ALRM - Earnings call transcript Q4 2018 | Alarm.com Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Alarm.com’s Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Later, we will conduct the question-and-answer session and instructions will follow at that time.

As a reminder, today's conference may be recorded. I’d now like to introduce your host for today's conference, Mr. of President Vice Trone, Investor relations. David go please ahead. Sir,

David Trone

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

this reminder, a call recorded. being As is

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

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

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

begin. may You

Steve Trundle

and afternoon you, welcome Thank David. Good everyone. to

expectations. fourth are our We results above report pleased that to were quarter

million, up year. license XX% and over fourth last in quarter revenue SaaS Our the $XX.X was

fourth the EBITDA million. in quarter $XX.X was adjusted Our

segment space. by Today, growing the our the than our provided our in devices extended progress other XXXX in commercial continue properties We their and connected our more as million markets pace close leadership growth technology results the our more in globally, more With we in very other scale in our XXXX. in our secular successfully to and X.X connected in million effective technology cloud our than space, nice of security participation year, and advantages that plan out saw to Our residential markets. to services. with providers providers of businesses. helped innovation, and and service property reported accelerate our solutions our in believe much Throughout service increase fourth XX performance. quarter of our the We owe by to marketplace, We continued the providers success the strong our than our core service sensors Things service in that strengthen X,XXX connected Internet business, be in are a enabled property trend.

our several channels, our the user of our new and is of developing intelligent operational elements through for grade strategy. management, multi-location is engineered Last elements in expanded of Those cornerstone to want our innovation further, key we our spend enable partners in international partners, to I for and market the growth innovation service to lunched increasing commercial call, want XXXX. Alarm.com include service more vertical I offers time to businesses. progress of small our security, XXXX video intelligent providers needs products ecosystem adoption additional It attack driving provider surveillance, all In number Before Alarm.com Product the opportunities. today's contributed I new businesses. automation, strategy. reporting. thank awareness, to This launched and our and on we our service Business. services, our markets, go year, medium-sized and sophisticated a platform Alarm.com the video differentiation who April, employees, core On and building of

all it's medium-sized connected upgrade to our a for systems always-on traditional, We from through opportunity integrated managed providers locally good solution. and to single delivered service businesses Importantly, see solution. a small our

for marketing we further our line this commercial recently service in through Control. of initiative, education facilities drive for market. grade a commercial adoption concerted to to recently This the plan video and implementing on goal, In the new of our in Business this commercial technical and commercial Alarm.com Business our adoption that offering and This to channel, significant a the the manages securely of efforts. a sales, we new XXXX, for our to like entire release driving partners multiple requires work consistent To access order installing our required services. cameras with of a of applications expand our our grade launched gives solution series to Alarm.com a our fully support we our access standard Successfully of engage with support service levels establishes providers partner part solutions, service expanded commercial Smarter for complemented also training providers. skills integrates program. training for We As services and services. Access spectrum

work our more than and solution. X,XXX for program, businesses and year, Smarter to base our technicians to the Control continue passed this provider Access commercial training the required During more completed provider plan service in XXX develop in training than service area our hard to in We participated deploying XXXX.

support to also technicians the provide hands-on installers. We enhanced we and direct

saw exceeded launch Business, a our quality we goals. expected overall volume strategy. for our internal our the Providing Alarm.com in With customer of support satisfaction of reliable, At assurance time, year. and an core is partners last trustworthy increase to benchmark tenet metrics same our the service

efficient service the us Over helps our retain our and technology helps it providers partners. with become more our valued long-term,

this offering. we of deployment early home command-and-control XXXX, close ADT will new recently ADT’s we with of worked offering, in positive. smart indications We roll this ADT system. into new also launched to partnership are focused the the As and new on be success develop

adoption to to key continue system, million and platform X extend transitions our computer supports the video existing and ADT our drive offering, of is is our support expansion than the video analytics This fields leadership of to we of into improve a more launched artificial As new connect Also of intelligence subscribers. to effort Pulse artificial October, strategy result the this to will multiyear we intelligence by which that services. a our and the launch In ADT also differentiation used platform vision. XXXX was offering. our

to enables We now deployed solution. applications. between our and use cases, business the as the Furthering SMB a of expand address international architecture element new an and additional vehicles, to these of analytics can to also also advanced capability various offer activity. plan of animals. range our system of people, cost the our With Our and platform AI It object’s analytics cameras direction accessible track of distinguish to video part effective is at particularly and of strategy. our for duration analytics cameras video an key capabilities movement high-value full scale, development we continue to train video XXXX

progress. hardware As the and year. and partners that solutions the global to XXXX, partners accounts, been active we milestone In our deploy fortunate place I at subscriber quarter, ecosystem to very service happy provider I am providers carriers mentioned reached with new we of last base home to continue announced company. on our to and in enable offering cultivate. we we of in we right international XXX,XXX add relationships a do on a And one with August, the our we these energy sure their the of stronger plan a and one an security launching that They to in we can where management outstanding we Europe markets good and to In to making international building Aviva, out job partnership partners. leading smart make Ireland. insurance our in a is early throughout markets have international feel service are team global continued global call international scale. XXXX, focus supporting customers and team have

They strong. now offering solution. Belgium, remains security successfully And Our is Norway our deploying partnership Securitas smart also in Netherlands, are Sweden. the Iceland with Securitas also services and

Australia, Latin and the well in We our a we of also cable see partnered continued GTD, largest momentum Chile. Latin region in piloting in global subsidiaries, where as services half of launched Guatemala. America NET. video in and America America, Americas New as large large strategic is well-respected one in based called Colombia telco Zealand, security XXXX. NET GXS, of another with company, their one and they in are in added a will key solution partners our services the second Brazil. Claro the providers launch in we is a has Latin telco And television and in Turkey,

promising work give in more for business. us additional XXXX, early our confidence to have these relationships beyond, make to global and together We opportunity to these in successful do but the partnerships

service and in an of Building solution. automation report they short-term particular for these developed and Our rental properties, include vertical delivery multifamily unattended includes and smart the our PointCentral other residential in businesses properties. other XXXX businesses home residential are enterprise and property vacation an segment, EnergyHub another space. access PointCentral strategy. The REITs, key level rental managers offers momentum element single-family both our businesses long-term market of XX. PointCentral and has PointCentral, We requiring and REIT

and or renewables strides that partnership solar Building services, with critical matching, continuing while and such thermostats, deploy water rich developing offering. they executing shifting, Arizona will distributed failures. these PointCentral build demand product alert learning capability many before trouble capabilities. EnergyHub their inverters, For providers were make energy Salt monitors new its include They they and to Electric pipeline of channel Lincoln intelligently XXXX, support, Project, range XXXX, EnergyHub's for technology a in enterprise to safeguards Electric and already In management devices EnergyHub utilities. as load in manages a and connected building grid-edge properties. engineering to including an platform EnergyHub under also XX,XXX an manage with a Through This an HVAC resources homeowners invitation expanded our system solutions XXXX, Cooperative programs agreement, of enterprise expanded System, customers. continues devices and conditions expensive HVAC focus smart with into of and in offers partnership utilities, storage, IoT XX to damage to that voltage more system key and portfolio provide bridge software battery role Sawnee can to instrumental Grid, of Service. to grid also reduction. APS example, platform, developing on homes rollouts recently their announced Meanwhile, new set machine leading energy play management a the escalate of provide announced EMC. properties services. our cloud heaters In National orchestrates Seminole and peak HVAC River energy Public They service will solution complete

pleased pleased these to to Although further as through each with businesses on I'm the performance of these different we’ll throughout develop and their XXXX. To report each with overall business, summarize, their teams progress. With continue vertical year very skilled are collective XXXX, opportunities this unfolds. invest our stages, and progress in quarter I'm in

and Alarm.com Valenzuela. am to and have that, our hard the for that our turn to also strong team let We over Thank a partners provider things you Steve? their leading. plan me XXXX our to trust service excited Steve their I And investors for work in again about with business. for

Steve Valenzuela

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

I the license Connect’s represents closing year of license note revenue March from unit full-year and that revenue from $XXX.X our For XXXX XXXX XXXX. business software the should a acquisition XXXX, Icontrol of X, million. SaaS the XX% of for on grew of partial to Connect

XX% cameras. the high visibility revenue historical and increase of range other hardware was quarter, The with revenue fourth increase in XX% fourth renewal video quarter primarily to our of in revenue the of $XX.X XX% midpoint rate of license was million, and XX%. sales an due over up SaaS in Our in XXXX. to Hardware QX our a the at remains revenue

remainder of to fourth XXX.X our QX strong million installs of in the our grew existing installed base Total with going subscribers. revenue see to continue subscribers, about sales cameras one We quarter from of new the for going to XX% of XXXX. video four and

same year, to XX.X% XX.X%. quarter was last last margin mainly XX.X%, year, to compared margin gross total from to the Hardware grew For same quarter license Total slightly fourth for quarter gross the to of was revenue the all of for quarter fourth due the the gross million. of quarter compared product primarily SaaS for XX.X% fourth XXXX XX.X% lower margin mix. and due gross XXXX, margin hardware XX.X% QX for XX% $XXX.X to the margins. was down for

fourth year. expenses. as the increased employees our fourth quarter of the were revenue employees in or and same the the in opportunities scaling XXX to quarter with R&D XX.X% operating of fourth will $XX.X campaigns. timing end of or XXXX, to compared marketing quarter Marketing revenue fourth ended Total last in million in compared expenses year. quarter-to-quarter, to R&D events see QX were decisions on in we the from to fluctuate XXX planned employees expenses to employees the in and same Sales compared Turning the of million $XX.X XXX quarter support from to continued XXXX. our markets. quarter We quarter R&D, investments make planned last million million up marketing affect in the XX.X% we XXX expenses $XX.X we as based that the at marketing in headcount total of $XX.X various

$X.X million course the of supplier. in $X.X expense mentioned measurement the litigation expenses the million part for This the the our in million Non-GAAP and recorded G&A as $X.X G&A and XXXX. results. excluded compared expense $X.X provision fourth a was in to our impairment million, quarter. of fourth to performance. both Our promissory were restructuring. adjusted a GAAP litigation quarter expense our note the financial $XX.X against our note quarter a Non-ordinary non-GAAP expenses $XX.X million compared ago who million adjusted previously in which $XX.X includes non-ordinary we charge one expense financial million on QX from are includes to measures an the G&A in our suppliers, of quarter EBITDA to implementing quarter are charge fourth of year financial includes non-GAAP of our million is provided $X.X is course fourth impairment

GAAP of non-GAAP $XX Non-GAAP $XXX,XXX fourth XXXX. to to XXXX. of income million the $XX.X net or in million XX% EBITDA per adjusted was $XX.X income fourth from million $X.XX compared to XXXX up diluted fourth net increased quarter net XX% net XXXX. the for for XXXX, GAAP from was Non-GAAP share, up income QX quarter, quarter million, $XX.X of or $X.X per compared million in income was share XXXX. for million For In $X.XX $XX.X income the adjusted net

the sheet. expect to we approximately operations, with million million quarter balance ended later fourth paid our XXXX, $XX We the the to and legal in of settlement $XXX.X equivalents. year. of the $XX.X million to $X cash and fourth QX Note, we million cash flow in TCPA pay remaining million compared quarter quarter, In generated this cash the fourth from $XX.X XXXX. for of Turning

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

Turning to our outlook. financial

the million of revenue we XXXX, first to $XX.X and $XX.X quarter license For of expect million. SaaS

to For the between expect XXXX, to million. we $XXX $XXX million license full-year revenue SaaS and of be

total will $XXX share. million, projecting includes estimate per XXXX is which of $XXX diluted income estimated hardware $XXX other to revenue be million. be million adjusted between $XX XXXX million for We are non-GAAP We that EBITDA to net $X.XX million and revenue to $XXX million $XXX projected to or for for Non-GAAP of million XXXX $X.XX to $XX to million. $XXX

remain to XX.X We an diluted shares EPS non-GAAP million estimate weighted is for XX% tax of average based expect outstanding. our on at XXXX. rate

$XX We full-year our and fourth with expect year million In performance summary, to are full XXXX, XX.XXX quarter the of compensation in stock-based XXXX. expense we pleased million.

financial today. for while business on operator, in that continuing strategy opportunities, please the and call We deliver us focused our to investing Q&A. open our are call solid with you results. on And joining on executing growth our for Thank

Operator

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

is Your now line open.

Nikolay Beliov

technological might and that about the and ADT Steve for can likelihood ADT Steve, is the ADT ADT to subscribers keen on become Pulse Command? you what’s question differences the between first and moving talk Trundle. Pulse product My Command,

Steve Trundle

a is ADT an of platform the And, hardware architecture of new for architecture. their The application, And designed upgrades want I’ve and a to upgrade that than it. and with in to let to called that we which Control. what They been But, new being just talk offering number a is enhance well. have team over -- well. say that established a a platform -- them offering. it's Pulse new architecture continue on-premises to as not are it's it's make and a I new The of SaaS number be that's entirely as offering -- feature about they more sets. There to continue got careful want significant

Nikolay Beliov

Then, for bit when Steve look XXXX, what question that? lighter revenue a high you is looks a the Steve, guide. and have embedded guidance little level, Valenzuela. expect we underlying assumptions you at It the at than into for subscription

Steve Valenzuela

So, a guidance practice, our today. we're consistent when have, giving we range, know what considering with we’re past we what

we or know And don't factor early we in upside so, that of a factor out are in the we don't growth stages. additional there that initiatives still lot are

just we’ve think methodology. well worked for that. based that's We consistently we've So, us that stuck with really and provided on guidance

Operator

Raymond line with from Adam comes the question James. of Our Tindle

line now is Your open.

Adam Tindle

vertical I typically or outlined. about thoughtful dollar just makes. of Company wanted to you've that revenue. the of you you’ve have SaaS initiatives that marketing brings start every about incremental talked very market of expansion about you dollar past, But Steve the the being number know and I about investments more talked a Trundle, about In

change you to expect of I that touch touch based it's what XXXX, seems in payback dynamics? can rate So, I'm of but initially a and than in the versus less SaaS you just last do X. pay hoping back, can step XXXX because thumb point decline would outperformed how payback growth you still on to rules question, on those acknowledge on of you it kind that like function hoping the guidance

Steve Trundle

Sure, yes.

keep a looking material. those and First, had lot But mind segments, the in is more partial a ‘XX just from then benefit the other acquisition. that Icontrol at payback longer

at segment sales we’re can instantaneous, but activity see from And activity. can and looking businesses, not inside see certain of certain the the other certain results year we -- result investments these indicator, and with is then, to are we to where customer So, over you with levels, there's more where sort we our want instantaneous of be can make creation as R&D Alarm.com which half out in and the some a thinking and investments then about decade want experience we're where markets a looking horizon a decade, be we an in. XX-year

to calculation markets of likewise. making strength harder sort we’re we’re an and NPV the think the Company breadth able much do on it's the and think sort that serve has that there. increasing of that So, more adding merits, enable. to with investments But, enhanced upside investment the of we of speculative We

So look we that's sort of how at.

mechanics have segment long-term little I less that there. spreadsheet our about other a of think probably when we focused and we're think the sort on we businesses goals

Steve Valenzuela

PointCentral faster would I of If other XX, basis XXX up And at in points total is the segment, the includes of contributed from X% that say Building total you contributed revenue, revenue. other XXXX, which that's overall look and segment a XXXX, than Alarm.com. when they EnergyHub, growing X%

early still significant to and they’re are more total they revenue contributing revenue. Alarm.com overall while becoming So, more stage,

Adam Tindle

a market, just channel high-end I security follow-up. wanted and from publicly kind the traded CEDIA results. at of players, the touch weakness have the to near-term significant even players We've experiences DIY the more like pro-install seen camera the in on Maybe quick differentiated slowness.

you you, how growth So, they’ve been strong you’ve channels just while able reflect with that the double-digit maybe can I'm different navigate around on turbulence? and to hoping seen

Steve Trundle

Adam. Yes. It's a question, good

We in markets those much. are that not

a see activities of sort pressures day-to-day don't So, there. exist in that we

have have in. the come results noted We some of that

views implementation stating is I the system service is the with all particularly have them for in has important market it a think, that security, market special an home a the characterize of a robust And robust. the of investment prefers security therefore, security what we to There that and property. their system been relationship trusted where consistently smart what we've to fairly market. been and provider, be as one really homeowner real isn’t sort it's smart

the probably been to think I less so, of exposed we've volatility. some And

early DIY versus on to be you they never you where where know in given by adopter really you in of at adoption about curve. think affected the curve are any tend time. sort the point that you And mainstream If markets, are

easy rate it's of along of harder sort sort and you got, of kicking and a you -- you predict already I then mainstream the much that at early extrapolate are at really end an adopter those stage So, you're to tail to and it's the you in are certain realize you've businesses think. don't

to our and heard at is least slightly a exposed and buyer, first fortunately, customer. and there while -- been our I thick second, I not as proven the have think So, think we've business have If safety what around new starts less buyer of security for our first through And thin. reason probably is are providers. a and we construction people that service there -- seeing lot always a it's end, where we’re and security I is the for of buyer confidence still a we've high our indications in about maybe the and the think need same some

So, I think, see again, as of volatility we've there others. been able the maybe some much not as to

Operator

DiFucci next from Our the line of John Jefferies. comes question with

open. Your line is now

Julian Serafini

Hi. This is on Serafini John. Julian for

is there confirm still to the you still decel XXXX, because a going business is XXXX. core going bit I strong guess, about upside of I factor guess, in on you've touched not well, again. talked guidance the some want and on the I from want and touch know, upside, Steve, back I even just just to necessarily. earlier, that, So, you in if I factoring all

So, well I at confirm just in things business least? going the core to want that, are

Steve Trundle

Yes.

very We’re still busy.

coming. with I on total think, side, sort think we've I last of mid-teens that initial We this we’ve the provided year. raised growth seen And number outlook actually, outlook.

emerging well, of a when we’re we’re still on see we’re growing about basis, the we improving year is the outlook it business about of smaller a percentage growth were nicely way seeing, some outlook lot still a and opportunities. and quite but company then the the the are we upside not were the the you for doing So, growing we

our now. generally, are right positive billings So, pretty

Julian Serafini

And on is then, video just the question the product. second

analytics think, to discounts to products? you products year. maybe going some terms this in going Are something subscribers, like in incentivize, of of video video talked want video to I the the video about, anything driving and to you like do upgrade you incentivizing hardware or forward

Steve Trundle

is X -- been a last which because video the really a exactly it's what on question. cameras I’m should years he’s drive sufficient seeing, that's having already customer we and there of really to into that That’s the question ago one of said is a moment upgrade gain V sort customer that adoption. Steve a we've reflects X, if are cameras seeing good more cycle video cameras old, and out do We're a And existing has new in four is what chuckling where the going the capability conversation week, that of account.

video the do don’t may may generate to just in pull-through something it analytics But, be so need reasons much new the package with of we probably any So, some have capability to cameras my that purchase. types new the inducement think upgrade of purpose belief video and materially for that better is the to of I still sort do other and -- with functionality is have we to Company. goals an LTE like analytics there to capability the use with for offer the up a

Operator

question of line Our Suisse. from with Kevin McVeigh next Credit comes the

Your line now is open.

Kevin McVeigh

Hey. Great, thanks.

I could in that, type on you you expanded a roll out, core on commercial more so still just little offer You that or network, dealer kind focus do initiatives. the dealers spoke it dealer that update specifically, of think an as of thoughts And give as it's perspective, the you in of both bit maybe you the installation ‘XX. network if any about is different a given wonder an about bit us services? the residential an skillset from a

Steve Trundle

It's both actually.

they capabilities commercial base have relationship thing one hopefully serviced service all existing one way a on we a purely around is of to of open therefore I'd which in and in industry business frame the parties, what existing that dialogue quite common, with with reason they that have in the or of a have in have commercial so base. are of another a partners. those some historically, commercial them have will and be really case, that's in so our and to the one Alarm.com, the some or expansion anticipate another, side about So, players trusted them are of we capabilities, say providers, levering But few not. any partner have our or a a set the developing commercial aren't residential, now, There

that we're with still offering and saw we've discussions segment a where on think where that service even in really going I providers year this SMB we through the toward it's the of And bit meaningful I last the focus. in to designed the the end process focus uptake of market. but access of of component think that also year the a embedded lot we plans progress plan getting did commercial and control early, fairly last service made see in commercial

Kevin McVeigh

then, or revenue bit? the that you traditional commercial, flex down should the should stay little SaaS to constant expect get between a we up relationship across And the or lines and hardware the as more

Steve Trundle

with the ways. that different ecosystem-dependent, because various a one bit we That one's little a the it's points, us predict and of are will in at a ecosystem for parties in engage bit hard other to partner-dependent or

make sometimes a new we'll we'll a Sometimes product; partner. introduce

us for arc through value. therefore, a and in the is commercial challenging there bit they several, meaningful customers range with At trend solution. be we're plans, wider with say near-term, time, What I full hardware and is of So, there the same build need There's there's instead is a predict. more not creating but the more satisfied camera one long-term well a as higher. component as really to a services, out to tend those the obviously, will the

don't I know now. numbers historical you, the be to in exact something line probably is I for So, but right say an I that with would probably place right prediction have

Kevin McVeigh

Great. that And then one to to flow-through With that process? still are just impact started we with partnership from in one I early you ADT, if your business any see Amazon, in or have of could. terms last too ADT's on

Steve Trundle

We're still that process. early in too

Operator

with question comes Pfau line William Matt Blair. from next Our of the

Your is line open. now

Matt Pfau

product. video the wanted a bit I get to detail more little on analytics

I available, analytics, new from your cameras that available video of maybe deploy, of potentially it maybe been you you customers? as into seen to video or product that's of the [inaudible], the And has as in that terms then be that from primarily of in more you And an existing customers could so able give customers us of on broadly you uptake so, have adopt two percentage uptake terms believe base make only that would idea video of cameras? more you initial implement

Steve Trundle

mix our analytics then There adoption that power were that I'd a capabilities. of likely have who waiting. support installations say on we're cameras were using to new video cameras existing are the the we've definitely a both the that the offering. they're support have of subscribers And adoption folks number to because processing required seen seeing on more

that camera though at supports a not absolutely that generally portfolio, in analytics the cameras, You're available that are correct the our POE moment way yet cameras handful of in especially there capabilities. are the a

we'll the ability, years that become supports rise portfolio fare into some it's over every full the the installation. next see continue to can envision a level that at but in I the as rate functionality of few analytics' that's base adoption think will sold table there, already rate video almost standard I So, a

Matt Pfau

you working push the through have marketing and partners opportunity them there your get then, And customers, with is them there or educate dealers? more an been on more from of offering to it perspective your a to with to

Steve Trundle

is just actually a there they there happens always also a think the definitely lag. pretty to while to us service intensity, in it, what it their while. for we're installations, more service bit and takes that providers to that It an a the an but I are still a watch do to there. comfortable few takes hear the there's so train, done of and of opportunity a early have happy, we have get a customer about opportunity until and definitely educate customers People more of consumer, part cycle,

Operator

of Our Borges Goldman line from the next question comes Gabriela Sachs. with

open. now is line Your

Gabriela Borges

classic for RPU on my question. Trundle, I margin SaaS-like product of focus understand new to I'll the How some on the versus business? architecture ADT, you're can you. on taking for think earlier instead of the SaaS business comments. you and we Steve wanted say so about that model. Thank the what some on follow afternoon. your the Good limited Thank you should about up gross I implications

Steve Trundle

to Gabriela, you're product? which SaaS our business tradition comparing

Gabriela Borges

interact ADT the The SaaS-like ADT new new stack. --

Steve Trundle

as our that deliver the abilities hosting and and amount I can trying The a of we the like the more Oh, services doing redundantly managing in efficiency of to model see, I model carrier see. to set provide we're is that offering range offering, as of leverage okay. the new as can. we much traditional Alarm.com maximum or a from fuller our operations communication of and include relationships, hosting all

business more like traditional it's Alarm.com the So, model.

Gabriela Borges

earlier technology little That's Thank a comment on adopters you. the interactive is mainstream. follow-up very the early versus question becoming helpful. on more a And high-level maybe

for on love interactive classic, something are do Steve security thoughts, Alarm.com the what I would your maybe transition to you. to from think in of traditional where Trundle, adoption get So, like we more offers? you Thank terms

Steve Trundle

the adoption curve. I was about almost speaking

million products are, seeing we're been know do you we couple curve and of had we just sort we the are and a bit why Someone I on on asked DIY think just and into it me or guess from million the last well. be curve. a because mainstream have little know the X working that of base interactive always would math that then are of as historic we're connected. and dominated that years was that of gradually the probably and I that process at into million entire somewhere point there're X capabilities, one XX the of this and by those rough the million POTS-based course of is trying at speculating the with decade, where we've solution one about are moving, the where we think and are know for been between into size about was case, customers, mainstream a more our turbulence I we're to for to and don't hopefully, to executing that not-always-connected In I increase the where the they XX market there, market

side, depends that the the the I of commercial, we're how serve, customer define early the On we're of really which moment. in So, think still market, the professionally it residential sort in the curve. the all the on probably component mainstream at of the we but in curve is on adopter serviced space part you

Operator

Imperial question from comes Jeff next with the of Capital. Our line Kessler

now Your line is open.

Jeff Kessler

you Thank and call. thank you for taking my

lot Smart train timeline First of you how one, regard a is marketplace into because it to what the also Signal get to, going PSAP question would for of do actually with a to type introduction item seems the like to are going on to able of start, end personal Signal a type jump first convenient the out Signal Smart make part some Can it's Smart be you number obviously be it. the and more of to of with maybe ASAP give things us but and you're use.

Smart So, you're the do Signal is do and going question first to adoption going get greater and around what you're how to it.

Steve Trundle

Good question, Jeff.

to the same and give the with dispatches time, and stations, excited user control to unfortunately, and the at The deal award capability first have false in case, responders with. false that central that goal we're the able really whole to this to So, at on we back CES. were on is alarms here cut get

which in And both route the the initiate control from do is and with to mobile the ability the we're central Signal, of panic and out of customer and their station, control giving from cancel that process second that the to is course So, also into PSAP. thing we're and alarms app then into the their terms panel important, and a ultimately, the mobile a lot of Smart their to ability the very giving customer there. device

to their the deal the because of there signals now of Their and to the they functionality with. it central regimens types the come and comfortable subscriber is essentially So, to with be have it's on. the app, the with response underlying then in they any caveat. has both be and into train needed previously available in, new operators service on are not ready is that functionality that works provider types are may need cases, one turn way the it platform signals actually the There to way to station new built

deviation service that our training how to folks and on reduction So, what that it. dispatches, we're a provider to confirming there's false each providers that signals the is deployed the protocol. require these number the the each to through program from really calls, hitting of seeing have we're everyone's make and central reduction in train their operator and so in functionality, also seeing service number seeing have of are The signals the enthusiastic but about test initial will go no handle we're central a that then

most information content provide the first that is and in efficiently, typically so more at work cycle. able that what responder doing content to information, of to we're the overall with we location way to of the an about Longer that to about you're of everyone right goal that correct, a chain location, value what term, that's and part we So, of better now. entire the so happens that better it's the wealth make part have efficient wealth have it's

Jeff Kessler

on in the the for Signal, part is cruising what other Smart an the of something it they've it stuff because question And ordinances. who been or while, now. going four some that this is capability who years they of as some while know in follow-up or what to the five beyond that federal beginning is kick to not with up, companies, companies year brings beyond probably a it incorporate integrated alarm And a that, want or from local to court would I from are along are Georgia you This stuff good, obviously of the you alarm these is guys for ordinance the people's to realize a you of the monitoring increase are the next is two. against independent the in for a DIY some accelerated something some do I'm to mean, verification have got the these companies your seeing essentially small verifier this you become industry in need community for deserved, the on As the and more in the December, to say, an avoid for doing of a also butt do value companies. companies be leading can to I upheld is that Alarm.com? a proposition monitoring of problems verification

Steve Trundle

on So, that. two thoughts

good a think I that's point.

with want that think so signal, probably I we've about how that data at healthcare, using, it you constructive between can do in a used routine us the does to trend machine-learning differentiate what can First, take is help you if the valid unexpected false that's we a we're and signal example, point alarm we or to one to first what can folks sure on they're a long we're where point responders for a provide more we Alarm.com? imagine predict a that so property, a likelihood have data that passing the time, and real algorithms for activity activity, is and make there. for do in and the

think analytics providers of increase see to service can on lay value view move the to we'll video a verification responders. give to we the what a about The relates to on second already to people that, and happening layers directly of our they're providing the tell increasingly spoken first property, which I've that a what's actually first lot I

Jeff Kessler

here your well that smaller industry, to security have both and higher come camera larger me level integrate not and with some you get seems smaller access-control smaller integrate opportunity be into be And just into you it companies and you ecosystem Thank you. of to commercial involved and access with some companies people One the of trying to folks to known the they and names could control mid-size final area. as small been there the but the a could slightly with video the who now? for systems to into those come of folks of area. you, but in become I but well. applications commercial for are meaning do and are have down commercial question. the marketplace out larger It partners just mean, competition that What the part can also in business down have

Steve Trundle

Good again. question,

SMB definitely, starting focus. a with So, we're

position one to up, spot we in think we the is certain XXX what facility plus a think build platform of are will after way, and hopefully of an the I the in the platform we're the if access have focus a point that in demonstrate any limited have said, strength, for not as about we'll you That but footage SMB, you that square service to up ability that. think move base the that our sweet scale initially, from of providers, we'll installs to area. them of and then is few by train we move market begin and to seeing

Jeff Kessler

And question I quick. and one I'm sorry, make last will it

or four businesses the you of now? to actually which right five greatest got revenues. businesses of your other of revenues traction You've in gone X% Can seeing total about your the category, are those you've talk total from X%

Steve Trundle

At the traction moment, and PointCentral. greatest from EnergyHub the is

Operator

the with Analysis. Our line comes question of Gearhart First David from next

now Your is open. line

David Gearhart

first question do homebuilder has my So, the with to channel.

Brothers. DR had program announced recently earlier a with Horton, builder, announced large June, already believe I relationship Toll you and in a with in relationship revised You the XXXX and a you

to builds Horton could that talk Is XXXX seeing a get that we for homebuilder use that Home how a you're shape? you kind and since and of how we handicap as that could DR about about DR of sense adoption a think percentage could on program proxy -- revised to if try rates wondering there Just in service builds. new should recurring attach

Steve Trundle

rate we be to offering, seeing take are of as the the using I'd that relationship to like of the you're the XX% with say rate it there. generally the seeking get opportunity higher the that an that's And customer, assuming to and have range homebuilder obtain have a between is automation-only is you rate percentage minimum. so the take XX% a of have and security, may when that type what to acceptance speak be you roughly, more or you that a but we'd to

David Gearhart

The just could ADT, that wondered it it their provide new in actually it where terms recently in then in something their a some platform. discuss having and company in this support, color, a I you're acquired supporting prior you can do-it-yourself you're that with just And could platform terms thinking so solution? DIY of something solution, of that how of month if announced offering early Is is or about Alarm.com of ADT? fit kind you terms too their with to that's earlier

Steve Trundle

there. to guess, probably what it's David, little is for I discuss Yes. us early a I'd say, much

partnership there for a we've time, I or think there Samsung. DIY back a clock year with roll if the two, seen long a I was

dynamic that I in a their think different ADT dimensions. really new growing it's of is number business not a

on the so early been focused that side, has comment Our component. DIY services one. role the further for any a on today It's professional on to little we really much me probably more haven't

David Gearhart

And picked 'XX How in in versus lastly, modeling 'XX? obviously then expenses Just think we about down? litigation the of should up Should up, 'XX. direction flat, purposes. it litigation be you. for Thank

Steve Valenzuela

it Hey, settlement. about not would David. level It's I Steve the including as Valenzuela. at at $XX TCPA XXXX, the look same million

to out take litigation was XXXX XXXX. you about if $XX.X in of litigation, expense million compared around that so in $X So, million or

same I same litigation as level to the use but say, hard model I So, would about predict right level. the the I $XX around including have And not settlement. is million would XXXX, to TCPA

Operator

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

line now open. is Your

Darren Aftahi

it. parts question to want to up follow and the of just homebuilder I kind two on

property of And with and maybe with of more the if or just were any strategy. of your folks on was terms of of part publicly long-term homebuilders for of of major that of you number some disclosed as a think kind other you Is First, commercial you a I'm with. in year, ending curious what of haven't said your sub kind broader pushback that for a time? I there's there XXXX. to function side last kind guys into And you working breaking curious build I'm the XXXX, that strategy working side SMB

Steve Trundle

there not license with then that back only. than business, are In we every press-release builders had day. it but that of of question. IP being any yet to of inclusive lot question activity There million there also the the Sure. happen really last standard. X.X that I And former of to happening big-name I'll the lot builder is think a the lot the are to worthy my commented with a subscribers, on are be builders. and wouldn't rise local start subscribers and year prepared of that's a there's entered there's remarks, a top I don't that builders, more

and with strategy think I their experimenting are what be, some are should to still move. builders beginning

think need I where think DR I'm as what to yet one you still known answer. if do drawn but probably home, builder, in around this they They're what and trying indicator one of sales not is be of simply are do maybe other a say, the a to, an experimenting competitors. a mover we're of builder. can to of the smart something, or there's sort therefore, not said, out If to they is versus a figure where with it's visionary, and and Horton our little doing things, market know should lot I been they've more win cycles yet you hasn't be markets moved folks a out trying opposed

have one program, we on could oriented we parlay doing into question the answer perhaps that we're REETs resi that today, to strength but We're can there, Your the a commercial build not envision that side if commercial not builder question, on that offering that and gotten with can do doing for to strength, we today. with more the REETs try your not far. on we and side but example have

Operator

Capital question with line the next Northland Latimore comes from Markets. Our Mike of

now Your open. is line

Unidentified Analyst

how Hi, guys. Like, distributors your commercial selling I [ph] for now Pavan Latimore. offering? two This Mike is have are on questions. many

Steve Valenzuela

commercial the our currently selling question how is are offering? many So, distributors

Unidentified Analyst

Yes.

Steve Valenzuela

So, of we of about a total a We've thousand that added per partners service providers typically plus provider X,XXX have we've announced. service year.

of each through a It's still basis. service are up a going disclosed at small through providers we're service If that their the haven't a number program. number regular a you We're basically, to training our but a quarter, and coming overall relative we X,XXX, on going technicians training relatively program, the those providers number. actually training look

haven't number disclosed really though. We that

Steve Trundle

know number. don't I if exact we the know

companies pretty that maybe access I the think prepared think we've a part of those for of to stated good is Roughly in commercial small trained, my of was subscription individual plans. terms then still and the the I color gave technicians, base, a We but of be had in commercial indicator. are X,XXX would commercial line, on broader now, that base the right our the a around I paying on trained I side. number remarks who X%

Unidentified Analyst

XX% surplus of that? gross year? And expect revenue this we revenues could Can commercial

Steve Valenzuela

of XX% goal early to realistic future. is actually, certainly for So, wouldn't revenue, Certainly, contribute this a a for for and opportunity the year in that for there bit, little control. than access mind, we just would the less the Business is that I be commercial smarter Alarm.com say Keep their given ago launched potential it's stage. that a year.

today, opportunity tempera performance we're The we that While X clearly Steve subscribers in good there, of million about is base. significant think that a just there's are a still said, valid for North But are properties us given longer-term for as actually X% it's America over our commercial. small businesses. seeing quite of off commercial-paying

two be for an two percent is RPU commercial, residential, a would there revenue to number but the say so the times Now, higher RPU aggressive of from there is I of would times, of three XXXX. amount a that XX% about

Operator

from Group. is Aarde of Maxim question with next the Our line Jack Vander

open. Your line is now

Jack Vander Aarde

tiers regarding Connect potential given or pricing platform the model? within platform and existing enhancements Steve new for offering. earlier new enhancements Do ADT these the multiple so, commentary business to Trundle, create Connect Connect the

Steve Trundle

of but feel so more If model, software, probably an subscribers than tiers, I existing on really Connect have think going customer from like SaaS on-premise Connect, to X offering. they for speak new million of it are it's and on answer just on the the take the what to traditional SaaS-like, direction offering most that, you to want their they the deployment drive don't for clear, capabilities Alarm.com-hosted Connect is I is and the pricing I more customer let way important there. the we're implement our about Pulse base be an So,

Jack Vander Aarde

to you platform operating if Alarm? costs the Connect as in to the you enhancements result answer Can higher new guys

Steve Trundle

not it's Yes. software a the us, different a rendering costs operating It's we're clarity, for for new stack just, the offering. will is have, because offering offering. of that new offering. it services offering, And the So, Connect-based with higher full

Jack Vander Aarde

Connect break profile core Alarm forward? to And do this versus SaaS going continue out you then helpful. That's plan to

Steve Valenzuela

for So, we've broken XXXX. out it

whether or we'll the decided going It at be may change platform, haven't be breaking new time. breakout in this we're you not to Command the point on relevant the to the We going not update future conference quarter honestly, first past. in as out provided forward, We for given but call. the that

Jack Vander Aarde

year's of down of sold? hardware one a there profile that is versus any could I that ask was video if the sales given hardware GM again. year-over-year, more, the strong new Is last just structure but change, were change flat video And hardware Q-for-Q there margin models in the or cost

Steve Trundle

are mix being are the higher answer sold. someone to question be mainly asked yes. of get products we anxious that think broadly a about driven. then would there a bit and analytics are deployed. analytics It's a earlier more what change. Probably It's And volume The I

to you the can I've lower we of as worried The value. getting lifetime right providers capability said creating going be new where margins help goal the not of that So, service there we're is the think high, if think lifetime customers. shoes, much market. we as impedance direction customer do to can the we're in imagine is you're customer in so terms if before, will our very And in create our we value hardware about times want to as that we our in

Operator

Ladies concludes And your the you now day. today's you disconnect. program. question-and-answer This have session. participation in for today's and great And thank conference. that concludes gentlemen, may a Everyone,

Alarm.com (ALRM) 1 Mar 192018 Q4 Earnings call transcript