Alarm.com Sees Continued Growth in 2017

By Timothy GreenMarketsFool.com

Connected-home platform provider Alarm.com (NASDAQ: ALRM) reported its fourth-quarter results after the market closed on March 15. Both software-as-a-service and hardware put up solid growth numbers, and non-GAAP earnings surged. The company's guidance calls for continued growth in 2017, with high levels of subscriber retention providing a reliable source of revenue. Here's what investors need to know about Alarm.com's fourth-quarter report.

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Alarm.com results: The raw numbers

Data source: Alarm.com.

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Image source: Alarm.com.

What happened with Alarm.com this quarter?

Both software-as-a-service and hardware drove growth during the fourth quarter.

  • SaaS and license revenue was $46.9 million, up 21.2% year over year.
  • Hardware and other revenue grew 25.6% year over year to $22.9 million.
  • Adjusted EBITDA jumped 47% year over year to $14.3 million.
  • GAAP gross margin came in at 38.3%, up from 35.3% during the prior-year period.
  • GAAP operating expense grew 21.3% year over year.
  • Total cash and cash equivalents reached $140.6 million, up from $128.4 million at the end of the prior-year period.
  • Cash flow from operations during 2016 totaled $17.5 million, down from $27.1 million during 2015.

Alarm.com provided various pieces of guidance for the first quarter and for 2017.

  • First-quarter SaaS and license revenue is expected between $49.3 million and $49.5 million.
  • Full-year SaaS and license revenue is expected between $231 million and $232.5 million, with total revenue between $322 million and $325.5 million. At the midpoint, this represents revenue growth of 24%.
  • Full-year adjusted EBITDA is expected in the range of $65 million to $66 million.
  • Full-year non-GAAP EPS is expected between $0.73 and $0.75.

What management had to say

Alarm.com President and CEO Steve Trundle discussed the progress made during the year:

Looking forward

Alarm.com now has 5 million subscribers, with the recent acquisition of Connect and Piper adding to its total. That's up from just 2 million subscribers in 2014. With a SaaS renewal rate of 94%, Alarm.com is building a reliable source of recurring revenue.

Alarm.com expects revenue growth to continue at about the same pace in 2017, driven by SaaS and hardware. With a network of over 6,000 service provider partners, the company is well-positioned to benefit from the trend toward smart-home technology.

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