VVNT - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Vivint Smart Home Inc.

Second Quarter 2020 Earnings 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] I would now like to hand the conference over to your speaker today, Nate Stubbs, Head of Investor Relations. you. Thank sir. ahead, go Please

Nate Stubbs

afternoon, everyone. to for us afternoon XX, for three Thank the results you XXXX. June discuss ending Home six-month joining of and this period Good Vivint the Smart

future call conference Chief statements, discussion I and today that Home’s, and performance would the on to Officer the with me this are regards by Vivint Executive Vivint’s Todd Gerard, R. forward-looking the begin may including afternoon to Dale like contain Smart Pedersen, CFO. company’s prospects. everyone Joining reminding

Forward-looking inherently and to uncertainties are risks, not statements subject are and guarantees assumptions of performance.

not reliance put You statements. should undue these on

of filed this You and should annual from such, about quarter expected I with that release are following Securities and our now is to the turn call Form presentation, the or on are in our and and to to available certain the could as of result on Relations and for available in report which time obligation also refer the in undertakes materially addition our presented Exchange XX, important historical will or to over differ the factors, a measures. forward-looking In XX-K understand results non-GAAP time may our of quarterly date in for information, revise statements, from those year the in reports today’s discussed comparable filings financial most factors future Reconciliation measures to those or for those other in website. expressed issued XXXX, earnings to the including Factors XX-Q company’s Commission, period otherwise. or update of in no whether to we periods measures section financial Investor Todd. on XXXX, with any section which in The fiscal will XXXX, June company on accompanying could year Risk the future results calculated our or periodic to ended outcomes these Form statements. the as remarks, in call, GAAP accordance implied publicly events be forward-looking new be affect non-GAAP earnings cause updated fiscal

Todd Pedersen

and three, good also to results we I outlook, time in share security his in business. in revising and the healthy full-year upward now solutions optimizing despite Vivint our everyone and meaningfully the and expand to into the QX. cash call. Nate, operating safe be momentum to pace, for have strong discuss to resilient with job million joining X.X pleased services than and reconnecting recent a financial portfolio security margins organization which spent specifics three subscribers improvements services demand for current and an two, great positive One, success continues we for and updated we environment. the America. the Adjusted performance XXXX. smart will efforts of quarter. in a metrics homes. home smart our results pause will for dive the everyone with our steady very financial EBITDA the We’ve key in the hope now to And homeowners customers our review continue in our half grow afternoon first economics the talk our Thanks, the main topics. we weeks a healthy sales during and home recurring reflecting thoughts second delivers more Dale first of continue are be at and expect to direct-to-home in Revenue six about are demand challenges quarter; XXXX. strong cover our on and of across on done more given significant revenue remarks across uncertainties total as encountered the the as all and more will a platform; the North focused navigating on flow their Today, he

Our what said mind customers lasting to but perfectly peace are services and a The only not our be challenging the that Vivint is along. believe supports incredible be our fully we’ve what their been also when to value high-margin This positioned revenue homes in the what has thrive environment. could model time all and time an we results extremely integrated recurring is offer built people that with of that resilient, is change. a current for reconnecting during

XX%, to the QX. by and Vivint panel the app In by and recorded through XX% fact of increased video views increased video live views QX from

our value the during discontinued XXX,XXX from direct-to-home nearly we the clear, given subscribers new to smart paused ability our is quarter home early proposition all customer sales We limitations, that we Although to eliminated when all Canada generate remarkable, mid-March fact Despite sales a self-imposed May. and direct-to-home is customers the number from from constraints new in mostly X% just off were year place. activities subscribers contracts. in by these of are retail installment ago no new add we

on see begin their the economies. hasn’t XX% generating year-over-year quarter, states team, demand and missed growth in strong in early May, reopening sales as the around resumed the beat other sales subscribers. in inside hand, national direct-to-home new a Our country continue We to

sales productivity program prior versus the and actually we’re is gains proceeding seeing delayed start, summer from Aside year. the our well

paid-in-full we’re on much capital allows efficient a that is tailwind This third-party Pay. funding in Vivint virtually with powerful new way. all us to Flex new more customers Another or financing subscribers bring through our

their cameras, outdoor support Garage manage lighting door garage various into from Chamberlain, now garage our Garage Smart homes. a a uniquely we quarter dynamics. myQ controls, doors speakers, technology using with ever, We monitor and taking and finance connected a platform. announced value our our two the believe partnership And proven their smart cash to homeowners a that external of competitors garage the integrate improving on plan All designed The anytime many environment platform to Smart Our protect cloud-based partners credit platform high relevant in to economics committed experience, a myQ full home and half leading home their frankly other by with control smart with we our providing with people beat current and attrition and volumes that also app. over customers our home is dramatically can core Home seamlessly hub million well have to locks, these their from work Vivint by current Vivint recently unit easily devices. to help enables and from proposition products We app the internal versus homes our in-home and the smart indoor decrease as their anywhere flow customers underwriting decades customers. together devices significant Today customers proprietary to touchscreen is door to financing result while standout our thermostats, options speaks their point secure as remained nearly simply through are innovative another that quality customers Smart manufacturer edge we control can phone believe voice. customers margin. with this a families have high environment. our of elegant across This qualified have reconnecting on we or fact the by deal single a are smart significant we connected seamlessly the as are over XX in care of devices through using the

Our underscores we recurring in high-margin model. confidence improved have full for the guidance year our the revenue

fully we home We are security our across for prepared all to demand. healthy smart are seeing offerings and demand our and that channels meet sales

now we in from in continue $XXX alone. the around projects, second activities that be XXXX. We will flow overhead in cash point, be quarter to budget and cash judicious that we believe generated and we To operating spend, positive million

continue We’re front. excited this reporting our to on progress

the and my by in light inclusion concluding much can important our XXXX. racial as actions, for ownership now change. Before being engage re-examining own as second positive turn to issues. to results, guidance provide The in we express and events go listening of we significant strong will of start of all our believe Dale issues I well simply the value over of each conversations, inequity recent other, and at specifics and nationwide, views We are ultimately Vivint. to how part productive these take to and updated remarks, of quarter injustice I through must it’s our diversity call

Dale Gerard

cover for full slide June results for the I’ll of the the outperformance six-month presentation to which seven, this I’ll But and we today financial posted walk informs in slide raise very year, our revenue guidance were conjunction we portion first Overall, through Todd. the decision across XX. period ended release. highlight quarter the Thanks, on later. second that range our our earnings board our strong with

as in monthly per $XXX million. to a grew For revenue well the X.X% quarter attributable increase in growth XXXX, revenue increase second subscribers is as X.X% average the to by X.X% a revenue The in user. total

monthly up Our versus average per $X.XX revenue user last in year. the was quarter

Moving slide eight. second expenses lower G&A. net and service in scaling The scaled six-month of and quarter and EBITDA significantly costs selling Adjusted to our the has drivers were periods. continued

expected noted, we XX.X% of result expanded adjusted second quarter, points full-year proud that margins the in level. lot EBITDA necessarily to are For to focusing we our rolls in we to customer work costs on the great reduction high we to driving and at while cost service and compared truck fewer by the and over for have second innovation, example, inherent overall wouldn’t be in costs It number of in quarter XXXX. due meaningfully streamlining Due function are revenue service our by believe a satisfaction. is first to quarter lower a clearly seasonality due to the reduce This some a of organization. by during XX.X% was saw entire our of overhead sustained should that business, XXXX to hard concerns basis anticipate be better calls and margins G&A to and the operations, sustainable part COVID-XX, we of and a completed initiatives do engineering that quarter then

how round our actions we second a discretionary quarter to exercise at the we continuous spend. and of cost-cutting another focused Vivint, efficiently further analyzing addition these In during more is reduce operate to because initiated

a the compared by than for was which As these the adjusted our million in debt used in to $XX is of covenants, calculation million greater Meanwhile, fixed in million have covenant $XX result the XXXX. second EBITDA, quarter million achieved we annualized scaling period, $XXX.X $XXX.X actions, cost reductions. permanent

on Average nine, User, portfolio look the Total from been such board. products, new and recognition as per X.X% has revenue up or outdoor to AMRU, growing deferred newest selling Revenue our doorbell year-over-year. AMRU of from of X.XX of you cost the across data and Monthly million points or cameras. also we $XX.XX, increased quarter year-over-year grew end strong at which X.X%. the subscribers X.XX slide were few highlight for subscriber to a As million effective generation

the On highlight next slide subscribers. slide, on few a new points we XX,

New over to grow sale the away point, our by by partners flow significantly considering greater number XXX,XXX of subscriber or second cash installment reduced our part the early costs acquisition third-party direct-to-home our RICs in originations we in the reducing the our of We toward resilient financing dynamics. were sales and portion all point XX%. a from improving of a contracts quarter paused quarter. the thus that One direct-to-home for for able Canada of and the shifting discontinued pay-in-full, were quite revenue, and net subscribers which subscriber was retail and RICs during quarter, we U.S. last sales are

home on to in way. profitable cash As smart of the future, delivering efficient to we the organization will a to homes true a look continue align and experience we millions

margin quarter to $XX.XX represents will the which Moving per acquisition new The of trend XX.X% customers, continued service in $XX.XX last subscriber the how our new of is reduction second to cost quarter per from and that platform, to significant now in moving across XXXX in generally versus on second of XX, quarter. the of years and to slide we a the the moving continued and cost the by from demonstrates the back in the subscriber, These we second during advantage per a half key of the XXXX. cover of service a driver We’ve hardware, both the cloud to quarter, net trend year. XXXX. XXXX, the most to XX.X% continue our recent of the service net XXXX our improvements seasonality improvement service the XXXX, tend in The in second per customer it be cost quarter cost our subscriber. support. most to metrics lowest these installation This our service the improvement $X.XX in of contributed home result earnings put subscriber software, particularly increase recent ten greatly EBITDA. year-over-year net we net significant quarter and of in in now adjusted Vivint’s to It’s subscriber seen fully integrated improvement the the $X.XX the its note summer, given margin of that quarter smart increasing in ongoing efforts in here important the costs XX.X% encompasses see second and

before, we in the mentioned due service were the to believe as calls concerns coronavirus. abnormally low second over Additionally, quarter

the So by seeing, anticipate while at that that level. we’re really we the and benefits excited the are results margins we and to encouraged trends sustained current wouldn’t corresponding full-year

our side hand net On trend the acquisition we recent cost. on new the average XX, subscriber right of slide highlight

are a financing that LTM contract That’s or subscriber in a subscribers to compared customers, prior as we the of per home XX.X% $XXX. net for acquisition period have products. subscriber the to nearly number their higher Vivint For shifted of retail XXXX, XX, full purchase paying LTM financed instalment decreased the of smart partners cost utilizing lower mix new period, new to and ended on our eliminated June the

benefited quarter, the point of installation leverage purchase sale of During also the and from pricing on equipment. we

percentage The in XX. slide first surprise Slide on of attrition higher It are changes given attrition, in quarters. quarter total for in cycle averages, the higher life Moving lower at subscriber our to phase. to biggest reiterating which walk the that time that trended was normal the sequentially historical end-of-term end. nine is customers XX is our reversal subscribers a pleasant most worth was and has a the than illustrate in

carries through it of attrition cycle. attrition the First, phases with the rate, at phase post define during these expected the and phases as highest progresses changes Each corresponding a in-term, life customer rate it for phase. term. initial end-of-term a cohort as its different with attrition We end-of-term

past curves steady. the in shared earnings calls, attrition have the cohort we As remain fairly

percent factor the The their elevated stay course total percent indicators our attrition And by before worth, that rose of customers attrition, will in given XXXX XX.X%. but was of XXXX This the the was attrition in our portfolio stage affects still remains customers continued beginning XX the the percentage and end-of-term trend long-term to of the in points and much better second XXXX. reversed phase. of higher second of end fall for The to it’s and to better has than higher in cycle. than is July. for our that lower each quarter, phase of sequentially In customers expectations basis other than what end-of-term are through terms leading in in perform life expectations in attrition

front the how Now our we this is all curve curiosity regarding thus as a far. on is at think attrition know of there may out lot positive there change result a of The we least news pandemic.

solutions, downturns, place effects with of current with economic experience severe homes our the times reconnect tremendous security home to through general the combined potential smart people for and propensity that to of their main of leading the the more pandemic past as are to prioritize and our focus customers some inward As the to value as drivers, on home unique factors crisis and come during mind. well

to tied performance about I’ll several stood good updated which our liquidity to move of XX. we overall for year, feeling factors very our as at out June million that point us leave approximately quarter second position, outlook the $XXX Before strong our

perspective. operating an Our strong from second cash quarter was flow

from facility. The generated months in strength of in period on we of of to three a carried cash July has we operating our the amounts and end million repaid compared million through the XXXX. use same the credit ended have cash activities in outstanding for generation June $XXX $XX For XX, the net all revolving

During positive float our $X.X cash as million has the a position exercised, quarter, also well. public we on of which increased approximately saw impact warrants it and our

our address finance financial is dollars. to slide many significant and into our Despite platform recurring, long-term revenue to lockdown. that pandemic, in improvement. EBITDA is pertaining of uncertainties original home on smart country in strong to early the our and Over that approximately COVID-XX of economics we remain and drive for year. subscribers we ability of XX% business. subscribers resilient the new model move let’s years, contributed our reoccurring the the unit adjusted eight has Most our will that to five-year proven significant a the any Finally, and before our range. where our are essentially downsides and our updated I to chooses comfortable for for driving reflected revenue went on XX And March predictability their revenue margin which enter provides scale Meanwhile, the to provided have to contract our outlook guidance updated with visibility lifetime major restoring

terms than stronger expect channels demand acquire X.XX the and X.XX we products to to complement subscribers for performance, our new services million million sales on having to total our versus In available Vivint full X.XX with of revised guidance of quarter expected guidance million. solid to XXXX previous and based second million X.XX of end customers,

$XXX of is Our guidance estimate revenue billion to $X.XX $XXX raising and we million EBITDA for $XXX previous $XXX are billion line million. to Operator, $X.XX between open the for versus billion. our XXXX $X.XX guidance adjusted between guidance finally, And billion to versus million million please $X.XX Q&A. previous and

Operator

Instructions]. Thank you. [Operator

comes from with of the question JPMorgan. line first Coster Your Paul

open. is line Your

Paul Coster

this pretty under the Wow, quite a really circumstances, one such Hard news kick impressive. good awesome. that to was was apart, it

And does think all it Is was sustainable? low. So RIC are you’re just positive of just, the number for Or of to I’m XXXX, is in do you is cash said like sustainable? wondering, feel going flow be Todd, this just -- also the expectations. this instance, ahead you you so so

Todd Pedersen

We’ve Yes, side not the by yes, time that’s of book actually should think to is reduction This on for over made believe of that improvement we way, what And the on put changes it’s of is of this led pool underwriting reduction been to But didn’t good And it do of this -- revelation year’s working RICs Dale note in and this to models an We’ve business structure as the to and just of attrition sustainable. happen. accounts the number. one is we see we I very outstanding. on the listened number us. sustainable. been to the -- mentioned, the that just this should RICs, this business do. -- to now we’ve of changes the company, some a kind cost the time on intending quite some business

think sustainable. I yes, it’s So, the answer is

Paul Coster

what Right. I Google validation course, seems or a with a Got up it you? bit, that is trying it catch competition to a mean you then, of be help And does it. where ADT to to is mean,

Todd Pedersen

Well, Home absolutely But the is ongoing for It I a tech. Vivint it of service Service. really delivers them important of as absolutely requires install It’s bulk a Smart within. elegant great delivering need think the the and situation -- head. you on the that into to hit critically market, in an validation model the providing

We’ve got news, -- investing to that so, that’s all been for read upbeat. you’re This And into and this a likes to a be When Google someone with we’re you that’s a the yes, got all opportunity honestly, saying huge good the is be us. is along. in, of space these thing TAM, I huge great. --

Paul Coster

so much. great, Thanks Okay,

Todd Pedersen

Thank you.

Operator

Your Rod Goldman Hall next line from with comes of Sachs. the question

Your line open. is

Rod Hall

and off you how Likewise, give some secondly, idea if for could us as us might start I job And through forward could subscriber question. Thanks through of the guys. nice Hi, quarter? environment. year. as the flowed just the give then questions any you idea of like for look in of Couple the what rest attrition that wondering tough a if see you. with new you linearity Yes. to wanted the look

in kind on Thank give any attrition If be couple idea next you the us that you. would can quarters you’re for what of of thinking useful.

Dale Gerard

for joining. is Dale. Rod. Hey, Thanks this Yes,

in I tough. subscribers is of think terms

really was we said, As the six first of weeks quarter. the had paused we for -- direct-to-home

So be teams we of continue from around out really different very to those second production May. to the started saw states from week most those a wanted go quick to. and not direct-to-home states that in. across all ramp areas we’re we good locations is in And didn’t rolling see really the we we’re There all that in. like teams across that offices, And we to

demand out roll to to. leads you -- in been carried first across sales to quarter. strong inside of in where seem You the be that And That’s referrals coming a has and sales, those the into when -- more terms well. quarter. volume look was from so second reporting out quarter teams really we the at to very, go they SEO and right forth. in inside then full different And that full the are and kind of for ratable and very And strong that expected

So demand third go And quarter here. the continue we’re seeing ahead, then, that Todd. into

Todd Pedersen

again the I important numbers very this for Well, note put Smart have and substantial very is that the consumers want one to that and fact the from we Vivint Home demand mentioned already, but the we’ve offering. been proven it’s up thing

of RICs really coming on really happy like demand performance the hard company. product past, look together, you view and in on to you up we’re a we the on that are overall the and know add Canada, the outstanding. it elimination of the was you it into It’s how When said, when value are past, we about the boarding don’t considering, the environment. QX services offer, Vivint looks consumer whole But we provide the how business it our of customers was direct-to-home. positioned, the the and We on and in in then and new at the decent pause not which good, percentage you also describe

Dale Gerard

people the again And are homes, their how And again, with what your are at mean, quarter. people services the attrition. around really that attrition to second higher reconnecting performed engagement seen even we’ve then with we’re in are attrition quickly people with because on I or it. is engagement seeing touch as the offer. think though how valuing just platform, We than happy quarters, the previous we were really using the that’s high question home, we the very in very,

with using different with the cameras more. a They’re Just the more that, home way, system. engaging they’re their throughout

deliveries For packages door, front see having your to those system with Those that your of talk people, now of more interactions off. example, camera people being able attrition. more, to left like to use we’re at that are also being dropped their what are in seeing door-up types actually who front kind to But and or homes coming about is cautious what’s that and door door. wanting understand through to we’re front the

half. percentage portfolio. life terms about And the of we’re those our -- when higher phase And perform at still XX% also of cautious their kind cycle. attrition, end-of-term of of in then a That’s normally we in In economy of or cycle. still we their customers have life higher of the have that in second know about customers kind they’re

through would And so will to the what the continue really, feeling good year, but seeing that attrition it rest will what rest really -- you from year. of I performing the look performance as in out well cautious think rather now. we’re right of and like it it’s the tell for confident also we're But the is we're of we

Rod Hall

Well, congrats And Okay, that. for again the thanks you. numbers. great. on Thank

Todd Pedersen

Thank you.

Dale Gerard

Rod. Thanks,

Operator

line Amit the Daryanani of from with next question Evercore. comes Your

open. Your is line

Amit Daryanani

were that think dropped start you eventually? lower impedes this wondering, raise acquisition the guess Maybe I cost. in think costs. subscriber me do subscriber with a as well than as net there raise really modeling it down? upfront these well. That for fact packs, that to were that any factors pricing pricing you demand on on that for the least. sounds to just off starter of play were we a other number if like you Was your at I'm And to And at able start I lot the it growth couple reflected the came

Todd Pedersen

Yes.

view, better in does the starter the change incredibly pricing partner our doesn't paid I on numbers change. ourselves did really And for a per then demand. group we their had well paying performance point change obviously, consumer's would kit on the didn't the Dale changes again, from spoke performance the It they're package. increased say received it, our So year-over-year. comes And financing inside but demand, It was actual consumer. our program. just rep between when itself a basis. to of for was average dollars of it it performance dollars monthly and direct-to-home a And from it And balance to that sales the spoke and the -- elevated

affect not did absolutely So consumers. demand from

Dale Gerard

it's is then, And been -- this Dale.

the And The other one-time fact SAC year-over-year. not hey, the almost that of in is -- that's down RICs point quarter. about of just kind that that XX% driving second reduced net we of a of, kind did we

and their bringing the as to to have big of was we zero. Flex on another -- have probably bring partners fact RICs that's rolling RICs go, started down our the driver the contracts those recall, take basically we in down. with out customers. finance put is, get balance upfront is but RICs, no as that essentially Pay we were once goal RICs We'll able if to -- just Our we as quick money some Vivint real from sheet, And you

or So more of lower SAC that to by also financing net partners full the upfront paying to out that of actually to down. substantially customer to us their for those account, and our enabled that's being bring in able own move

Amit Daryanani

new right, And I'm curious I like? you if that, like of follow what just the or down month QX how subscriber helpful. I June were weeks numbers any in And you month the look when then That's that's did difficult trend a the terms how of look July something that the line was up, X% not if the in then it at new really it. in I complete shutdown, looked indication could look six subscriber and maybe where well? of think at Got I was, understand growth or number, completely as

Todd Pedersen

when year increase when I underwritten year still to basis, customers down revenue numbers that attain XXXX is per I'd customers XX% we a month, it's revenue again, have look net try subscriber underwrote the compare When in So, if XXXX, an per granular. we outs because outstanding. and only this. last But of not we did ahead probably subscriber to won't year. say that. we're And of outstanding, this basis, apples-to-apples on the actually and X% eliminated the of we adds would you get you the fact were last We the in that beyond on at reiterate -- to

reiterate So I that I say tremendous this enough just continues. And quarter. it was can't trend the would a

So we and and forward. on really are home positive we get reconnecting too consumer -- what's in increased feel Dale of really But people very due It's a we're this, but like mentioned lot demand situation. going to can't benefits positive with new we seeing happening a their granular that We're time. of as factors, environment currently that we're one from be over a that the home is at lasting those effect of might and their looking change that. are really having companies the that think are fact a home, people their

Amit Daryanani

leave after Got and one me I'll this. it. Last from

a fair That capital we expectations great. Given to about getting the the guys. for free be cash the this how congrats in think quickly? delever cash a do company good wanting is do the better given amount? quarter, pulled on would flow And free you year, more Or positivity think flow about usage, fact

Dale Gerard

Yes. Thanks.

XX terms to in -- laid less original of cash to a I on times we think or months. on then our the we cash said EBITDA-to-debt goal projections also three of this mean, we've an flow all flow, kind ahead along how way We're continue And we've ratio, neutral be year. a leverage wanted about we of to to ratio. get think XX out I of

there. think brand into I have investments at that's how the So whether that other we has use continued generate about down don't whether don't the We look talked to want or to a products, new quarter, pay Todd that's we'll that services. we -- to at we really to look and this debt make we'll that cash, have out new cash company,

that vision, overall go we're this actually drive on customers very money the kind cash in to flow want we fact of the positive to The quarter down But in of able growth as how will company, I get of throughout very, did rest and $XXX million for that decide part We Yes. would which the get end the recalled, July. paid down outstanding the some year. believe second we on we're continue we a about do more revolver we'll had the remarks, the we we spend -- think revolver. pay even on excited just branding of so at so the we and to And I go. long-term this and last said June my thing,

fully setting that were of so back we're balance pay revolver and on sheet. able to And we kind cash the

Operator

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

open. is line Your

Jeff Kessler

you. And Thank hello, gentlemen.

Todd Pedersen

How are you doing?

Dale Gerard

Jeff. Hi,

Jeff Kessler

I'm am good, doing doing And I with good. connecting home. my

that spent you ongoing to to of the and have period, if to U.S. goes the downtime -- temporary the tinkering the time how the add guess, both I actually period wondering and sell? still in want to direct-to-home you any Canada, what time I'm fine-tuning that -- group or call of group market and that how One the in want group, your they you that for

Todd Pedersen

did. what force, think with the engagement how hope sales reality we when inbound we And, did time. than and of from brand actually awareness positive not That's engage we to our We experiments to it's who demand do. would had mentioned, But expanding at increase it But types shutdown of services. really to overnight I know I we kind informing more us over would as they're is mean, had happened. Dale engage and all they to, companies might unaided households different say less results we even some workforce the demand bit to ask. -- even we knowledge point, on But in, inbound Vivint's of start that because consumers had actually did an and this about say the can are would and year X% interesting of actually build the with do some going how you and basis, a American as at consumers. maybe and I'm we dig I we

that increase we needs efficient if there or as that group, does and opportunities part those utilize of so, come additional services. think some to really around test, are tremendous of be And with and really Vivint's demand in

So yes.

Jeff Kessler

better Has the changing on? apps, the or stressing to probably in time. per up a a seen little terms video going really package end in the set there get -- has sell or or allowed there of had there to -- to because different kind different than on partner helpers it's would initial is long it before? but anything video by stress there been bit year you of -- applications better that other a silent the has be another types that a particularly apps than types of are doing we've could -- been there know gone have an been of app things, Is as is Because you? of I with year some and by just have you video, in this effectively in video, be helped -- have it sales could there you able is And

Todd Pedersen

Yes.

of us general kind an in engagement that that's -- isn't So, and here emailing the quality did of consumers have we ongoing them driver our the of major things the the that there do. in proprietary with is is is video install, showing. the have, system demand recorded we've that engagement the data there video do And say, the inside functionality in video kind professional I arm/disarm of anywhere it seen actual hub, definitely engagement, But live realm views, views, know no with for of just we feedback increased different is This provide. service in delivery customer, stack, app. we're user does platform, anyone I guess technology system. itself demand of a we what we ability mean, and viewed it. the the peace to displays connectivity with what of that mind or otherwise. increased from their loop, isn't we like we And one or in the service of our what own or I would we This seen

So outside other are helping apps no I push. that would say there are

is while would this we and not to penetration segment. We smart is huge by years think attainable. becoming this having in Vivint much percent in But us provided a and demand momentum think XX-plus think going many I very large kind the that's premium interest and well, a that in We're to provider how like this obvious will that is is the very that a market for home state, the service is demand of a guess. believe we U.S. is, be it market. people's gaining a very be households

Jeff Kessler

regard would touch there with I home homes does on about attitudinal city young is, out as the what an to change that larger getting itself, it that a out particularly with movement the because more homes? it suffice not little for if this? finally, moving de-urbanization, people areas as call suburbs, or they is of And a of seem XX their people, into need is XX to talk of bit realize Okay. the whatever finding people you to it moving homes does beginning with of into necessarily a and also are you DIY from larger market zones. Are There monitoring urban if getting in

Todd Pedersen

I Well, think that's observation. an interesting

and we couple DIY-able service a One, provide a is product of Here notes. currently.

about we customers with The the for talking answering phone, actually numbers truck thing capabilities potential rolls, also on is technical the We that service up we our back are that the end. can customers on amazing back do. that, not but or

end-to-end. of kind can we So

That's has that and inside to thing thing homes a in of and if up can grand and DIY in didn't then And that space. an addressing, need provide life. they've combine on quite they on capabilities to deliver And a matter. really of that professional for is for never in to someone to of it's I Through personal delivery very, products the highest quite because But that this go to brought service of even consistently about is services a However, we to is some way. the delivery delivery good DIY, is with COVID, had last has our quality that services, yet, with the some address say up compete now past. interesting the take Vivint used my scale. the reliability want really who food even that you I'd company an to wants ongoing market for us with -- to services, say very time had interesting I value products realizing basis that's see Google us order -- DIY-able they in big and people's

all we that's Now, do.

So, anymore. delivered get go I me. my even own don't It's food to

devices, which is the and CIO into to locks. is my want it's me want don't I -- car. the more don't I cameras But manage deeper connectivity thermostats And home don't my smart experience to the and don't really that and of and done so I deeper with or door want sound I a XX, home technician And just and are consumers who going a No, more for deep their XX things mow lawn, XX, have wash other XX, home. absolutely and to be happening. I adding think People lazy.

couldn't in fact we a we position so And the we're and be about that leader. the are market happier that

Jeff Kessler

final -- of Okay. my you servicing a the deal of customers. here. question because brought I And Well, here, up cost And I'm with coverage sorry, me. from interesting is and you all lot you've all point talked is that but about quick that one service about an which talked with this

sure -- to are easy complexity become can't and you you that just out end, keep more that the have how of doing to they have it's up can minds from to so an more you What other still in five have the easy-to-use demanded the with you levels their to in let's the -- explain fashion? integration when to is the your complex system that make do how say, what devices they use complex, you're As up what XX service devices? you tech do, at going and are become them

Todd Pedersen

connectivity integrate. again, This sure own make products ourselves shines. data we integrate we Everyone will because -- do process we best-in-class to that much system, and more more we -- for operating WiFi platform. the But we issue. that allows the and manage. to take to Vivint your gets difficult where camera, greater. that important hub, unfortunate our too really develop doorbell -- This and platform on this not not control and that that connectivity, our things for platform on knows you The But an fact that's go greater you wrong. more really if And to as and start and potential that that, the installing the becomes more it upon our our too devices, you're mentioned, the install more like adding into of demand is flow instance, is a and we and in-house

way. obviously loop feedback of with we system. I service that's platform, network, you the coming our Now, immediate our through feedback loop daily that is incredible platform, very software, fact team, engineering our this there firmware, AI tracked design, data and and X.X hardware by have mean, the pieces billion installation

If substantially. and would seeing, at down of you're roll demands. are we have of we you reverse And a to the the thing hoped they're comes is not our we just better happened. attrition Because service And go better firmware, little attrition would that this And done and going levels that a and service to and protocols which better not by get consumer. it the software end answer well, the could we've if our that things. new long service of $XX, then two-year don't from $X.XX work, levels and over for as speaks But great aren't the which, to maintained watching that's it cost and continue happens month, delivered are had it it's than time -- sub by per happening in great, sorts roof. just cost going very best therefore our through thing service are just have great, to class also in enhanced. better And we that day, comes trucks. very, predictable need just had to are to quite margin reduces way, those period, our connectivity that new with quality very release a new you per month we to is sub that We've hubs, levels it's And for. keep numbers -- model. so releases, through business reduced per happens last that go substantially better installation this not rolls every done don't it things of has just service bit, service. it truck and service phones, they're the more attrition theorize up to go service both, at you We And that and per delivery the so when when a to up, service new

Jeff Kessler

and it. Okay. appreciate and thanks, Nate. I Well, Dale, thanks, thanks, Todd,

Operator

next [Operator Instructions] line comes RBC. the from of Khajuria with question Shweta Your

line Your open. is

Shweta Khajuria

Thank Okay. you.

due about think margin outer we margins. years? the the EBITDA half, are levels. then quarter, going at Even margin. please. implies of the calls And similar elevated Could to you Let service but guide the How barring for reduction already expect two for sustainability from your about costs, you EBITDA just the as to you pretty because in half we said forward? your COVID. increase very talk only on of healthy When a in me this think not cost generally question in the margins quarter about think costs, dramatic try we The expansion back back those that should and potential

So forward? potential going help the for Thank think expansion about us you.

Dale Gerard

Yes, thanks.

based quote about mid we don't want what costs, that think if But I on we think think. I where at think you a you the of really of looked is a if and more, of always kind put bit you servicing I'd reason give margins think. half follow-up see think needs. in lot dollar, why service a there XX% is we kind margin second the year. And I service XX-ish high servicing we'll know, to it's the quarter XX-day on in a probably in is the percent of back period. little range costs a customers we our And come where as you to

So into that just quarter and have there People over the into to we -- also times where to truck we lot and help, can installs. that think are point we related fourth think integrated quarter just a more new back quarter, service second a then this again decreased wanting to had going can calls into And of to those had the like phone. is their solve or rolls not around and we calls goes I in COVID. fully call were Todd's related center where I in come just third the we system it of the people homes lot problems

to home, does when truck in, to call can panel, a actually which somebody of lot log or in having resolve to into their is the without someone So send help, log we really important. remotely a issues, sending out their

Shweta Khajuria

please? Okay. And margins, the on then

Dale Gerard

at continuing always ways in the we I Yes, be that's full-year and we'd and on of mid year, of business and said We're at this that, think Todd think scale basis, to the the on you this look the where it, to have. that's said looked again, if again, when in think thought optimize looking low are. you we we're I've I optimize call And kind at XX% what rest this a margins. think margins, I we I is EBITDA

at at that that. year, quarter you in or And looking When we're quarter to mid full continue so look for it over XX% low the probably range. look we'll to

Shweta Khajuria

Okay. Thank you very much.

Dale Gerard

Thank you.

Operator

the with of from comes line Kunal DB. Madhukar question next Your

is Your line open.

Kunal Madhukar

Hi. and a the and not competitors? to service it understand rolls, attrition quarter. cost monitoring Thanks of manning built other to then the from is One, couple. part, how service switching people And what -- side? or sense the wanted how customer for wanted much any the a had of versus that attrition, being side, you on the reason then versus get moves to taking have the are the I down broken doing the question. between truck or Great is on

Todd Pedersen

Yes.

incredibly those of into. break on we across to with probably happening that the cost that haven't out probably and and the that's system development, Vivint's current then investments the made there sub software years. to environment. the action again, happy so to -- are gained all structure. We how that answer detail just into actually we've And all of per the also the we what's we actions. and results. wouldn't month would that the -- not is technology, hopefully of service down over hub back And our dig actual firmware numbers individual inside and operating owning we But we the these protocols the per service is done delivery, This that phones today then installation result person. are happening really be training releases, just technology, board efficiencies down some and are these So, just of in you And in a don't our

go we we of lot that moves, those our a of want into of break don't then when it comes in numbers is that those, attrition out reduction both things the giving don't hate you service on just answer with there break And to I to that also the So out. detail. but costs.

Kunal Madhukar

a the operating I you alarm.com especially tech like landscape, if this maybe kind operate -- be of your does cool. That's how its for -- everything with how of partnership is do might changes, how do change which and A with alarm.com number thing they ADT you and stack competitors, that follow-up this Google's is with but become in system with -- may. How think and the how about Google just the maybe coming else? think

Todd Pedersen

What Blackstone integrated would and own that to user the and need tens really arrangement them sure hub improvement fact I'm back about our to maintenance of annually is tens we ask it's that to getting we own own, experience. other been we've it. alone own what the everything -- our And we and and platform, be our -- us that but technology operating on it's is millions very I and have very that to not don't and on it's years we're we investors we that app I'm others or spent providers. is and tens developers And and our just the so and look, platform and of the the in to Vivint that. do relevant, proving platform, end-to-end have dollars other we've relevant make we sure -- that with and depend control I'm in fully fact over on glad and the you allowing which entire system providers, very that or hardware look, we would gracious that of and and that critical own this, say do stack, developed not Vivint,

Kunal Madhukar

Great. Thank you.

Todd Pedersen

you. Thank

Operator

line Your of next Morgan Jefferies. question comes with the from Todd

Your line is open.

Todd Morgan

chain secondly, any really drivers mean, slightly -- sort pretty you quarter? higher continue as down big the RIC prices subscriber even stock any of by Thanks. have don't acquisition another add results. one that costs I that I net about materials sourcing Dale, guess, talked ratchet typically Number And at I really down of Great early called you that is the sequentially. into or quarter, package great adds shortage very if the in not you issues look from companies given higher is front. just subscriber things. of kind difficulties that's high the in if Should reduction getting in that $XXX, rapidly here If overseas. is I get number. think in third with year. know the you. would you're I I a which know subscriber up guys a to supply and Two And out, Thank couple third about the the subscribers.

Dale Gerard

Yes. Thanks.

So the chain. two things. We'll supply with start

for You're make for sure second, based do, what upon to or going lot period. what do on put where do inventory we of I would the accounts, right. third preparing that think call we we install place a most based business do we're We way our our -- pre-buy we have of quarter we and on in the and

we've so chain. in our really terms not disruption And seen supply of any, any

of we've have we're We make making good our see have and to our go pricing continue fact the -- structure that that RICs sure of available when manufacture quarter where do forward, in current vendors it's that's probably to all how model, to $XXX, -- if what our expect our third Officer down contract in in a to were you really technicians we sure product are we need to reduced going and to -- constantly you continue terms out, reduction that our kind see Chief we right. that install we and report reps, manufacturers of can those you as working forth. and said Procurement would subscriber as the you Based so we of terms the costs, roll In sales upon come the net math to so that. we continue with where we run we we should acquisition

Todd Morgan

Great, thank you.

Dale Gerard

you, Todd. Thanks. See

Operator

to There remarks. are no further for back questions at this over time. I will management turn the call closing

Todd Pedersen

Yes.

the all also. numbers. And management of results. call QX is We the know So, were We getting hope individual sure current on for downturns everyone -- were being our about structure customers impact their focused with or you continued on upcoming investments. and the underwriting we making subscribers, environment, we're or cautious that that happy economic phone appreciate economic very cost in any just

with -- we phone all look the in getting we're So again you forward QX. to on

you. thank So

Operator

Ladies and Thank you gentlemen, participating. this concludes today's for conference call.

You disconnect. now may

Vivint Smart Home (VVNT) 9 Aug 202020 Q2 Earnings call transcript