The Platform for the Connected Home and Business

Transcription

1 The Platform for the Connected Home and Business November 2018 Copyright Alarm.com 2018

2 Safe harbor statement Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical fact contained in this presentation, including, but not limited to, statements regarding our possible or expected future results of operations, our financial position, our business strategy, our product development plans, including product and feature releases and related benefits, our competitive position, addressable markets, industry trends, potential growth opportunities, our ability to successfully expand in existing markets including internationally, our ability to attract new subscribers, development and growth in our partner ecosystem, and our future financial performance, including our target financial model and expected future revenue, are forward-looking statements. Any such statements are not guarantees of future performance, but are based on our assumptions, expectations and beliefs as of the date of this presentation and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement. Investors should not place undue reliance on our forward-looking statements. For more information about factors that may cause our actual results to differ materially from these forwardlooking statements, please refer to the reports we file with the Securities and Exchange Commission (the SEC ) from time to time, including our most recent Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018, our most recent Quarterly Report on 10-Q for the quarter ended September 30, 2018, filed with the SEC on November 7, 2018 and our subsequent filings with the SEC. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. The information in this presentation on new products, features or functionality is intended to outline our general product direction. The information on new products, features, and functionality is not a commitment, promise or legal obligation to deliver any feature or functionality. The development, release, and timing of any features or functionality described for our products remains at our sole discretion. Non-GAAP Financial Measures This presentation also contains certain non-gaap financial measures as defined by the SEC rules. These non-gaap financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. As required by Regulation G, we have provided a reconciliation of those measures to their most directly comparable GAAP measures, which is available in the Appendix slides to this presentation. Please refer to our November 7, 2018 press release for information as to why we believe these non-gaap financial measures are useful to investors and others in assessing our operating results. We urge investors not to rely on any single financial measure to evaluate our business. 2

3 Company Overview Market Opportunity AGENDA Alarm.com Solution Competitive Advantages Growth Drivers Financial Overview 3

4 Company Overview Founded in 2000 IPO in June 2015; Nasdaq: ALRM Smart Home and Business Solutions to intelligently protect, monitor and manage properties worldwide Go-to-market via 7,000+ service provider partners 5.5 million+ subscribers 866 employees Note: Data as of September 30,

5 Key Investment Highlights Large & Growing Market Market Leader & Innovator SaaS Recurring Revenue Model Strong Growth & Profitable 5

6 Market Leading Innovation 6

7 Largest Platform for Intelligently Connected Properties Million Subscribers Billion Data Points in the last year alone 80 + Millions of Connected Devices 7

8 August Locks now work with home security systems powered by Alarm.com You can expand your system with popular smart-home devices through Alarm.com We are making the video camera smarter Alarm.com s enterprise services support the end-to-end needs of Smart Home Security Dealers. The promise of cost-effective solutions that leverage AI are beginning to materialize with new video analytics from Alarm.com One of the coolest integrations we saw was all the smart home stuff you can control through Alarm.com. FEATURED IN: 8

9 MARKET OPPORTUNITY 9

10 Global Connected Home Security Market Professional Installation ($B) $ $ $4.1 $4.8 $5.8 $ Source: Technavio, Morgan Stanley Research 10

11 Security: TOP SMART HOME CONSUMER BENEFIT Personal and family security 41% Energy/resource management Property loss protection Indoor convenience 13% 16% 16% Smart Home Considerations: Who installs, integrates and supports a security-centric smart home system? Who can create and manage a tightly controlled ecosystem for these devices to work well together? How can the data from these devices be leveraged? Source: Business Insider,

12 120 million North American Homes Current Home Security Market 75 million owned homes 45 million rented homes 22 million homes with professionally monitored security Source: Pew Research 12

13 Current Home Security Market 22 Million Homes 5.5+ million Alarm.com ACCOUNT TYPES (North American households) SMART HOME SECURITY Controlled and managed via mobile apps 8 million smart home security High subscriber value and engagement 14 million traditional security TRADITIONAL SECURITY Controlled and managed locally Limited capabilities and low engagement Source: Parks Associates 13

14 Projected Home Security Market in Million Homes ACCOUNT TYPES (North American households) 16 million smart home security 10 million traditional security SMART HOME ADOPTION D R I V E N B Y T H E S E C U R I T Y C H A N N E L Nearly two-thirds of smart home devices are attached to a centralized controller provided by a security company Source: Parks Associates 14

15 Small and Medium Sized Business Market ~4 million target properties in US High penetration of traditional services Opportunity to upgrade to integrated, smart business solutions Source: Parks Associates 15

16 A LARM.COM SOLUTION 16

17 Intelligent Solutions Interactive Security Video Monitoring Energy Management Intelligent Automation Wellness Solutions 17

18 Alarm.com Platform Unified Experience Intelligent Solutions Security Access Video Energ y Lights Garage Water Internet of Things Ecosystem Advanced Cloud Platform 18

19 OPEN, FLEXIBLE ECOSYSTEM 19

20 SIRI SHORTCUTS Use Siri to arm, disarm, and run Scenes. More commands coming soon! Hey Siri, I m almost home from work Done. Alarm.com says: Running Almost Home Scene. Almost Home Scene: Porch Lights On Interior Garage Door Unlocked Hallway Light On A/C Set to Cool Audio On 20

21 Subsidized by Major Utilities Energy Savings Verified by EPA Guaranteed Accurate Measurements Copyright Alarm.com

22 SMARTER BUILDER SUPPORT Heating and Cooling Systems In-Wall Lighting Control 22

23 A LARM.COM FOR BUSINESS 23

24 A Unified Solution Security Video Access Energy Copyright Copyright Alarm.com

25 Play Video 25

26 Commercial-Grade Video Solutions Flexibly addresses the needs of many types of small and medium sized business Broad portfolio of commercial-grade video cameras Integrated with intrusion and access control into a single, intelligent solution Live streaming HD video and recorded clips of important activity 26

27 Smarter Access Control Securely manage access to assets and facilities ranging from storefronts to entire office. Intuitive, cloud-based user management software designed for the SMB market Enterprise-grade integration streamlines permission management across all access points and for multiple employees Retrofit friendly and minimal on-site hardware for competitive price point. 27

28 IN-APP UPSELL: ACCESS CONTROL New card on app home screen Tap to open animated, interactive sequence 28

29 A LARM.COM AI 29

30 Play Video 30

31 ALERTS THAT MATTER Person Stay Connected to Family Enhance Perimeter Security Catch the Unexpected 31

32 COMPETITIVE ADVANTAGES 32

33 Go to Market Strategy 7,000+ Service Provider Partners Residential ~22 million homes in the US have monitored home security (Parks Associates) Commercial ~4 million commercial buildings in the US are less than 10,000 square feet (EIA) 33

34 Sales, Marketing and Training Resources Customer Engagement and Upsell Solutions Remote Diagnostics and Support Tools Business Intelligence Reporting 34

35 How We re Different For years, Alarm.com has continued to achieve strong growth even as the DIY/Retail market segment has more entrants, thanks to several key distinctions: DIY/RETAIL PRODUCTS Typically singular device with narrow capability; added devices require separate apps/seldom integrate Primarily home automation devices; most end-users seek convenience and are lured by marketing User-installed User resolves technical glitches with limited support Typically self-monitored Broad system of multiple devices and capabilities, well-integrated with single app control Users seek security first, often triggered by life event (family expansion, new home, etc.), but they also value home automation Professional installation Ongoing professional tech support Professionally-monitored 35

36 GROWTH DRIVERS 36

37 Compelling Growth Drivers Add more subscribers (Currently 5.5 million+) Upsell and cross sell existing subscribers (In App Ads and Upsell Engine) Grow Commercial (Enable existing service providers and add new partners) Grow International Grow Verticals Property Mgmt. & Vacation Rental, Demand Response, Wellness, Etc. Add more Service Provider Partners (Currently 7,000 +) 37

38 Growth Opportunities 1.4B-1.5B households worldwide 5.3% Global smart home penetration Global Markets Property Management Energy Management Alarm.com services are available Targeted future expansion 38

39 Global Service Provider Brands SEE MORE EXAMPLES HERE 39

40 Growth Opportunities 27 million Multi-family units 16 million Single-family rental households ~1 million Vacation rental properties Global Markets High Growth Potential for Untapped Vacation Rental and Property Management Markets Property Management Energy Management Source: National Multifamily Housing Council, Urban Institute, and Wall Street Journal 40

41 Growth Opportunities Managing connected devices and distributed energy resources for utilities at scale. Global Markets Property Management >4 million smart thermostats sold in 2015 >32 million smart thermostats in 2020 Energy Management >7 million electric vehicles on the road in the U.S. by x growth in energy storage capacity in the U.S. by 2022 Source: Navigant Research 41

42 Advanced Control of Distributed Energy Resources Utilities rely on EnergyHub s Mercury DERMS software platform to control consumer-, industrial-, and utility-owned DERs and IoT devices and provide critical grid services, such as demand response, load shifting, voltage support, renewables matching, and managed charging. 40 utility clients, including 12 of the top-50 in the United States Programs available to 25 percent of U.S homes Largest connected device manufacturer ecosystem 2012 Pioneered the widely adopted Bring Your Own Thermostat program delivery model 42

43 FINANCIAL OVERVIEW 43

44 Q3 18 Snapshot Continued Strong Execution Year-over-Year Growth 20% $74.3m S a a S & L I C E N S E R E V E N U E 33% $25.8m A D J U S T E D E B I T D A ( N O N - G A A P ) 24% $111.8m T O T A L R E V E N U E 36% $18.2m N E T I N C O M E ( N O N - G A A P ) 85% SaaS 62% Total G R O S S M A R G I N $41.5m L T M F R E E C A S H F L O W Current data represents results as of fiscal quarter ended September 30, The future financial results presented are not projections, guidance or an outlook for Alarm.com's future financial results. Free cash flow defined as operating cash flows less Cap Ex. 44

45 Consistent Revenue Growth ($ in millions) $103 $87 $68 $41 $55 $47 $83 $56 $111 $141 $174 $ SaaS and License Revenue Hardware and Other Revenue 45

46 Track Record of Profitability ($ in millions) 21% 22% 17% 16% 19% 21% $72 $49 $21 $28 $28 $ Note: We define Adjusted EBITDA as net income before interest and other income / (expense), net, provision for income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense and legal costs incurred in connection with non-ordinary course litigation, particularly costs involved in ongoing intellectual property litigation. Adj. EBITDA Adj. EBITDA margin 46

47 Key Financial Highlights Scale Growing Highly scalable platform 5.5 million+ subscribers 80 million+ connected devices 100 billion+ data points processed in 2017 Strong compound annual revenue growth TAM expanding with Smart Home Adoption Recurring High SaaS and license recurring revenue model SaaS and license revenue renewal rate of 94% Profitable Strong cash flow and profitable Increased operating leverage as business scales Favorable unit Economics: CLTV/CAC ratio > 6.0 LTM; payback of S&M in 12 months 47

48 A PPENDIX 48

49 Investor Data Sheet (1/3) Alarm.com Holdings, Inc. Select Financial Data Fiscal Year End December 31, ($ in thousands) Statement of Operations Data: Q Q Q Q Q Q Q Q SaaS and license revenue 1 $140,936 $173,540 $236,283 $46,888 $50,226 $58,928 $61,924 $65,205 $67,988 $70,968 $74,292 Hardware and other revenue 67,952 87, ,654 22,906 23,968 27,060 28,038 23,588 24,768 33,520 37,556 Total revenue 208, , ,937 69,794 74,194 85,988 89,962 88,793 92, , ,848 Cost of SaaS and license revenue 2 25,722 30,229 35,610 8,450 8,092 8,500 9,545 9,473 10,806 11,027 11,501 Cost of hardware and other revenue 51,652 69,151 80,578 18,265 18,543 21,335 22,288 18,412 17,571 25,461 30,491 Total cost of revenue 77,374 99, ,188 26,715 26,635 29,835 31,833 27,885 28,377 36,488 41,992 Net income (loss) $11,768 $10,154 $29,251 $2,976 $3,963 $9,865 $15,103 $320 $10,515 $10,733 ($7,652) Net income (loss) per share, diluted $(0.30) $0.21 $0.59 $0.06 $0.08 $0.20 $0.31 $0.01 $0.21 $0.22 ($0.16) Weighted-average common shares outstanding - diluted 24,108,362 47,875,522 49,153,948 48,025,847 48,758,774 49,000,553 49,259,701 49,341,091 49,268,255 49,497,088 47,812,642 Balance Sheet Data (as of): Cash and cash equivalents $128,358 $140,634 $96,329 $140,634 $63,150 $68,916 $84,640 $96,329 $96,798 $105,959 $124,243 Non-GAAP financial measures 3 : Adjusted EBITDA 3 $34,370 $49,034 $71,628 $14,311 $14,103 $15,881 $19,478 $22,166 $22,958 $23,409 $25,821 Adjusted net income 3 20,577 31,138 45,104 9,057 7,822 10,654 13,335 13,030 16,654 16,761 18,166 Adjusted net income attributable to common stockholders 3 7,066 31,126 45,095 9,055 7,821 10,651 13,330 13,030 16,652 16,760 18,166 1 Includes software revenue of $10.5 million and $9.3 million for the three months ended September 30, 2018 and 2017, respectively. 2 Includes cost of software revenue of $0.4 million and $0.4 million for the three months ended September 30, 2018 and 2017, respectively. 3 Adjusted EBITDA, adjusted net income and adjusted net income attributable to common stockholders are non-gaap financial measures - see next page for reconciliation to GAAP. 49

50 Investor Data Sheet (2/3) Alarm.com Holdings, Inc. Non-GAAP Reconciliations Fiscal Year Ended December 31 ($ in thousands) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Adjusted EBITDA: Net income / (loss) $11,768 $10,154 $29,251 $2,976 $3,963 $9,865 $15,103 $320 $10,515 $10,733 ($7,652) Adjustments: Interest expense and other income / (expense), net 526 (323) 1,133 (122) (21) Provision for / (benefit from) income tax 5,697 4,227 2,990 1, (4,506) (5,018) 11,971 1,202 (2,554) (9,061) Amortization and depreciation expense 5,808 6,490 17,734 1,627 2,864 4,846 5,071 4,953 5,025 5,238 5,891 Stock-based compensation expense 4,124 4,001 7,413 1,121 1,313 1,915 1,906 2,279 2,669 3,544 3,457 Acquisition-related expense ,098 5,895 5,301 3,648 1, Litigation expense 6,347 13,387 7,212 2,108 1,793 1,251 1,879 2,289 3,271 6,117 33,167 Total adjustments 22,602 38,880 42,377 11,335 10,140 6,016 4,375 21,846 12,443 12,676 33,473 Adjusted EBITDA $34,370 $49,034 $71,628 $14,311 $14,103 $15,881 $19,478 $22,166 $22,958 $23,409 $25,821 Adjusted net income: Net income / (loss), as reported $11,768 $10,154 $29,251 $2,976 $3,963 $9,865 $15,103 $320 $10,515 $10,733 ($7,652) Provision for / (benefit from) income tax 5,697 4,227 2,990 1, (4,506) (5,018) 11,971 1,202 (2,554) (9,061) Income / (loss) before income taxes 17,465 14,381 32,241 4,276 4,506 5,359 10,085 12,291 11,717 8,179 (16,713) Adjustments: Other income / (expense), net 348 (513) (1,066) (175) (237) (137) (342) (350) (396) (420) (717) Amortization expense 2,151 1,750 12, ,493 3,530 3,682 3,577 3,820 3,797 3,801 Stock-based compensation expense 4,124 4,001 7,413 1,121 1,313 1,915 1,906 2,279 2,669 3,544 3,457 Acquisition-related expense ,098 5,895 5,301 3,648 1, Litigation expense 6,347 13,387 7,212 2,108 1,793 1,251 1,879 2,289 3,271 6,117 33,167 Non-GAAP adjusted income before income taxes 30,535 44,104 63,977 13,013 12,516 13,891 17,431 20,139 21,081 21,217 22,995 Income tax (9,958) (12,966) (18,873) (3,956) (4,694) (3,237) (4,096) (7,109) (4,427) (4,456) (4,829) Non-GAAP adjusted net income $20,577 $31,138 $45,104 $9,057 $7,822 $10,654 $13,335 $13,030 $16,654 $16,761 $18,166 Non-GAAP adjusted net income per share - diluted 1 $0.27 $0.65 $0.92 $0.19 $0.16 $0.22 $0.27 $0.26 $0.34 $0.34 $ For periods with GAAP net losses and non-gaap adjusted net income, the weighted-average outstanding shares used to calculate diluted non-gaap adjusted net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive. 50

51 Investor Data Sheet (3/3) Alarm.com Holdings, Inc. Non-GAAP Reconciliations Fiscal Year Ended December 31 ($ in thousands) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Adjusted net income attributable to common stockholders: Net income / (loss) attributable to common stockholders, as reported ($7,219) $10,142 $29,238 $2,974 $3,961 $9,860 $15,097 $320 $10,512 $10,732 ($7,652) Provision for / (benefit from) income taxes 5,697 4,227 2,990 1, (4,506) (5,018) 11,971 1,202 (2,554) (9,061) Income / (loss) attributable to common stockholders before taxes (1,522) 14,369 32,228 4,274 4,504 5,354 10,079 12,291 11,714 8,178 (16,713) Adjustments: Dividends paid to participating securities 18,987 Other income / (expense), net 348 (513) (1,066) (175) (237) (137) (342) (350) (396) (420) (717) Amortization expense 2,151 1,750 12, ,493 3,530 3,682 3,577 3,820 3,797 3,801 Stock-based compensation expense 4,124 4,001 7,413 1,121 1,313 1,915 1,906 2,279 2,669 3,544 3,457 Acquisition-related expense ,098 5,895 5,301 3,648 1, Litigation expense 6,347 13,387 7,212 2,108 1,793 1,251 1,879 2,289 3,271 6,117 33,167 Non-GAAP adjusted income attributable to common stockholders before income taxes 30,535 44,092 63,964 13,011 12,514 13,886 17,425 20,139 21,078 21,216 22,995 Income taxes (9,958) (12,966) (18,869) (3,956) (4,693) (3,235) (4,095) (7,109) (4,426) (4,456) (4,829) Less: income allocated to participating securities (13,511) Non-GAAP adjusted net income attributable to common stockholders $7,066 $31,126 $45,095 $9,055 $7,821 $10,651 $13,330 $13,030 $16,652 $16,760 $18,166 51

52 Supplemental Financial Data Supplemental Financial Data: Alarm.com Holdings, Inc. Supplemental Financial Data Fiscal Year Ended December 31 ($ in thousands) Q SaaS and license revenue 1 $140,936 $173,540 $236,283 $46,888 $50,226 $58,928 $61,924 $65,205 $67,988 $70,968 $74,292 Hardware and other revenue 67,952 87, ,654 22,906 23,968 27,060 28,038 23,588 24,768 33,520 37,556 Total revenue 208, , ,937 69,794 74,194 85,988 89,962 88,793 92, ,488 $111,848 Cost of SaaS and license revenue 2 25,722 30,229 35,610 8,450 8,092 8,500 9,545 9,473 10,806 11,027 11,501 Cost of hardware and other revenue 51,652 69,151 80,578 18,265 18,543 21,335 22,288 18,412 17,571 25,461 30,491 Total cost of revenue 77,374 99, ,188 26,715 26,635 29,835 31,833 27,885 28,377 36,488 41,992 Sales and marketing 32,240 38,980 43,490 9,448 10,314 11,899 10,426 10,851 10,822 14,612 14,128 General and administrative 35,473 57,926 55,396 15,802 15,375 13,450 12,974 13,597 16,162 18,119 43,662 Research and development 40,002 44,272 72,755 12,048 14,521 20,062 19,257 18,915 20,377 21,521 22,869 Amortization and depreciation 5,808 6,490 17,734 1,627 2,864 4,846 5,071 4,953 5,025 5,238 5,891 Total operating expenses 113, , ,375 38,925 43,074 50,257 47,728 48,316 52,386 59,490 86,550 Operating income 17,991 14,058 33,374 4,154 4,485 5,896 10,401 12,592 11,993 8,510 (16,694) Interest expense (178) (190) (2,199) (53) (216) (674) (658) (651) (672) (751) (736) Other income / (expense), net (348) 513 1, Income before income taxes 17,465 14,381 32,241 4,276 4,506 5,359 10,085 12,291 11,717 8,179 (16,713) Provision for / (benefit from) income taxes 5,697 4,227 2,990 1, (4,506) (5,018) 11,971 1,202 (2,554) (9,061) Net income $11,768 $10,154 $29,251 $2,976 $3,963 $9,865 $15,103 $320 $10,515 $10,733 ($7,652) Stock-based compensation expense data: Sales and marketing $372 $536 $561 $114 $113 $65 $181 $202 $235 $319 $301 General and administrative 2,486 1,430 2, ,028 1,481 1,191 Research and development 1,266 2,035 4, ,095 1,141 1,347 1,406 1,744 1,965 Total stock-based compensation expense $4,124 $4,001 $7,413 $1,121 $1,313 $1,915 $1,906 $2,279 $2,669 $3,544 $3,457 As a percent of revenue: Cost of SaaS and license revenue as a percentage of SaaS and license revenue 18% 17% 15% 18% 16% 14% 15% 15% 16% 16% 15% Cost of hardware and other revenue as a percentage of hardware and other revenue 76% 79% 78% 80% 77% 79% 79% 78% 71% 76% 81% Sales and marketing 15% 15% 13% 14% 14% 14% 12% 12% 12% 14% 13% General and administrative 17% 22% 16% 23% 21% 16% 14% 15% 17% 17% 39% Research and development 19% 17% 22% 17% 19% 23% 21% 21% 22% 21% 20% Amortization and depreciation 3% 3% 5% 2% 4% 5% 6% 6% 5% 5% 5% Total operating expenses 54% 57% 56% 56% 58% 58% 53% 54% 56% 57% 77% Operating income / (loss) 9% 5% 10% 6% 6% 7% 12% 14% 13% 8% -15% Net income / (loss) 6% 4% 9% 4% 5% 11% 17% 0% 11% 10% -7% 1 Includes software revenue of $10.5 million and $9.3 million for the three months ended September 30, 2018 and 2017, respectively. Q Q Q Q Q Q Q Includes cost of software revenue of $0.4 million and $0.4 million for the three months ended September 30, 2018 and 2017, respectively. 52

53 Security Access Video Energy Lights Garage Water One Intelligent Platform Users prefer these Smart Home applications over DIY device specific apps R E P O R T 53