Alarm.com Boosts Its Sales Guidance for the Year

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Connected-home software provider Alarm.com (NASDAQ: ALRM) reported its third-quarter results after the market closed on Nov. 8. Revenue and earnings continued to expand as the company picks up more subscribers, and as those subscribers add more devices to their systems. The company also boosted its full-year revenue guidance. Here's what investors need to know about Alarm.com's third-quarter results.

Alarm.com results: The raw numbers

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What happened with Alarm.com this quarter?

  • Software-as-a-service (SaaS) and license revenue increased by 39% year over year to $61.9 million.
  • Hardware and other revenue rose 20.8% year over year to $28.0 million.
  • Adjusted EBITDA was $19.5 million, up from $11.8 million in the prior-year period.
  • GAAP net income included a $5 million tax benefit related to a new accounting standard for employee share-based transactions.
  • Cash flow from operations totaled $13.8 million, up from $3.6 million in the prior-year period.
  • Cash and cash equivalents totaled $84.6 million, down from $140.6 million at the end of 2016. In October, Alarm.com refinanced its $72 million of debt under a revolving credit facility by entering into a new senior secured credit facility.
  • Alarm.com released a new web dashboard for subscribers, rolled out software enhancements for its video service, and launched Mercury 3.0, an enterprise software solution for utilities, through its EnergyHub subsidiary.

Alarm.com provided the following guidance for the fourth quarter and the full year:

  • Fourth-quarter SaaS and license revenue is expected between $63.7 million and $63.9 million.
  • Full-year SaaS and license revenue is expected between $234.8 million and $235 million.
  • Full-year total revenue is expected between $332.8 million and $334.0 million.
  • Full-year adjusted EBITDA is expected between $68.5 million and $69.0 million.
  • Full-year non-GAAP net income is expected $43.2 million and $43.7 million, or between $0.87 and $0.88 on a per-share basis.

What management had to say

Alarm.com President and CEO Steve Trundle discussed the company's progress boosting attachment rates for advanced devices during the conference call:

Trundle also detailed the success Alarm.com's partners are having getting subscribers to add additional devices to their systems:

Looking forward

Alarm.com's third quarter looked a lot like its second quarter, with a similar revenue growth rate and earnings expansion. The company boosted its full-year revenue guidance by about $6 million, although it lowered its outlook for non-GAAP EPS. The previous guidance range was $0.96 to $0.98, with the discrepancy due to the exclusion of certain tax benefits. If those benefits were included, it would add $0.25 to non-GAAP EPS.

Alarm.com now has more than 6,000 service provider partners and more than 5 million subscribers. With smart-home security representing just a fraction of the total home security market, Alarm.com can continue to grow for years to come.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Alarm.com Holdings. The Motley Fool has a disclosure policy.