning future amount September generated sheet. equivalents. quarter, cash to the of $XX.X of been to the of third balance expect flow of we quarter had our $XX.X legal balance we with from Note, XXXX. million In settlement not $XXX.X in end this cash quarters. the cash ended third operations ending reduced XXXX. million the third of the compared quarter for approximately for

last generated cash $XX.X for free in $X.X for was free million third the compared million Through the ended of of September our cash $XX.X free months Our million quarter the million period up $XX.X $XX.X to cash flow we year. nine million, from same quarter for flow flow same the XXXX. XX,

outlook. our to financial Moving

QX SaaS of and million. expect to revenue We $XX.X license $XX.X million

are We from revenue and million, to between million license outlook our SaaS XXXX $XXX.X license SaaS to to prior for expectations full $XXX $XXX.X of million. be our $XXX.X increasing up revenue for year million and

We guidance of million, are guidance This $XXX $XXX $XXX for $XXX includes million our million up and million revenue XXXX to to $XXX.X total also hardware to from our for prior million million. increased $XXX raising for guidance to revenue million, to of million. $XXX.X our $XXX.X of other our compared prior guidance to

for QX revenue hardware be to lower expect historical seasonably We with QX consistent than trends.

We are from to million $XX.X for million, EBITDA between for $XX $XX.X non-GAAP prior to XXXX adjusted expectations our up $XX.X for our increasing million of guidance to expectations million. our be

non-GAAP non-GAAP average diluted as prior of $XX.X also of $XX.X to we previously rate XXXX our is net to on are our million million per $X.XX outstanding. estimate $XX.X for guidance diluted based our We of $XX.X raising million per income tax or $X.XX on EPS XX or guidance is up have based indicated. million from million for This an weighted to to $X.XX share. shares diluted XX% share,

expect million year stock-based compensation $XX $XX.X of We to full expense XXXX million.

to we $XXX $XXX consensus. in it while a on time, very spend did is too XXXX, early Finally, line of million this much total At million to early with with perspective. revenue want comfortable provide to are current for XXXX, time I

that is we're increased remain items outperformed our these patterns. can the to during We incremental products, the considerably track Access consistent conservative hardware behavior service, indicative can sale able the revenue. guidance XXXX drive higher. some for video believe product several not that future for of anticipate to in revenue the sales we sales, channel. to our we we Control Also, recently from sales through as revenue sales such other does Business and led of estimating introductions in for practice, While fully us our our analytics new for the those But among will raise guidance with until our introduced months Alarm.com work of hardware that of past it potential take QX, expectations own anticipate

initial We results XXXX our for performance our about ahead we conclusion, will service provide we our report In fourth next providers. the and excited us for year. when XXXX our guidance February are pleased quarter in opportunities and with

continuing us invest today. call on connected the please We that are for operator you capitalize to business for joining and for with in on And Q&A. residential both our commercial in to Thank markets expanding intelligently the call opportunities open our property. the

Operator

Raymond from Our Instructions] Adam comes James. question Tindle with [Operator first

Adam Tindle

on start thanks. to good Hi, with competition. wanted I afternoon. the question Trundle just And Steve

on You're that QX indicated pricing down seeing space. basis for Gross the some competitive XXX even margin points in more year-over-year DIY channel. significant in

you'd that any QX. had very, is to you Thanks. there you improving, hoping may strong general So EBITDA for QX, I'm channel. be guide but deterioration of in. on it just some conservatism sequentially know just very give to that the so I a and recognize is be tie-in And mix a comment expecting built I up were

Steve Trundle

Sure sort. all solution, of quarter, typically someone see, we a who's a not But see sure with I'm the that of product another components terms I of – Adam. the a we type announcement point that. some with DIY competing caught from I'll the each competition start in some of question.

and we system. a the providers systems the customers service fully they in our want have said really As investments our before, be to home, of complete serviced market that bulk provide to view are who their

DIY and of not more the impact even it haven't components. by And meaningful solution from a say guess, as the and competition we point seen we any the would almost we we segment. new I quarter any the before, quarter I So or do bifurcate have – markets, the into seen evidenced third break

of have and margin, strategy service go, would as gross providers. any that As of mix ago with a point, products to moment more comment be to made I given our shifts in get the margins triggered and far attempting function to this I on market gross a a at we're, our

some to to goal see, that allows almost goal that to as and providers alluded our So service some we this, one And not price we works sort shifts, expect, sort services didn't in cases, to drive margin will see of out we – outperformance say mix as our product that compression. them our I or get of that to at in a it's category I point is the customers. and

So don't we upset some don't time really quarter on margin attempt or we're losing one too another business. we to That's of get from if part to our time product.

by So I of driven dynamic. attribute be to the market external wouldn't any change, though, sort

Adam Tindle

Okay. And question. an I industry ask just wanted of to kind

home Toll a puts it they're for having over monitoring given in Your seen automation channels overlap conjunction two to partnerships, example. like focused et on and combine, the Cervont, seemingly two with kind growing sense, both markets Brothers' cetera, with for of that. Pro runways. Does and takes professional to channel both And channel? make installer rapidly sizable high-end Just you've ControlX, the both time, these some empowering

Steve Trundle

and Sure. is typically the of much that system. the of CEA make long channel. more devices a of $XX,XXX Does ControlX folks driven That it's is about typically $XX,XXX existed is services. It a revenue It's it there are the a smaller are very sold, type anywhere These elaborate sense group it on hardware spending more to by and for being Cervont combine from – less pretty channel's driven and customers. smart a sort to a model channel. home time

different a it's So customer.

us and those of with the we're sort , not may the want of to of of Cervont are bit they but part going sort the I be smaller that use after they market. are the but premium of much of high-end where an concert focused category, sort market bigger we're of can a piece focused on in part on a of ControlX, service like a part it's our in with market. business. a really service I which customers best who affordable Our of providers more and focused, And some have, the security think We value-oriented customers a a

Adam Tindle

Thank you.

Operator

the Our with next from of comes question America. Beliov Nikolay Bank

Nikolay Beliov

for providers, in is Nikolay taking There my to Trundle. this seems questions. service being industry new with trend of the hardware guys Hey Thanks from be the third kind the impression a for kind Question financing Steve Bank banks. a of parties it that of of by impact what healthier? that? making down your like And Trundle, little Is business? the bit Steve might industry like is how America.

Steve Trundle

Nikolay. good question Yes

long So told of healthy the received but I'm capitalization upfront, on customer, are for dynamic of an those of that that a if makes and for said, lots for that. opinions is have that always system our opinion cost personal the basically than more their Anytime not mine service better typically a it's system any bill. you the are in providers and upfront who time, free my industry. repaying customers customers customer the is form a investment others, sure service valuable for now than different monthly all the have their we've us in

dealers We making we mix. think that invested customers see to own consumer. a sort for anyway were are I easier I financing on obtain like are financing my up more my the of the finance choose to We and to $X,XXX piece, home, now system if spend that to that and increasingly So in available could front. that like

their I a think need. meet offer provider the that allows likely dealer wider It's or complete solution the the range to to more service consumer. of

have that a generates panel. think if clock of much powerful the more majority the intrusion have might only us handful we years, I is cameras. back system and intrusion sensors folks includes a functionality that control and level of to some want market. probably – XX for still value The you the try typical a if the to customer downstream includes some there home And to that it, today, in but roll of market smaller a it's customer and system same smart that sell a

to someone, higher cost, has and customer service or borne the potentially or financing by the through upfront the that provider a either So cost customer a mechanism. be just there's

a makes they that giving service system may So I a today away have more it providers to do wrecking XX to element attainable possible what and bigger think sell system balance sheet much complete X customer a of more financing without sort needed basically the free by to to for years for our the than ago.

Nikolay Beliov

And it. question a Got Steve, commercial.

Our conversations with good initial partners control. around traction, really especially indicating access

So you with buy the plus guess, controls, customers just other which the like channel how plus can convince to and hardware not but I third-party sign interactive control? video access security more access of the

Steve Trundle

Yes, again. good one

that we're on yes, feedback great on seeing moment access control. So commented I a ago.

last by of think adoption. itself, control upgrade commercial quarter, for by XXX obviously, providers third up I of by is fine an somewhat And terms set we prefer so platform. we're And of of really to was And in the access is technologies. those has early up where itself we indicated really or some where systems three benefit cases video a first, say some even promoting missing adopters. again, the that to part quarter, the us, fine itself set gone but all the that's are I'd gotten market, there system, or I customer video be our during I an continuing think the about had in, product initial sold holistic the in of see systems service getting

quarters, cameras. talked time of with the So it's been what In done spent about prior video. about we've I this talking acceptable, lot but I a I think quarter,

as software. as and really about of I commercial be. the the I until side talked would video some with This offering, weren't like got quarter And the the on we competitive especially to we capabilities think we market, to quarter, third the

a there, access stake system building ground think obtaining I I – not of the only now would think I be someone solution be and that of say, and the And today can to impressed, control with forward top that video looking So should we're anyone with that sort it. sold put we in on that.

you're of months describing state to will product happen three – it some the ago. So we what Nikolay, probably now I than more a And compelling. some compelling is as six were think it I will of think is in that,

Nikolay Beliov

you. Thank

Operator

comes from Our next Jefferies. question with John DiFucci

John DiFucci

that of results in coming instituted – And where the I'm like like here. My first to Because commercial understand in well, coming the trying you. all, the just other Are from. have now? Or in are to all numbers? right seeing business in we is see that the doing well to seeing? alarm really starting Or of what business, we're these business? core seeing Is still numbers? Is in we that traditional Thank it that's at international? that much question investments you are from Are just we these core yet strong come? areas guys

Steve Trundle

a Yes. business, to providers, bigger because system beyond that say today the that service the core intrusion our the meaningfully part I more effectively driven extent the they're the would by is of selling who results, traditional consumer are business, were more expectation, to bigger. the and just Alarm.com

normal. at that came But of result. themselves that great a well, to – around. can And That's extreme it a the doesn't other say that there. the scale level for by a make if relative overall the evolves. hard are when there, So and this of the more we up the it's see of some causes moment, is sufficient do other a sort than outperformance to not at point some commercial, of gap the EnergyHub them impact meaning third but we result deals. recent and they of nearly international outperform doing none on initiatives way moment, is as to doing and the why nicely, hope of growing That's their quarter to basis, – well. quarter at At cause pieces be not well as each a all I parts contribute one sort their future, drive of aren't those size could current a in They're aren't the doing share well, highlighted

systems So more on good the aren't more third putting providers they video, a for had quarter most partners bit particularly part. a than little we the service selling expected. quarter, did They're was just – and more those systems,

So that was driver the there. real

John DiFucci

end might about the just settlement risk at See, tactical trying one there that up a with mean that to some understand because how investment, I don't never you a you it's doing, just be as happen, if I Or it. plaintiffs concern you and it's just to settling I'm the about suit that, settled some know of beginning this, that follow-up. doing say And from of could had action whether this more that trying Thanks, us you things. the against weigh unique? a just the what's an talk anything can one you – I can more one of these but could that of and class And point. Steve. that's the there's as question. then know plaintiffs the have you I to much with just other was but – Is to a mean have you as you lot going well obviously we're business of

Steve Trundle

That's Right. a good question, Yes. John.

which settle you we I were can frame lot about going of a I put repeating I if kind think worried about a be if phenomenon, to that case we would we of were is that mind, pretty it. be in reluctant say to can't particular though, – that a obviously. thought

to related legal other I would probably careful nature. to are basically there give frame – mind current in to pending real XX-Q up of So that's is no then suggest matters read you outstanding encourage the that matters the and and a I would of when PCP because the that section is

Steve Valenzuela

pending dismissed was week. matter last other One

XX-Q filed. the It's on that that's see available actually You'll online.

John DiFucci

Okay.

helpful. very lot look great. – Thanks that closely. Okay, we’ll all That’s guys. a review We’ll

Steve Trundle

Thanks, John.

Operator

with Our William next Blair. Pfau comes question from Matt

Matt Pfau

Steve question. occur have in to Hey, of guys. purchased wanted that hardware occurred the to actually sales guidance, I – consumers XXXX. might from being some your bit sort Thanks a about and my comments end XXXX up actually follow perhaps on taking you the in for XXXX might

million And so high you for about initial forecasted guidance gave if your the $XX come look of end initial so you're hardware, I at or XXXX of the ahead guidance. in to

materially or decoupling – of going why we how we that from to should the that slower growth about start pull-forward that's of we I subscription amount revenue subscription guess, as about XXXX So as is to hardware hardware revenue? to coupling than differential And forward, relative think grow should XXXX? the should then, think

Steve Valenzuela

Yes, this Steve Valenzuela. is

a there. So couple think I of points

seasonally keep QX mind all, are QX. stronger and in than of QX that First

of with into of so video, take QX, those sales you a guide hardware very, look very going said for seasonality. And as occurring XX% that need lot see macro perhaps when But QX, see of very trade we with some strong just forward we to tariffs. encouraging cautious performance if a my in for QX, from pull remarks, existing that to and be just at to events also there's obviously, did wars – account the and about subscribers. video potential on But was to I

That some that to information or activity very Steve a have use five could be of there quarters look out, cognizant some when in anecdotal we And we when we're forward. think hardware. look said, seeing been we're that need can have of – positive lot things XXXX, uptick we that is pulling at So But we there I as said, hardware. fairly change. to a of

good we very revenue we that flexibility. margin, very have strategically, that to going hardware recurring use and we're Given so good maintain a SaaS

be of were about given thinking of way look So wanted just XXXX at we folks this we kind we it's But the And early. the is initial didn't careful, guide, very in QX, performance we to want get guide, look. but the with when the themselves. not to strong XXXX, again, the ahead

our not clarify We're hardware mind, XXXX. guide. it from that, would lower really me of, in was Let it's than look in a kind thinking XXXX

initial not have given to occurring. lot of a that When looking we we're macroeconomic we're be through Now at advance. just our there's hardware's given cycle, far out number that with putting an out just still be that budgeting could grow have part case, to reoccurring, careful to our look, not have that careful when process but we events out to there be the cognizant, turn in in that we actually a

Matt Pfau

due which, encourage relative video XXXX decent would expectations video more to sales. And sales it now in of sounds Got video to to XXXX, of the of is And your functionality, video about was that camera it. even in cameras. a I uptake turn, if XXXX your potentially like more amount a driver perhaps drive outperformance in then with analytics think

to way be thus, this be going the fact and, potential? proper you that video integrated hardware about is is with don't and that cameras that So there to won't analytics think a Or is maybe that it provide other used the third-party from correlation a perspective. revenue

Steve Valenzuela

No.

But focused I of talked XXXX, on lot hardware, initial SaaS potential introductions. excited product analytics a video It's we guidance capabilities. said give in to not about. our we're great include new terms look what our when really think when – quite practice for of I is just introduced upside we a we about to mean we was offering which very the

compelling a from feedback great the we'll initial that just adoption service it October comes Summit us standard or positive the Partner it's very We we – far. analytics, really just in providers. But I and was factor as released week our But has yet, from had video ago. the both that's and Steve practice, kind the look of I So so service offering, our is a think very it certainly well so been we through how – well. into we see think guidance said – served our and providers how can't on

Matt Pfau

Great, that’s guys. a helpful. it. Thanks appreciate lot I

Steve Valenzuela

you. Thank

Steve Trundle

Matt. Thanks,

Operator

Our Sachs. next Gabriela Borges from question Goldman from comes

Gabriela Borges

the is of congrats you and to Trundle, the how do business market. afternoon Good question is quarter. for This is your think on Steve more a which macro sensitive housing

to in part Thank first upgrading because wondering reason. home coming you. versus maybe time Just the ground new platform bought for the budget they've of hearing because or a dealers you're moved on they of homes the from for as their other new some the terms customers or renovation what

Steve Trundle

Right. No.

of housing in we we've last frame, a XXXX-XXXX cycles, lived sort I housing think time one negative impacted through few the the cycles. the and really by weren't

folks go and are of the cycle, getting have providers to what was might people for seeing that around up, protecting not that because the and in tends they're little less learned on neighborhood. a economic an negative from sort a you system what a little is So then. – The service hanging we've desire our It things. theory bit business be intrusion mature focused the working, but more

going for the them terms well. a our going because bit doing how it's driven years room little But negative like bit now to more market. of And than exposed that at been there but we we're would say is wouldn't with years let's or this to I'd it tends then a some a be still if healthy housing point, builders, – ago housing have be that unfortunately, healthy see effects, volatile we economy. more think though, have six have offsetting we some it positive we to us from there, to than – in had view cycle's a we not – effects probably by program seven, and I cycle noticeable cycle say fairly a seven of – ago. if for were there's say, growth bad say in unfold, I tends is that or So might enormously eight it'd I negative we're negative today quite from a a

Gabriela Borges

percentage the mix thermostats? business. things just looks disclose, even And then very the you Thank – To you. can other of video the that modems line on versus follow-up what maybe That’s is item thank like? composition us hardware qualitatively that what is helpful, that or the And cameras piece extent or you. remind like of of

Steve Trundle

I is maybe the and video, of then mix smaller XX%. thermostats component items thermostats the the and And the me. modules composition don't half be rest front have the be the rough but other of other module modules, video the hardware a sales, So in rough revenue cameras. other, couple which in is or LTE and video a would primarily, is about and of But of data composition, of breakdown half would

Gabriela Borges

Thank helpful. for the questions. very you That’s taking

Steve Valenzuela

you. Thank

Steve Trundle

Thank you.

Operator

comes Imperial Our Capital. next from question with Saliq Khan

Saliq Khan

guys. Hi,

to Just of end. is analytics dealers? of launch for that verification questions for for how verification? marketplace? you video And think – the out event first And a is monitor playing for step envision guys on able quick too We about or provide alarm it to the kind the would couple analytics, being you with the would my us see professional the towards data it of essentially early

Steve Trundle

the for Thank question. you

already That and to if do, And alarm already. the that already the is adjudicate customer is value handled. make we use event, helps video proposition be provider – our with coming video current dynamic, an decision from that and the of number turned a service if the station the comfortable cameras is will handle Saliq So alarm. providers video verification event, matter service the of of part a then of the cameras In make so there on during a to operator the determines our central the on. the that how is installation, the how time

impacting identify So can but increasingly doing a business alarm some to from potentially events drive And We that not first, central to intelligence a would the step towards there with insight station analytics more may activity. to that in we're for a are that station or or also events step that provide to that's couple I be interest noteworthy the of would time. terms prompt able the be headline consumer been trying operator, be a whether this the they're the things of on. things, of of the monitoring other necessarily think make are not what more events. driving may to and decision, video provide that video that, – now central We still of owner actually may interest into events to a judgment dispatch, person operator effectively

off that intrusion alarm that want the everything the by that see an given is we something least to notify may event we sensor. if operator routine, But came looks routine. at So for

us efficacy richer much of to protective consent with of video not make decision So interest to it of the our and improve still dispatch I will responders. those use but in with possible consumers' the data of sets data the data or and interest is on providers the our first to whether of as their with the sets privacy as to it's we and use think in there make for analytics, derive been that those be service think can I sets

Saliq Khan

and increased from okay on market of follow-up traditional end, large more then industry, insurance that a just There's the security we're a guys. with then perspective. there, my seeing SMB some the these And the utility conversations Steve. for ahead out security of helpful, very traditionally very the That's for providers meaningfully been runway amount has providers an a

solutions your could SMB those well. as you plans analytics? you integrated highlight thinking process analytics helping about advanced for and more advanced to are So customers business upgrade that? eventually then thought my analytics How is are more guys And

Steve Trundle

Right.

of that real to we're time. in sort our turning focus So

residential particular, I and that would think including out our would we first there's get of the slightly solution look be to templates have goal types solve different with range use that to cases. a work for when drive smarter. common SMB most an even commercial, analytical customers, different broad But at in was and analytics of and a opportunity down verticals

to doing. example, location. a the SMB a be types is things a for be the two you to types going point-of-sale different, data different different with are integrate of different and way observing doing that bar you're of those the than then accounts case between going can in look And types be the store to little of and So a are going you're restaurant

our – So shifting now listening we're the what of to gen analytics with sort the next- opportunities guess should And here, service are providers. at say moment, we're, I to layer. I I think, the

going currently First seeing market level as analytic addressed set, vertically-oriented at the they sort for where an and of to go templates are to the foremost, some and more being beginning we're derive what's in market. not effective opportunity with the specifics SMB what

Saliq Khan

Steve. Great. Thank you,

Steve Trundle

Thank you.

Operator

comes Capital Partners. Our Darren Aftahi question with from next ROTH

Darren Aftahi

my taking Hey, questions good for Thanks congratulations. and afternoon.

if two, Just may. I

back to first analytics. Just

network. the neural So about talked convolutional Steve, you

on And other trained that video cetera. So I'm been in there analytics have then question, differentiation solutions within general, you like analytics embedded think do product sort are et out Like long-term and about on that of differentiate long-term? with video When you data images, there curious. the differentiate how Steve Thanks. kind as and second that kind I XQ. you up year-on-year. was I'm use to we spend, talked if spent had gen lead substantially to of curious about question marketing plan product. that of under you to Valenzuela. My increasing pretty just the relative know

Steve Trundle

opinions take video differentiation I Sure. Steve first It's that his up I'll piece is right in I'll alley. And on piece. this analytics. second the cover. have that let

real the First engine, more, neural advantage. information a becomes. The better. a and can And content you're the AI the it you more is net when smarter and there's training it, driving you're that feed scale

of, there against majority folks. positioned take So a think well not scale that the is every competitor to maybe but we advantage we're reasonably against the of

out and our rolled average capabilities always and The sort technology commute at type second a on of in such lot But out affordable ton if a a acquisition that of cutting-edge average edge the a on the look that crowd the case, compute price was without of supplemental sort it and how the affordable consumer. even amount make of challenge them for trying the real it they've got little that have make at is been for can to focused to – that capabilities is we're of a premium with compute we fit of we decade almost, residential a differently. figuring level work of customer. still economic take modest ago an And envelope works what we this ObjectVideo, done in are that

stay So that's and a place think we focused right as an we will for on advantage, now, maintaining I today of have that advantage.

focus. but down, come the compute course, of steadily edge Of cost the on will that's the

are database push be we and the their we video We transparent allows on this a – And or model that database capability. analytics a think I mean model information to marketing to who different that providing I metadata us is business but with layer – the our going involved of companies more from their third The take very which we a to treat maintain customer is to from in of differentiation, lot consumer. what privacy. a come how is the protect how don't level more more by may our any interesting and need other sort the the interesting business on in

business potentially model. the the other to that and in I a think same have are that commitment viable of some the folks consumer market still can't make

trust. the hope think the in enough consumer leave for third well I actually do and and And approach So operate you by trust second third-level become that the be their is our part that – a I'll long differentiation. Steve. would piece can you

Steve Valenzuela

question the the on Darren, Hey marketing.

spend of XX.X%. marketing we XX% revenue. QX did XX% was the actually be for around about At of year, the the marketing expected to beginning So we say to

And so on much track. right we're pretty

increase point quarter. have conference we QX, in of we're fourth view, in a does – marketing year. on we from I do think the our about, the D.C., service Washington beginning marketing say annual with at to thing October right a which provider spend as national Another too, But spend, the in the would laid of track bit planned dealer out is the

Darren Aftahi

Thanks. Helpful.

Steve Valenzuela

Thank you.

Steve Trundle

Thanks, Darren.

Operator

comes Gearhart Analysis. question First next Our with David from

David Gearhart

good taking questions. for my Hi, afternoon, thanks

First modest I wanted a your prepared the question remarks ask, to that pricing. increase in mentioned video analytics you would be in offering

Just uplift the and on much wondering on basis, it storage if you side. on can some sense give us a how would an analytics itself of the per-subscriber of be piece

Steve Trundle

in and offer to that analytics. That's day service They're on introduce analytics video included very per it of of that includes we this we're include – two not the On – basic we've think And today, plan. the wanted is to XX of to at – video roughly Well, have up piece actually. it to is the conceivable plan typical our storage getting consumer. clips that not plan does four cameras. providers what rid on a our and related, today And our XX that's sort which modest way a we parts for is additional rate storage, okay.

the of we're the We not market. With four we're property day to available of for offering this to market. in probably including cameras sort offering, on that part going So price competitive sort of per keep each aggregate. entry-level That's clips to there. out want our XXX up of drop most

then to storage analytic comes that expect. the there's capabilities what the do cost, that includes we're consumer released. plan the video of including currently And and the with going the what's is that tripling we're we pay So analytics, and incremental we've sort

to to of an the of ton extra want roughly $X.X it of a that revenue month. providers to a detail into these us from lot $X, be want incremental is our But don't I expectation, service freedom our think expectation to because per one leave place makes I I for sense how would get them. our

David Gearhart

that’s Okay, of terms on then and update seeing you you're can give international a helpful. if in quick us there trajectory. what And wondering and traction just

Steve Valenzuela

And is bit at last momentum quarter, kind international I time, don't on countries changed. – I International a I about spent little to The in with I along, time providers. sort and that service think Yes. on think of XX think the that much we the same. said of is up different we moving of were

shift look what there to a a where cusp kind that drive of anything Particularly, particularly at institutionalize we where markets I think I Let example, as Europe we're their still of an In mature. I days. point to on But little if healthy, on international. positive third do growth the sort to from to it when more are uptake partners the with that this have getting are I some of insurance the last the will just sort we're we're point continue shifting me I of folks getting haven't into the there, trends see was to on generally Aviva the seeing The sort of internationally but is be with and quarter. – focused company, positive. expect big announcement from quarter, pilots of but think quarter thing early more much as and offering. though, are testing, that efforts beginning early really sort where will our

David Gearhart

Okay.

you Sounds much. so good. Thank

Steve Valenzuela

Thanks.

Steve Trundle

Thank you.

Operator

question And comes next Nehal Group. Chokshi the with from Maxim

Nehal Chokshi

you. thank Yes,

the part higher that mix. driving growth video cameras, correct? that's And therefore, that's hardware a SaaS been was and to mentioned ARPUs has to you've due that the GM been of that big You due lower Presumably, reporting? strong

Steve Valenzuela

quarter the increase as well, margin the impact have part margin. in was does which So of impact an on in modules

mix as also, we of were then cameras different in there video were sales talked in terms different more how But video service, a right, module with So just well generally, there there video, to is of there's the exactly, about, sales of But generally, more I well. that cautious margins and as as uptick the an plays want be but… in with you're SaaS. quarter. out

Nehal Chokshi

Okay.

Steve Trundle

would OEM well another there that’s to fine sales normally are sell provider. work. third module quarter Steve's is channel No, that as resells were who key if it and quite But make service sold the in where an manufacturer through point we few a then those to the

are typically thin pretty those margins. So at

Nehal Chokshi

understood. Okay,

that percent correct? increasing on just to hardware year-over-year of is that's basis. clear that then, So be and to going a Q-over-Q Is sales video

Steve Valenzuela

correct. That’s Yes.

Nehal Chokshi

Excellent. Thank you.

Steve Valenzuela

Yes.

Nehal Chokshi

Go ahead.

Steve Valenzuela

think a trend say there given that's correct. on depends any variability. come would But on I can is month No, I basis, It where orders in. be line that the true.

Nehal Chokshi

Thank great. you. Okay,

Steve Valenzuela

Thank you.

Operator

call the Ladies participation. gentlemen, and of does this Q&A for today's and portion you itself. Thank conclude your the conference conference

day. disconnect You now and may a have wonderful

Alarm.com (ALRM) 7 Nov 182018 Q3 Earnings call transcript