ALRM - Earnings call transcript Q2 2024 | Alarm.com Holdings, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Alarm.com Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to the speaker today, Matthew Zartman, Vice President, Strategic Communications, Investor Relations. Please go ahead.

Matthew Zartman

Thank you, Kevin. welcome Second and Conference XXXX everyone, Call. afternoon, to Quarter Alarm.com's Earnings Good this recorded. is note call Please that being

Joining us today Steve Valenzuela, are Steve Trundle, CFO. our our CEO; and

review you During that events. XX-Q cause as differ These quarterly statements, the are report along discussed based to that obligation making to our estimates on of will release. to may encourage expectations speak will actual which statements them. other be to statements today's forward-looking associated update to factors, materially the shortly and risks in current Form The current predictions, other their uncertainties assumptions and future to SEC, Alarm.com and are the assumes risk information, Form is expectations. We subject factors dates. from projections, which subject forward-looking we these X-K, about no statements on call, we with are call respective results refer which risk or press our filed our be and and with you

addition, our now over will Steve in on press reconciliation Trundle. on call. A be website. Relations to be the call measures today's non-GAAP measures GAAP In the of found the release discussed turn non-GAAP financial the I'll Investor several can Steve? to

Stephen Trundle

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

adjusted SaaS and pleased are million revenue license and in expectations. was quarter to to the our $XXX.X We report quarter exceeded financial second results $XX.X the that second grew million. for EBITDA

provider Energy businesses. growth the and in our the Hub During organic quarter, commercial, and partners continue drive service to Alarm.com international

and employees offering. I our to a with service for We notes their want convertible provider sheet contributions also our increased flexibility balance million our to our thank partners $XXX results.

that remaining businesses. additional This routinely by contributing in over mortgage devices staying the quarters economic moving a recent of the elevated, smart today that in our fact investing higher periods cover averages. their churn that increase that and churn consistent historical and below expectations our experience continued I'll analytics, percentage smart last In the is video see prior they in to capabilities are With thermostats number video developments with our softness. System commercial and in time. call, lifetime consumer. second to less. factor account residential lower the remained with value quarter, today's and systems of engagement base Instead, are the advanced line a believe rates we the of the and residential into been attachment and people of home or and in account existing include are put. We an has locks Alarm.com used capabilities few like significantly residential survival On

the see the to nudged So quarters quarter. followed that our new be during appear enhanced XXX monitoring to attachment station by including and our with floodlight camera video the we Several markets more rate several in residential Since our of well video new doorbell This we are increased remote XX% attachment products, recent pleased integrations, video launching new X.Xx. new the has hovering higher serve. accounts received our analytics quarter residential XXXX, on of the to of the fourth rate combined services video than accounts video XX%. to solution central second around

installation this a systems platform. our provider access they To generative created and the subscribers. to partners complete on trained we or service our a of in information database X,XXX who model the used synthesized content. technicians support its we Nearly installations interface chat-based capability language app. support is delivering release. training AI to supporting allows more accessible while better all tech information, resources our and engaged field partners since in technicians This our advanced our our in of seamlessly are support, capability mobile product The service actively have We from adopted to these to are large market, introduced recently

Now market stages an are easier a cloud-based let commercial fragmented me shift in capable to to commercial use. remains less and maintain more that update to early of the the is significant and transition believe on install solutions expensive enterprise, business. our We that to across and the

As in business share. this reliability competitive are service-oriented leveraging advantages capture software, our partner market shift to our unfolds, we model SaaS and

capabilities. have We're solution, a market to shooter partners response. for users made management Our ago. cadence intrusion, has integrated solution end-to-end solutions worked allow mobile control particularly of and purpose-built, which to is Access our commercial unifies credentials, I'm with their pleased the fleet access several we progress and also offering closely Control we access active that using enabling video years property brought like drive a steady our team just a The smartphone. which to with enhancements with

enterprise the complex organizational Control so added align access that elevated that larger create their with so can on more of customer's without management Connector Cell we And connected our the IT We network. structures. can deploying also launched plans that operate and commercial Access devices solution customers manage challenges

with This our steady debt sales by solution. The our successfully have our also Access cycles. work in Access to quarter, partners began our we Control solution and team expanded introduced product introduce our elevator control has Control more

surpassed second a result, quarter. we milestones few the nice in As a

X XXX,XXX Our access credentials. powers control and doors million now user active over platform

X of They access We doors to customers markets. a enterprise from hundreds control manage. with doors with of businesses base large-scale range customers diverse across approximately XX to worldwide X to small have different

One includes XXXX of accounts multi-location our doors. nearly

Another commercial employee access XX,XXX account manages our over through credentials service.

a platform to advancing growth in partners and excited driving solution can provider our service continue this our our area. are that pleased such serve and are wide market We and

the during Steve the We in convertible over We're put we I including secured, want to what development interest to strong offering the with we more to senior quarter. upon dry of a Before interest corporate touch opportunistic that hand Valenzuela, convertible into can advantage I took felt bond terms be and the second things rate. strong to closed was we initiatives. powder pleased X.XX% we market notes so our offering bond our business that continue market in the our

past, to our have business. buyback in that, to indicated support be Board's corporate our We anticipate With a pursuing pleased things buyback and consistent from review million acquisitions Valenzuela and a cap partners. their for hard see provider our I'm quarterly transaction with strategy the partners we work activity want authorization. In I reduce the stock consistent in Steve in for that and financials. As summary, $XX is hand thank are The strategy across Steve? transaction growth our our included their deliberate to over dilution. continue our future convertible to with development their team and the bond call to investors continuing I'll and I business. our results with our to continued trust service our time-to-time,

Steve Valenzuela

XXXX then Thanks, questions. second call provide before guidance our results Steve. I'll for and of begin updated opening with quarter financial our a review the

quarter revenue same Second of the quarter XX% year. and SaaS license grew last $XXX.X million from

other video a up in QX camera basis second year-over-year. Hardware the for for XX.X% strengthening quarter, quarter XX% X.X% margin commercial mix the the quarter, hardware SaaS second to up and second product grew remains mainly XXXX, from quarter license points mainly margin XX% $XX.X rate some of XX.X% Total and year XXX revenue. the margins quarter, and year-over-year. high up and million, XX.X% million due from at second for gross SaaS was gross from revenue contribution. Hardware up in million XX.X%, in SaaS of sales. quarter was $XXX.X about SaaS in the gross $XX.X ago Total revenue increased end was due XXXX QX margin-rich historical to was renewal for revenue the the product and with visibility of a our with mix increased higher of due to Our and in range. hardware license license quarter, second for the revenue second higher margin

to for expenses compared to in revenue with last Turning $XX.X million mainly the employees XX.X% in of conference from ago revenue, year, quarter and quarter to were up $XX.X total $XX.X employees increased headcount million second to X,XXX and XXXX. second R&D, the million in the QX of second X,XXX XXXX. quarter. expenses in quarter to of expenses. quarter compared second quarter ended the were quarter Total year million the X,XXX due X,XXX or operating more spending. marketing XX.X% in Sales the We second expenses up the employees from in employees same in $XX.X marketing or R&D program

million legal quarter, million, due QX from expenses. Non-GAAP In $XX.X income million, Our GAAP from or G&A adjusted million XXXX. second for income was second $XX.X quarter Non-GAAP in second million GAAP expenses of lower to to in was quarter $XX.X quarter million, $X.XX were XXXX. XXXX. quarter in was $XX share million for $X.XX second income EBITDA $XX.X the the from adjusted million, the per for $XX.X $XX.X or per share XX.X% down compared $XX.X second of up net the net net QX diluted up mainly the

balance equivalents, $XXX XXXX. cash billion December up our from at to the and ended sheet. quarter Turning cash second with of We XX, $X.X million

we convertible notes $XXX issued mature quarter, that the During million in in June XXXX.

million of of at $XX our transaction, to part repurchase stock X.X common the $XX.XX. million shares we As used

We effective also $XXX.XX. from $XX premium up convertible conversion to an million of the cap used price XXX% bid to calls for to conversion purchase XX% bond

XXXX. bonds As $XXX million mature a convertible reminder, our original January in

to Turning outlook. our financial

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

guide some and that Our impacted third reduction SaaS from $X.XX temporarily includes our a the operations. license of revenue quarter CrowdStrike in million outage resulting

million, XXXX, our $XXX.X license be For prior $XXX are million. expectations the $XXX.X to for SaaS full guidance to to revenue from year of raising up our of and between million million $XXX.X we

$XXX.X XXXX which million of hardware our of be are $XXX $XXX.X to $XXX to from estimated XXXX guidance We revenue $XXX guidance projecting to million, $XXX.X up our for for will million between of total $XXX other $XXX million revenue prior increase to million million. million. $XXX million million, prior estimate adjusted to EBITDA $XXX from that and of million includes We

income guidance per net million million million be diluted or compared is diluted $XXX.X to $XXX.X $X.XX share. $X.XX of million $XXX.X prior $XXX.X to XXXX to per share Non-GAAP to to for to $X.XX $X.XX or projected our

a rate XX% to total shares project XX.X As new estimate outstanding. of diluted We diluted tax under number million our currently average at the on EPS rules. tax issuance an remain reminder, weighted of non-GAAP increased bond outstanding. XXXX for current our convertible is based shares

full on expect stock-based million. In $XX our call in operator, profitable our year and please are And for summary, focused while plan strategy open We investing on deliver $XX long-term business with the we million that, expense to compensation to Q&A. XXXX continuing of growth. executing

Operator

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

Adam Tindle

the wanted Okay. to Trundle, insight. more get Gen topic I you ask on as of Steve AI

remarks your concept prepared a lot of sense. it makes utilizing in which mentioned text, You the for of

Or potentially separately? that topic, think the you monetizing think Just are from here then as on kind it bundling you that And are where a into does monetize you something AI, you areas curious, could Gen in broader how is that can and Alarm.com differentiate? that you app? go of about

Stephen Trundle

on complex technicians, do get answers the someone's that what sort But application, job complicated see and and to on becoming it's language tech Good of mobile the a hand go and more there. More Adam. if while phone At technician. you'll on get to more where through implementation We'll the pretty moment, installation. Yes, a of to. routine issue, and and we super it's them and are got large or on remote good to easy to commercial and the helps often tying we've I the specifically offering, we're we're -- generally, capabilities their them still of them quickly a site routine that's answers, really hours is they've of that's the doing questions, for help us doing question. hold types with video a video expedited monitoring. the seen with X available the quick sort think bundled into get there type usage in they're intended X what for go, model support the sometimes our stuff, really get

something I'm in when at a this some an can may can lot for in and camera to sure of actions, not that entire leverage that potential station, the maybe or operator and we're process in the areas activity, need one imagine imagine point, or of we're that someone we operator where you make that more doing you were doing headed. not -- maybe I'm work we're a world central I'm perk to efficient do of a -- watching several may it the if shouldn't I I So the the to where -- can speak be that's who's number operator today,

Adam Tindle

congrats you're Got flushed And it. cash. convert, with Makes sense. on the now

the $X with some billion the after do even had you to of near convert. think, things that I

kind could you of that tuck-in even priorities, and for for? would in light in if of fell wonder more criteria think acquisition, piecemeal key if were about example, and you we talk to you potentially would for more I in So of think just Or maybe that, likely swoop, do as a through that that larger you particular, one look be potential, be kind the need type? would this to it's do maybe what use

Stephen Trundle

Well, in bit a but had, at a we like smaller track with wanted did time, in things some that with I did standards, position still nice a do ObjectVideo, -- look record smaller larger a potentially just to was than by we through to some today's acquisitions to those. are We've with Energy like more and of of be I want we to position think, tuck-ins. be Hub even than the we larger, the open,

we things we're applications IoT we're the that's watching of providing look IoT in We're security have in their with We more what cash of We're are now sort range that particularly a being anyway. those think life. the acquirer people any if available. probably some of So the everyday convenience doing. choice consistent time of We to in mission the their at optimistic. industry good it may the And and safety are place space, is market. think

our we would We'll opportunities. do trickle I careful things about to a a not we So right I things. criteria as say doing we're opportunities I'd attempt and to to and We're the to look larger look way And is shareholders lot deliver. of that basis, out themselves. the want at accretive that long-term of present tuck-ins the continue looking one as shareholder the sure primary a supportive of ruling at things a on mean is make we're that at whatever metrics we're

opportunity. those are that's a can't there. deliberate how speak little we're but we -- I at things. active, But specific look any So of bit commentary opportunistic and in to

Adam Tindle

Yes.

I appreciate that think mindset. certainly investors

Operator

Saket with Our Barclays. next question comes from Kalia

Saket Kalia

dealer commercial I start you. do really Great. that just level replace commentary you're your in bring to have remarks. maybe maybe into Steve can and onto a Alarm? to sort Can to prepared the would Trundle, about with of going rip their just go on you one appreciated you deeper how just think that what platform And after?

Stephen Trundle

Saket. question, Good

somewhat. rip we the So amount team The of long a variety video and wide for OpenEye replace is actually has supported the of declining at side. a time, on have cameras

supports a of known via as Onvif. standard that that enabled Some is

analytics on more cameras the edge, and of our more cloud the them commercial a of own. the value they is side, support out have. Obviously, on get for the analytics enables services just get of to everything range us camera. newer especially wide and on customer not enable we to being our is that the So what And cameras, functionality. all a potential pretty newer without go on them platform, ripping models And done

newer So then to support. and want meaning by more capabilities what equipment, possible are but that and We expand, sort trying capability back the we're brought that's with camera way, broader of into do. full to Alarm.com the platform, you land

fairly using we're or market scans the There, devices common I the talked On which side, to door out and readers, a little control are fairly -- we're next that with. see a someone about market. access what leveraging you cases, most are the bit in that actually access in standard

can those in readers over existing partner -- a without service go deliver can and a to of I ton go services and and our of new enhanced of We in. case, rip this mean, lot begin we provider take So in course, replace.

commercial try trying very we and avoid ones, always often. in successful the the So customer to we -- kind to bigger can't be just and we're message replace having increasingly go and of these especially with rip

we as much as that avoid to try So can.

at your enterprise of business America, we're penetration is think every in I think sort as The To mean, North million, for the number least roughly available, early North TAM, or sort in and our sites do we days I TAM, think there, to try X are of about at we X.X American the TAM. sizing look that. million regarded steadily of sites, we're of think small generally chipping at if we the we have I -- comment TAM away

Saket Kalia

but growth I of some Got lens it. you Valenzuela, apologies business in just shift areas really SaaS like like and mix makes from if that's remarks, of in happening Steve useful for international, the update missed you, higher video that mix of a always just prepared or given comes on a It sort of ton the those of of sense. of sort the that give business sort the that's an maybe did commercial, it business. and the

Steve Valenzuela

Sure, bit. We've Saket. North well. and the understating it Yes, very do it initiatives the residential that video actually of growth growth We've pull actually at out North initiatives continue American looked because actually to refined America. was a

So growth commercial, XX% XX% in Energy total about Hub, those include growing the X/X about if at of year-over-year. and represent SaaS initiatives, you we to we're which look international our

Operator

ROTH. comes question Aftahi next Our Darren from with

Darren Aftahi

you Can me? hear Great.

Stephen Trundle

Yes, hey Darren.

Darren Aftahi

two, Just I may. if

the to in the result AI cost relative going that's initiative, help. to some I'm if savings On Gen kind of curious of

those into to as kind have And made have new the longer in acquisitions of of on of some kind manifesting into international, I kind acquisitions provide go and forward I'm know how markets past, You we maybe said XXXX. you'd some play guys term? then you curious international

Stephen Trundle

Darren, in AI, drive call theory, amount some time Gen in should over sure. volume. in-person The reduction of

expect great are now the We confident routine their we one in calls have do pride actually things minutes right or calls in seeing human AI. development most out Those we're on and their new a partners provider with that so products really might support what laying question, prior support the X us technologies. that products handle with person X for on ourselves -- otherwise. of fairly taken can mentioned and was that they're we of are or I the new service our adoption is of of As

we you're don't a out to to to a to did our we're there I see a time. for And our there's was capacity, capacity -- X the will years reduction to think acquisition work variety that referring last we but ago, is lower had getting work support point to we a a or positive which of that tailwind X.X much regard massive probably market. So the where coming over to international, wide lot of have EBS. international which the yes, is since going underway we're back bit cost years a in of with partners, that acquisition there an With the and just communicator product, panels maintain

second the So to of showing in it's of year, start this just going half starting up now. right sort

should a of reminder, the an watch market update end But the year. that it's of hopefully to we we something beginning with good So and integrated are further technology. the get version to about on probably now towards talk

Operator

Our next question comes from [indiscernible] with JPMorgan.

Unknown Analyst

from on commercial was commercial second, side, first, sales macro customers margin behavior contribution got whether think remarks, varying some lows. you seeing you to all-time the the the improvement. greater I hardware maybe residential then maybe For the versus side? in elaborate existing which with And bonds Can home the what on you're on led you front, provide us on can your prepared on color seeing? noted hardware you're the

Stephen Trundle

questions. Yes. Sure. Good

macro the expected the as looked of to in second quarter. us, On sort side, things

supports side, we are residential moves seeing housing remarks, in noted are I because there think my higher we certainly, retention revenue that. fewer and your data As the on prepared

quarter, are little what quarter So each of -- in into anyway, of second we of at QX back time, indicated systems In bit we plan. softness they're we side. a purchasing the we and the the If towards we the commercial report, hardware the of thing on following our installation. Same back buying in saw move go those in side had of a a second basically side, on who bit had the and that amount saw going planned terms commercial the size those seen actually. right but little consumers installations SMB we

little side, recovery bit cameras access a control, install. little more a into the hardware bit going a average on of the So more

commercial on overall us the second So to macros look and the on tad in to side quarter. basis improve a an residential the both

Operator

Stephen comes Blair. William next Sheldon from Our with question

Stephen Sheldon

one you the if guys which next And applications, I X applications opportunities needle years as another -- you of investors capabilities, about me. just I the could rank are want Alarm.com's commercial for which to think think order should most optimistic there X the the monetization, about? you that how really about just move way, about framed think over guess, really

Stephen Trundle

line level I Stephen, with and the with analytics, video on would upside improvements remote first video rank them and capabilities. including foremost, on the monitoring then constantly SaaS analytics

monitoring growth, that little detection I then as are one So think that really fleet that the bigger active then is that and of promised. But big would I'd doing the control video second really of access and be we're big a rank and we introduce shooting rank two nicely, time, further in access that, things category. down then the probably terms First, growing pieces I then would our and now commercial installation. And the sort have all lot is of video. of with a piece and video support And the right into over But may additional after control. products what the other intrusion drivers

Operator

questions further showing time. I'm at this And any not

does conference this presentation. So today's conclude and

may and have day. disconnect, You now wonderful a

Stephen Trundle

Thank you.

Steve Valenzuela

you. Thank

Alarm.com (ALRM) 8 Aug 242024 Q2 Earnings call transcript