ALRM - Earnings call transcript Q4 2019 | Alarm.com Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Alarm.com Fourth Quarter 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

the David to Trone. hand of Vice now Relations, Investor will conference the over President I

David Trone

Thank to XXXX Alarm.com's Good Fourth you. afternoon, Quarter Earnings everyone Conference and welcome Call.

call recorded. reminder, is a this As being

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

today global chain; a financial other our call markets current market such performance for continued statements. year first forward-looking and include our our supply certain Before opportunities for the during investments we and our listeners. XXXX; discussion anticipated which on coronavirus business; enhancements or full on impact the in crisis reminder to the as platform; quick demand of begin, forward-looking public offerings; in strategies; for potential expand our our our into statements, to Management's business growth markets the will projected health to impact include new quarter

most are quarterly intended contained in Risk call. XX-K materially those and to could available such similar statements annual forward-looking we our with These with current and statements. results including that the and our forward-looking Factors XX-Q on X, expectations Exchange may, These Exchange statements. cause on Exchange our that uncertainties, to from intend, of believe, Securities containing subsequent other differ words Securities and and contained risks the Commission such are shortly Statements time-to-time, and we section to reports will file Form XXXX Securities filed That Commission currently based after this statements the Form intend as estimate, file with expect, on our from forward-looking us. the are and actual to including November Commission beliefs information and on continue, anticipate, updated on identify report those statements subject in recent to report

to reflect to call financial this non-GAAP management's this statements extent subsequent call as by include the during and date circumstances except guidance. commentary these no Please undertakes obligation during measures note made or statements update will speak to Alarm.com provide that, conference only required forward-looking Also, and these today's of law. events non-GAAP

the performance understanding of but an investors substitute trends, directly information provides measures the note for company's financial or in the to to isolation measures in of prepared with that Management these a not non-GAAP use the and as use additional is GAAP. considered non-GAAP be believes that financial meant comparable financial for in accordance tool presentation

which can our our metrics found Reconciliations of between results at in posted to investors.alarm.com. reported our Relations Investor and earnings press GAAP we non-GAAP release, be tables for have financial statement the website

website. and call This a telephone conference available webcast available our will call on replay is be this our being Investor on website. be Relations archived The also also webcast and is will of

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

begin. may You

Steve Trundle

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

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

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

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

first time close fourth strong history. our billion revenue the in annual $X.X out Our with a exceeding helped for company's quarter XXXX results

I service devices than the in sensors million X,XXX over want than through more and our our world. providers their technology enabled our more cloud sell XXX Alarm.com provider service achieve more our our connected in to to manages partners, properties million partners, who Today, X.X revenue to us service services. around milestone. XX than this ecosystem and thank customers employees countries and

opportunities investment confidence about on as underway. growth end capitalize in process our On to level of That QX, the areas intent to several increasing fully up our well call our spoke our last see. organic is I as at step the we more of

we where and XXXX review call, On of growth elements will touch some our in the areas strategy investing. I are upon of today's the

of scale working are across businesses the on to stack monitoring that continue to operations. our the wide technology extend hard to that want service build and set we This for platform IoT-driven capitalize position the provider our we innovative First, emerging most provider applications. as requires

across to We business the the single-family and aiming commercial small fully the are address multifamily markets, opportunities enterprise and residential market. market,

management, can in each provide across international And businesses. we our type, and areas property these North are both applications will that, American security, For integrated, fully best-in-class automation, health. geographies the languages, to of such applications we drive aiming supported fully growth deliver in we management and energy and water

example, launched steadily In a our control, making XXXX, businesses. product are focused intelligently service, delivering significantly We commercial and we small our that offering. these integrates solution We against on progress video, analytics enhanced the medium-sized video we and for purpose-built for are market access intrusion. commercial In goals. position and

We AI Insights intelligently installations, commercial to technology solution personnel. the also the called access -- access applied to events. control our our alert And in large-scale for right Engine, control unexpected detect

opportunity, of OpenEye market commercial of XXXX. market. and VSaaS our the OpenEye, products enterprise needs, a commercial the expanded of late in is mix leading with that address a unique company, the acquisition also with services We

strategy large, property commercial that the Their consists chains, retail such go-to-market customers primarily companies. is synergistic, integrators. national universities, of end banks, management OpenEye's enterprises with and service channel schools, as, are provider large-scale

technology by capabilities with many enterprise video customers, Looking assets, forward, new integrating we platform. intend for our of to commercial create OpenEye's

the integration value, the that analytics expect software OpenEye OpenEye of unlock each video we in into capabilities, our will example, stack, deployment. an additional As

the results elements, the Alarm.com to integrating many enterprise And the offering, also continue space, We to Shifting to market. that platform. residential our the our strengthen service demonstrate provider partners the by video leadership. OpenEye of lead intend of

Security purchasing for services. and smart homeowners, consideration the and safety when products top home remain life

serviced, become an typical of increases. intelligently-integrated not devices professionally connected, the the as only value solution, in more home, As

few These a additional with adding entrance, Over to self the offering, attempted we typically product, last decade, plug the solution entered many the professional devices. for installation, disintermediate, market and new our companies seen have channel. attempt a service provider broaden then by to

have sustainable business professional create has And of our models. None impacted or them to business the significantly most failed service provider.

continued channel, strategy. right So that, go-to-market we have professional extensive the our solutions, the approach we and that on confidence service developed a have provider

extend we forward, hard service advantages in the will enjoy, to residential the that marketplace. Moving providers our work technology

is more security monitoring creating experience, focus service Our of service extending on for aspects to advancing and providers and by growth new provider the on the overall opportunities home.

from As safety an of example, water we Water in Smart full Valve+Meter announced, water-related that recently a This CES, our whole issues. protects a is called comprehensive component device, range device new of home, January. properties the solution critical

on sensors. main. extremely, It in event, Notably, of cause problem. anywhere slow damage, that of leaks, waste homes can water It in can the water And water from detect the leads supply, water automatically property. protect off the central respond point installation, property's to the the shut or its

would discuss A is like second our strategy of plan. I video element our to that

development video and Our have translated product and terms into results, meaningful satisfaction. both efforts financially, customer engagement of in

adoption, in XXXX, XX%. services. rate in strong was a new well account our services, the of analytics, late XXXX, video seen In the attachment over installations increase we've launching Since video of video for

expect new pipeline. analytics In our service of begin XXXX, this several capabilities, deploying, in our some currently we continue, positive as launch, our video as trend products we larger and partners provider

analytics availability will lower-cost our an XXX compute called offers As round the onboard for two-way this a Alarm.com XXXXP camera, lineup. summer, we launch service. Planned quality, power indoor plan required out, video it and audio, that for, image example, our camera to has the

presence. international smaller the our third confidence opportunity, analytics is our a year services. our had and highlighted key business price reached warranted, and out team call, I of on should Its our market international. with expand level element point building for strategy size Last video lower we this A that that global

on throughout XXXX, international of executed can existing unmatched through while international support to that further contribute providing adding additional partners, the this We our goal with growth. also partners

been these of is our in our And going business, well. that feel confidence, this efforts have increasing. We aspect

EnergyHub segment The final market include our of and by These our building our expanding BuildingXX. strategy addressable businesses. element PointCentral, is

SaaS revenue businesses As reported our XX.X% XXXX. grew our in other in segment for segment,

have solid and on last operations building the their We Each market. scaling models segment attractive teams, over years. growing progress is these business an few their focused made refining business

dwelling residential solution REITs enterprise and an multifamily provides help to property for vacation companies units. PointCentral

Management. example thermostats our product of and solutions. water and devices in and while the also X,XXX companies successful an managed units servicing PointCentral XXXX partners HVAC was by development efforts safety installed leading BuildingXX As over BH deployment, apartment with

BuildingXX monitoring partnership year HVAC market in extend further HVAC to by with worked launched quarter fourth a systems solution sophisticated its Linux. integrating new the [indiscernible]. Last by And opportunity in manufactured

more solution XX than enterprise the EnergyHub Over reached households provides software energy EnergyHubs now to United in market. resources use utility XX for States managing the that utilities an technology. million distributed energy energy

a we and had fourth momentum. solid nice In with finish XXXX quarter summary,

Wu. to I our introduce new As underway, XXXX gets want Board member, Simone also

brings Counsel General experience Communications than management operational, the to as at as excited Her experience President We serves Board to for are International. she and Vice President years team. Senior broad and are Simone includes served we forward a Simone Vice her. Simone Choice Board very legal working where looking Senior to and previous XO also to with our XX more Hotels General add and Counsel.

Alarm.com to our their want provider for thank I for partners Lastly, work business. our XXXX their in in our service trust team the and hard and investors

over things Steve? Valenzuela. Steve turn me to let that, with And

Steve Valenzuela

the down from in good guidance revenue questions. XXXX license new licensed opening we of same the quarter revenue the quarter. their host fourth who rolling our call for quarter The $XX.X on too afternoon, provider. and for in last everyone. the customer million SaaS for the to start results Connect provide focused out service grew quarter before approximately drop Steve, you, and fourth Connect quarter, for and XXXX from software the includes will in and that $XX.X year million. fourth as XX.X% license Alarm.com year-ago software is Thank we of then on a software is Connect our operated expected million I review revenue full financial platform license $XX.X year the with This SaaS

SaaS and of described. driven PointCentral, segment fourth quarter subsidiaries segment year-over-year, and grew including and which Alarm.com just our the Other Steve by our license XX.X% results both EnergyHub in for strong our at XX% grew revenue

SaaS license from $XXX.X year the XXXX, full For to of grew XX.X% and revenue million. XXXX

by grew revenue our grew XX.X% year-over-year SaaS XXXX. segment and segment Alarm.com XX.X% in Other Our

and was the from sales up was inclusion lesser over revenue the remains of and financial XX% QX the end in results a in renewal of the to high rate hardware XX%. of in XX.X% to XX, and of XXXX. of revenue range increase Hardware SaaS primarily million on an in quarter our OpenEye cameras Our at October due $XX.X revenue historical closing our high revenue in to XXXX. video the license with The visibility quarter fourth extent a increase acquisition Other XX% the fourth of

of $XXX.X XXXX. for from QX revenue XX.X% quarter grew million Total the fourth

approximately up total XXXX, margin XX%, gross of QX $XXX.X grew XX.X% margin XX of for points license to from all basis the gross and For XX.X%. revenue quarter fourth XXXX SaaS million. was

Hardware gross the product compared fourth hardware due was quarter last to was due for year, XX.X% increase fourth the mix. same XX.X% year to last revenue. compared the the quarter for margin gross XX.X% the Total quarter for margin for quarter to in same to mainly XX.X% primarily

expenses. the up operating fourth R&D million quarter quarter in same were to of the the ended compared in last year. to in in R&D fourth employees We Turning with expenses million $XX.X quarter from fourth XXX XXXX. the $XX.X quarter employees XXX

million expenses XX.X% Total quarter million of employees were compared in at X,XXX and $XX.X revenue or total of year. marketing $XX.X quarter same XX.X% employees XXX of the the compared to fourth last in revenue XXXX. the to headcount increased to Sales end or

quarter fourth the for million in course the million year million G&A the non-ordinary to compared in expense to expenses in litigation $X.X quarter G&A quarter. $XX.X of XXXX. million includes $X.X QX fourth $XX.X were ago compared Our expense

$XXX,XXX excluded our acquisition-related G&A expense financial performance. in the litigation part and and are from of includes our of course measures our acquisition Non-ordinary also are in measurement expenses. expenses fourth quarter non-GAAP adjusted

of $XX XX.X% Non-GAAP adjusted XXXX. QX quarter the of in EBITDA fourth million grew

of compared XXXX all adjusted was GAAP In was XXXX. fourth For income $XXX.X for quarter, XX.X% adjusted $XX XXXX. million million from EBITDA million $X.X net EBITDA to GAAP up million the $XX.X QX for income of of net

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

of acquired million the and OpenEye we with $XX.X of used Turning to the quarter $XXX.X fourth of acquire approximately ended from million cash. We cash generated we cash sheet. to XX% in to quarter In $XX.X million equivalents. balance compared our $XX.X for fourth QX, In cash XXXX. net in million flow cash of the operations fourth quarter,

$XX.X was compared last Our year. fourth the the same to million cash flow $XX for quarter free for quarter million

our XXXX free million and ended we capital million higher Through million $XX.X mainly additional QX to flow generated In for the costs the cash fourth quarter centers. $X $XX.X service period about December XXXX same XX for than facility-related months were our for purchases in the XX, equipment compared data XXXX. of

and million $XX flow cash free flow TCPA were settle to in we XXXX payment by Our made XXXX from operations cash the reduced matter. the

Turning to our outlook. financial

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

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

million, XXXX We million. $XXX other projecting which for of $XXX.X are includes estimated and total $XXX revenue million hardware revenue of million $XXX to to

hardware on global predict it's the supply difficult and impact possible fully therefore the potential our to impact time, from to this on not At is chains coronavirus revenue. the determine

the not hopeful coronavirus, our are year full there from could we impact results. short-term be impact will While this some

XXXX We million. to or adjusted net be share. to $XXX XXXX $XX.X million Non-GAAP $XXX million $X.XX estimate non-GAAP be that to income EBITDA is to $XX.X will per for between diluted $X.XX projected for million

We expect XXXX. our at for XX% tax remain rate to non-GAAP

average is XX.X diluted shares outstanding. an million based EPS estimate on of weighted

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

with In performance the summary, are our in full XXXX. and quarter fourth pleased we year

on focused in executing while continuing financial to and solid business We our are opportunities on results. strategy our deliver investing growth

in to be the XX for holding our we like Day May call the to Analyst on Virginia. Investor will and turn mention at I Q&A, our Before I'd operator that Tysons, headquarters

you of hope be and will we many invitations soon see there. We to out sending

please call operator, for that, open with And the Q&A.

Operator

you. Instructions] question of is America. with our Beliov Bank Thank And first Nikolay [Operator from

Jacqueline Cheong

of and this Cheong up on ramp would hit And Nikolay. Thanks progress double-click Hi, taking the for it when of is for Jacqueline question. kind doing there? sort you point? and expect we commercial Can on please some the is how inflection to

Steve Trundle

Steve This speaking. Sure Jacqueline. is

strengthen it We and yes, at story our to commercial story So, OpenEye strengthen particularly, enterprise -- pace accelerated pretty our last the well. market. acquisition grew We further made is year. doing an obviously the in commercial

be we real we So, when it's base providers sort of to of down see was impacting -- when to accelerate. business. install And continue who going positively of our already as say build promote service is a offering, it should move, the I'd a it commercial

marketing space I the continue we trained to expect of offering we're XX% roughly would that say providers service in the are commercial to at right now and and number grow.

Jacqueline Cheong

And And talk you. we like platform? Got training -- seeing it. about trained how of Thank required? why more aren't what could commercial is providers you sort on the

Steve Trundle

keep Well, first, in just mind, numbers. sheer

when that period they are So, come have and up providers X,XXX a solve beginning short the means with say to XX%, relatively XXX in actively offering. time, service that of

are Second lot a the space. them in of busy is residential

I stay you space. service the few a quite the have divert a space and residential the us. I great a that's market. to strong make And commercial to of they're decision the on on good that's into where business focusing have with saying focused That's If provider, for preference a to space resources want sort in fine residential or you're do to a begin wanted

a on depends the the how training it much take through commercial improvements But in It's certification to service of But experience to we the providers our to to more sell, recruit training, price, provider everything a necessary. a that the how terms execution. provider how And install really how in trading is from of with enterprise a that products, -- service process. and space. already continuing strikes we're of or with the history service of actually commercial with in door have it's competing lot the block on to already to of do tackle offering space

Jacqueline Cheong

And more. in if Thank you. one it. put Got could just I it. Got

wanted Just doing? in as a bit like to inflection how do we're but sounds about is ramp, we when a international also seeing It hear this an well? little of segment expect

Steve Trundle

Yes.

So a I seeing we're ramp. think definitely

made investments in providers well internationally service we Our would XXXX have I of executed the some and are say prior years. in

a prior years sort people do? does similar are take? of types long do What refrain it you the think to went well I asked steps? into of I how in of have And have things. What

have train get You you have set. your pricing to to

You ecosystem given a are have all products working sure the to make for market.

together the saw acceleration that A really XXXX part non-North And partially year. the very the we in in the the an on year we're American to lot gain that seeing enough execution we side of of well we we expect ended kind rough of business over that confidence or of half in numbers and over service and succeeding XXX,XXX came installed providers or with rate. to of close -- back subscribers

an we we international inflection, one the up and step what good characterize know drivers to we cater the momentum to solid markets. necessarily of don't continue but are there why as to that's I for our to So, see efforts going

Operator

Thank you.

Tindle go Our with question comes next Raymond from Please James. Adam ahead.

Adam Tindle

I license XXXX the Okay. at SaaS with Thanks and afternoon. quite just range. healthy start year-over-year revenue mid-XX% guidance initial good growth is wanted guidance, to the and

growth just same off ultimately But XXXX, that base. I about think exceeded percentage started it. guiding you that's the you're a bigger starting now obviously,

growth is thoughts the hoping going like of year-over-year just that progress to key and a as initial I'm lot going that's target on slightly for satellites So, looks percentage confidence start around year to guidance some with as similar growth. it drivers moves you a at below out start maybe to XXXX XXXX QX that because build

as why So, the year it accelerate progresses? does

Steve Trundle

take pretty perceptive look initial that we lack Adam. history. I'll you're and at that about first, of if Sure. talk And

strength. And of back contribution We've areas some provider talked we well increasing our And the So, service the saw growth North things of coming American it. yes, felt in channel about of number parts we of a as the at from XXXX. together then half business.

more our is budgeting hit. we intend way to look we a we and bottom-up process that treated -- we at a and and budget current do where we off then really model, the it's and trajectories we guidance of of model So that as

things bigger to see in growth we commercial, did of I some create we the base, some basis on the comfortable and American the segment growth of think when year. So last we well business the North because some with time contribution, the beginning we businesses, in are see felt results percentage was guide material international similar even this growth of that what and a more a to coming in on doing these

Adam Tindle

half Okay. the And in the maybe…? acceleration as the back happens that year the is of that progresses something year

Steve Trundle

through little QX Yeah. -- think seasonally a levels. yeah. dramatically mean I There's weak of the think slightly And obviously a bit goal I what outperformance year yes, of little would of end the I performance. I weak, get you accelerated kind have of some to back weak. we to mean, always call the half quarter is to not at just year have the our in or

currently we're So what -- what yes, we that's modeling. that's

Adam Tindle

That's it's maybe just investments. kind on helpful. of success business, And me. on predicated acknowledge Steve that bear because Okay. And I a prior this follow-up picture somewhat a is but of I'll with unfair, have bigger the that

for how payback revenue and revenue, the marketing that's it on able been, about year revenue get minimum. talked period be proxy SaaS healthy add You've to we've take year recurring a sales prior usually SaaS may and your and at forward be license should a to where been prior

model implies it beyond year year. I And where payback that that further. the if XXXX Now period this that guidance, that extends was payback one a period little with at we extended first we're think look done bit XXXX,

investment these not tackle given weigh maybe how opportunities payback metrics the And elongated? just that focused has investment decisions? What the So are core question period on then key is the the saturated? business do on you're first you the is why

Steve Trundle

a is say expense initiatives, and in a the basis sales required relative upfront of marketing I to to marketing business -- would Yeah. a sort payback the and the be more Starting starting than state more with of higher chunk meaningful on initiatives would is it the prime tied mature mature less with as pump period. segment. earlier that sales really

bring that take anyway. on going segment a after sales And that in doesn't actual justify work might like service the annual provider first hard or an us. a five on months XX really international, in to So clearly consummated given basis few and spend that relationship's country marketing if subscribers the we create a to for we're

think But at number you we that's it, long, do to reason hope segment The look on sales when decades will the businesses. of stage these what there do and be burden up marketing trying we is some have relationships a you're seeing we're -- to increased I have as that some course, decades both of a set of relationship. side. hopefully we earlier And long

demand out the about time marketing that we third Particularly there confidence we sales businesses. sales is some or organic cases of investment the wanting team that I likely segment year the saw is think pump a and last quarter, growth and I some and actually to Based that step prime increased intentionally of demand now to there bigger ready up building the have energy. the different initiatives native in or it's end talked requires at and on the product what with in

to new in still video offerings may a American So America, commercial, and ton not from with traditional that's sure back I'd growth don't we service. -- and see being more they be want to think a we moves say either to point have of servicing from you in sort business while we selling partners that. our to given pull there of additional North in we want some North I sales at thorough provider aggregate make sales in service why

grow their sure, we a continues make legacy them with continue we're to want meaningful as business. service us, and partner place keeping in And of kind helping a to component their

more elongating but some the bit. I you don't that's mature drop business, you a require in base a the businesses -- payback component. that And energy, why new want to is as upfront get build think ratio then cap service So efficient somewhat the that

Adam Tindle

Understood. That's helpful…

Steve Valenzuela

be too going investing their to team. with in is Steve Valenzuela. add I sales this acquisition, OpenEye we're Adam, would

they of the at billion company, really a $X a you you've number in opportunity the enterprise, got as market. And constrained private for the terms If salespeople. of were look

that a enterprise an bit. a sale OpenEye still is of salespeople But sales does that if as around for percent low maybe XXXX, you a that companies, and other points look number increase the other revenues out expense spending compare are of there. at at given to be team XX% you XXX going XXXX, but looking our and And the adding relatively to up sale, to marketing marketing when still sales basis companies additional for we it's

So we feel sales marketing. very good in about our investment and

Adam Tindle

Definitely. Thanks, Steve.

Steve Valenzuela

you. Thank Yep.

Operator

you. Thank

Our Blair. next go question comes from Matt Pfau Please ahead. with William

Matt Pfau

for Hey, guys. Thanks my question. taking

Just analytics wanted the to video ask on products.

there's larger of you – year as with a video that partners offer that partners to look base, across start offer come took mentioned that percentage partners You going large How several in these to product? over I analytics it the then XXXX. your to are And currently? video doing are could guess what so market analytics

Steve Trundle

Yes.

world-class are for that focused point. – is And a customer delivering offering just so. that customer could experience doing analytics Let I'd of guess partners pretty the percentage this sales is question analytics with when whatnot that a guess is is offer which just is to are solution. and reports the is high at experience the everyone the me what the consumer. and second number at such this XX% say probably plus on that My a is actually better it's video looking start with – it's our reason in

Just already you're the you right? to way when is do entities technicians sell, sorts those – are that year out think the when that enterprise the you again that a have With things. actually not. not And moved about salespeople if of have in some about large some installations field way the trained a reconditioning think larger the

to time some and a of things those little type takes deployment takes work through that And of out with times cost effort on at things. us the to also just It plan. work bit

So of that hurdles point. expect at trend think to we've therefore And we've those continue. see that to able – comment this that I we're we cleared most

Matt Pfau

the the also the And breadth complex. and Water it. in you of more offering become increase things get Got and installations more the Valve, like something as Smart complex video associated

them also on more end? up So partners reflecting then make how sure sell your they're with do your work to that that deployments? end it to those you done so And poorly properly incentivize doesn't complex

Steve Trundle

Right.

excellent focus a that's on something have question Now with support. training and that's and we to

– The first you're is of making our we're very proud sure team. that support

the for the partners that with and as of market the reason product, a feel making enter is to working IoT-type sort you're one you're to you you're of if and support is our confident to attempting have effectively. you So going with new supplier – of

that to well. the have really That's in from thing we great articles to is those telephone to hard resources making That's [ph] XX So just do types to sure It's training an place. first states it's support knowledge-based something everything and e-mail support things. incentive. of not have you but do

incentives that consumer. delivering all capabilities providers can the for market our terms customers possibly are think I like asking this. they the most creating And to is the in increasingly value of of is is on service Second focused

is of of hard support. good universe market you there's TAM, a to And will add a remain ecosystem the expand hard base So there plumbing installation. a devices because one. segment as a you the involves be order that to example. wider It it in customers relevant little the a of will a where to of one It if be more water need and bit will part you

leaks business make home we'll to providers a small apparatus. to what or knowing value into immense. to work plumbing high company of And And the create can an a the consumer to network the right loss a value that do and at of peace though of the pretty third-party who adjustments the mind sort as come if the look And well. just is is to insurance don't homeowner or actually is you they of have

in If demand. to in actual the then of we of terms something delivery because we'll later will and a reasons deployed out XX% why it's product. the market a figure the one sometimes on But of execute to the year XX% announced think be question we So that could technology. we're is how or installs the good it

Matt Pfau

I and for Great. have year. the rest guys. for of That’s you Thanks the nice all

Steve Trundle

you. Thank

Steve Valenzuela

you. Thank

Operator

Thank you.

Our next Analysis. go question comes ahead. First from David with Please Gearhart

David Gearhart

you taking credit accounts. about Thanks. or afternoon. In quarters Thank prior your my talked large Good to had significant difficulty questions. you for dealers getting buy some having of sufficient

if wondering regards an and in update front to us Just activity that could dealers that on around large you those issue? give

Steve Trundle

that third shape two large local And very take of lenders, Sure. and dependent capitalized David handful smaller, on now. become Those of players -- sort market persists in I'll have which that right service softness today. fine some segments of large, who for chunk three They lending well segments us that through a are providers. has we've community one. they're seen sort players. are very there's years a in The is both are the who

an So, are it's through. folks issue still working that

that service ago. Yes. the away? think year think is hasn't go that is a certain as a it credit gone I will provider I to the issue available And it was category in issue Do away. today not as widely yet the

a I of trickle trickle a deals additional entrance. we'll see think

participate. beginning segment of that's where right looking become lender so deals opportunity just more to probably point, as at out land and the terms deals now we're point where of we participants to think some are chain. evolve, into the kind some at and evolve are a a that terms at see is anxiously wants this The to attractive on at markets -- point And some I the on debt that

Steve Valenzuela

but add a They recently Yeah. lenders that think of couple I whereas it And a the not that heard see and looked a there that business. see this starting we've good good there opportunity. it are the in as are in a would that area, to them at a opportunity opportunity. of few past, is may are have look, an starting they there's that take to for are that that

David Gearhart

then mentioned And Okay. to coronavirus that wanted for remarks, me, lastly I in on touch your and you prepared briefly.

bit do to so hard difficulty having yourself with build their maybe components, peers, your and and it of about yesterday, results they the products. it's One announced a scale, space actually it making on getting less the talked

do that runway is the safety kind have of you at this do think And components just of So, hand? what I'm And you? facing are you gives not you enough question time? that wondering stock related on

Steve Trundle

Yeah.

watching And a today. juncture, And obviously, the estimate challenge normally. an we on have more we've we of make supply chain certain So, for to with than with for probably our amount have we in year. year what this we're estimates the interest accommodated all news know at the based the provided

scenario. We the But think partially, because that's scenario. don't worst-case we're going absolute haven't have the accommodated to worst-case absolute I

is it's gradually at quickly say on online -- think if look as factories, of in I but most true. that's liked, actually we increasing That's online, have factories capacity reporting are -- back it a we look and at who suppliers. while If back are we not our We increasing. percentage coming terms now with what's going as at of we

supply Do don't. we have infinite on an we hand? No,

and based thing those, supply So, to we'll see have we'll I chain on we But be some we'll expect We'll have manage we'll guess I online, challenges. accordingly. gradually few execution where this today, We'll in see point, okay. some a anyway see back at I'm some hopeful see out. the work that scramble products itself we'll what come factors

David Gearhart

That’s Okay. Thanks color. me. for the it for

Steve Trundle

Good. you. Thank

Operator

question Chokshi please. is Group. next with ahead Maxim from Our Go Nehal

Nehal Chokshi

and you Yeah. results. questions. Thank have two good I

related was that one-time saw, license is license growth within revenue SaaS there and that? behind that Were revenue First that great you acceleration. any it

Steve Trundle

year the full XXXX? of for So,

Nehal Chokshi

XQ, XXXX.

Steve Valenzuela

quarter. Fourth

Steve Trundle

energy are QX on replicate our are fourth challenging can contracts four And when the that in contracts get -- some to the one-time. There's for always quarter dependent be a those over again. Oh, those tad and performed in number year. how value of of over during -- those the we seasonality out

you not. You may year, next the may get

know. just don't You

there, came bit had would in energy-related particular the in say, so, performance our quarter, services strength strength whether I slightly positive. of fourth various types or incentives a we have be in that reliability also And to of they some related we in of that

relative and probably not was smaller and kind the necessarily we look what the there that that's component was. of So, some Q-over-Q But of would a probably -- repeating, SaaS why a if volatility little on basis guide, at say. QX small that QX it a looks number of I captures that was

Nehal Chokshi

to accounts what is ARPU And going to calculate has driver new X% expected adoption to in second to positive flat? that's of now your you've that that trend you you that that new And rate expecting video continue. I and basically say by attach go trying Were on And calendar at year a Or of up? great. the about are stay a been the customers increase? the XXXX. for be talked to call, to Okay, a XX% accounts you in row lot

Steve Valenzuela

Yeah.

percentage new did that the do I'm video have confidence continue. will think year, trajectory it an what we'll is, the think by continue that that in endpoint I increase of not the think XX%. see this I continue mean the there I an trend of to see where but I attached. the we'll the installations in we'll year. upward if don't sure particularly half be second may get there know So, to I

even an hope end rate year. data we would higher So the towards point to of provide attach the

to better. have ARPU, we of obviously selling to the reasonable service the of how sure to is mindful providers. same value translates we're be terms At In that more providing making services time,

or So already we'll protecting to to ARPU as we jealous we're but we're primarily service going about value gaining sure We there, going the growth benefit preserving service. get great provide. some our hopefully provide we're that to overly to -- -- use going the it make and see out customer we're massive not a to not of want the not

Nehal Chokshi

Thank you.

Steve Trundle

Thanks.

Operator

Thank you.

from Our next Capital Partner. question Aftahi comes Roth with Darren

Darren Aftahi

of is my at taking number. I end the XXXX? Hey you result. XXXX Nice hear ending for that guys. subscriber provider had account service I Thanks questions. the heard Did

Steve Valenzuela

X.X was million said Yes. We that subscribers. that

Darren Aftahi

Fantastic.

of follow-on could I last maybe to So question. kind

least -- that that with easier year. quarter of it that is of of line we the what more at the SaaS kind comps call the So like like reaccelerated in didn't were looks level that look fourth half first in kind last that any really comps and opened core of year kind

there's international, you of commercial would part reacceleration? is that I'm that And as call would But directionally you. kind commentary Thank of anything your there. some positive of kind there So call out of can helpful? be curious in you just anything if Steve it like sounds

Steve Valenzuela

Yes.

Steve some savings the fourth benefit seasonality energy that there savings, quarter the as fourth quarter a programs get were in the those as in is positive. we said, typically energy I taxes the record and think with utility

the But did we a I in saw growth international would up online. international it fourth we fourth in too see a a did It's that bit a not the take number number, starting stair-step say dealers of little huge to quarter the contribute as quarter. new of in but

commercial think is also contributing. I

but ARPU video and think adds talked along I plans video video. to video analytics is hardware related as certainly about contributing not we comes with the also the before only video that

So performance. I contributed elements quarter to are positive that think fourth all those the

Darren Aftahi

around at Great. your back the on XX%. you been I service training on of commentary talked customers, And think uptake kind curious while a new then you may Day it services kind Investor kind ISE said I'm increasing video of your providers. have about for just

I'm selling seeing basis? of curious then services? provider a service those you. for subs rate trailing going your where kind and attach maybe up on existing the What you've video back on rates Thank base attach is

Steve Trundle

doing definitely that. We're

you believe I back the one I'll can about base. terms video point, tell in cells, to of quarter the actual is In the do that what I data our camera share went XX% of have -- fourth I

video from service home to capable that's existing into or of them level analytics a going providers don't or to upgrading customers, So get of attached who simply device out business. it's our going coming have and their supporting either customers video to

it's to to exactly So as the base penetration is go our of don't and base back a I the what but... have into part continue penetrate. for number handy strategy the definitely

Darren Aftahi

Great. And just last one then for me.

it's better segment is $X.X hardware? or around. talked $XXX I'm last that just million time $XXX curious curious what million to million million $X.X so? numbers the I'm you of Thanks. on towards the guidance, skewed this out think is I what call, can about were you about through kind revenue SaaS

Steve Valenzuela

Yes. Actually it's Steve Valenzuela.

So is $X so we've guide that above. I took never about we but increase by guide most took on up it million of it, think But $X we million SaaS actually given above a the SaaS,

Steve Trundle

Yes. exactly. factors Other

Steve Valenzuela

you component. to But number, really include hardware not if the at you and XXXX our relative if look all at OpenEye it's elevated

coming that's So the from. there versus of where initial outlook most gain our is

Steve Trundle

right. That's

Darren Aftahi

That’s helpful. you. Thank

Operator

Thank you.

question Latimore next Our with Markets. from Northland is Mike Capital

Mike Latimore

fruitful Can are Great, forward the here? of any Congratulations now going color thanks. how international? of particular a And quarter. maybe year most you there a are And are providers sort service more versus on-boarded many countries little provide on on that sort ago? the

Steve Trundle

well the or in have accounts we're providers I'd per me. the would installing. us that year month color. of XXXX a main service the that recently you say, See, more is half back saw week gave we little increased of in how I the the international segment. month many of watching don't per see front a We above growth confidence are number actually move XX,XXX in the But in thing that

The markets actually are we're in. it's every good, that almost market

service providers. in shown months. we're of has to Europe, strength a different there last beginning I Latin get some couple like six America So the with feel momentum nice

strength Turkey be market been strong. some long that time, a be continues for a continues is strong. So strong Australia time, there. has a been strong to has to for long

side. we're some where momentum feel places most participating, international So, we on the

service different in failure in in countries relationships. all the I in the those we're noted But, good we're painting where not we're a provider think, with running general, about I really are place now at moment. XX sort And stages. of

running devices they're of what seeing. the we're kind in we in type the the get And like because can that things solvable. the And If we're failure, solve. Fix those usually that's place. apparatus it's product, of right get are support problems we'd supported, encounter, the to right

Mike Latimore

the dynamic more something or you're now? then, in true North I a I'm guess, Right. this And got market, then, else? that American little I improving two, is tied is one, credit confident that to And right residential -- largely interpreting that

Steve Valenzuela

good. was various the American on Residential North performance and I the it delivery think There's been pretty thought providers, the was of on coming at the about of an if provider. we the service just concern segment, production of the service solid. But we impact based the look it's places -- whole, XXXX, lot noise and a the from on -- in

thing. I debt think, on the probably that's So, market

of market active an we're It's where not a part the participant.

have what as up firms the a I I'm problem come itself. we sheet don't work we're at from in. with various is outsider then And gradually my all new -- moment. So a to entrants over, that belief hearing problem. looking I roll et and an in, have I that And What that participants. but it need that these is, discussions will cetera a I fewer balance business partners, have have

see rectify the if I the participants that think, is we'll itself. solid, business as So come in,

Mike Latimore

great. Okay, Thank you.

Steve Valenzuela

Sure. Thanks.

Operator

Thank you so much.

is go ahead. last Jeff Please Our question from with Imperial. Kessler

Jeff Kessler

you taking my you. Thank Thank question. for

OpenEye, sized security -- the providers you security at together. is installers secondly acquisition of looking beginning looking with your installers kind worldwide commercial look world larger at at of deals enterprise dealers of world or the As your as who of industry, and I'm we the morph and

the are -- just terms page. about how all you same dealing be getting same of the getting in commercial all on who dealers, with on them side, doing who -- both them talking I'm to to larger folks commercial this and So may interpreting resi the going the your commercial basically are the get integrators and -- those and on

common dealers start message so on to you business same to it if taking your commercial begins at a of the business the groups those to out get across those commercial that, sales want both to integrators even time? begin the accelerate channel, and to enterprise you you call for and your Those products, and to

Steve Valenzuela

Yes.

parts of So couple that there's a to question Jeff.

the up First, part more types into models space is the that component and converging I integrator zone. of of commercial moving dealer right moving absolutely into of with enterprise business you're revenue is sort dealer channel. is commercial The integrator think, oriented recurring system the of the channel the the

So underway. that is process

the have that video, in energy it's intrusion solution -- us, focus we fully not right sure integrated is the being best enterprise-grade that and for incorporates on access, And some the there. make to want the first, management. really We product cases a

we'll presentation product works there have functionality the exceptional, think is inroads. right the If we'll continue that then to that nicely all we and together and make user of the to

technicians. what hard perspective, I'm in get biggest see also look enough under market. in technicians person is who an to that residentially service hire person and actually challenge to to want me, difficult to struggling a the front right hear to at I'm more I we economy. to especially that, them constrained you backdrop, sometimes ask I current And focused, challenge hire the get when are providers hey, I'm their As biggest from against I HR the usually sometimes to if can't that new the enough already resourced on install it's of into demand, say, it's leap is, a

where it's of a you think sort thing of type chip I So away.

technicians, do higher in the and are that out. space You HR and focused that more gradually to cancelations demand hope that, referral invest and hire more state invest built capacity they then more They on the side, they're up able their that on gain functions, meet residential to the as they scale maybe become successful.

everyone We don't to be need who's strong move need or want commercial. residential to really to we in don't everyone –

we kind them. just allows that that market make platform are to entire both that to right potential to the service them So for we've addressable that providers across sure those got want that's of doing move the

Jeff Kessler

this would the about saying heavily At a was numbers your like it your going things analysts but – so, you did EBITDA were below what did with did year? with most the ended have of question. which higher I'm we – of – those at not Last line go those than basically more of particularly kind your with invest some time and were was numbers some for last it spending to in be that like year, help investing time increased saying, beginning Where that more was you. business. adoptive investment about reinvesting thinking what the XXXX be business of talked so Thank more not the in up were you revenue the of the – business watch out better right. some kind All a investing or right some that's into more in call investing some

Steve Valenzuela

right. question went it A of whether Right.

– number you're So EBITDA the about higher is reason being the and talking

Jeff Kessler

would year those you What more and your be to would this investments of year the higher. of was talking you that were became the you throughout is how be kind fairly that about the heavily higher I'm be optimistic would spend that were going at that? the revenues to it said investing was for of Yeah. kind fact regard in R&D expenses code the – with business to And higher that investments. the reacting cause fact

Steve Valenzuela

recruiting in Well, the cause the I perfect Alarm.com. was say on at guess, that, front I execution would

scale the we year, and last than So R&D markets on intended faster even recruiting did. intended our we tough We front. up are function to

better then EBITDA – when particularly so than expected by have on line. the And than with top number, you expected employees a end up compounded higher the growth that's was you we slightly that fewer you on when

So didn't we sales. higher in to wanted quite hire top We had better as hardware many line we as XXXX. growth, people

end the towards out. and think of roll into acquired to Next I we business that we it commented the in invest year intend as we XXXX, we build OpenEye

our the reasons you articulated build presence just of on your in lot out a So question space, there. commercial the

run and to while think sort at an So a in line, we're for contribute we're run company's in that million. of going level. We're it we've $XX a going loss. that mode And definitely EBITDA we've top that investment to business is not indicated indicated margin I probably a the taking case,

continue year, XXXX, look both for cases I reasons, to to resulting communicated the that and and towards in one organic deploy opportunities we're going go of I the was of last some as acquisition. that from growth think initiatives capital So we end into to

Jeff Kessler

cloud? cloud Will a have Will OpenEye OpenEye platform? eventually have eventually a

Steve Valenzuela

the already Yes. getting They by do cloud actually. the richer is And day.

Jeff Kessler

our Thank you much for taking question. very

Steve Valenzuela

you. Thank

Steve Trundle

Thank you, Jeff.

Operator

ladies program gentlemen, your this And our for concludes Thank participation. appreciate and Q&A you. today. We and

disconnect. You wonderful day. now Have a may

Alarm.com (ALRM) 25 Feb 202019 Q4 Earnings call transcript