Summary
Alarm.com Holdings reported first quarter fiscal 2021 results with total revenue of $172.5 million, up 13.5% from the prior-year quarter. GAAP operating income rose 52.1% to $15.0 million. Operating margin was 8.7%, up 2.2 percentage points from the prior-year quarter. Net income attributable to common stockholders increased 68.4% to $14.8 million. Diluted earnings per share was $0.29, up 61.1%. The company ended the quarter with momentum in its connected property platform and related hardware sales.
Cash generation improved. Operating cash flow was $21.2 million, up 64.6% from the prior-year quarter. Capital expenditures were $4.1 million, up 9.4%. Non-GAAP free cash flow, which the company defines as operating cash flow less purchases of property and equipment, was $17.2 million, compared with $9.2 million in the prior-year quarter. Deferred revenue was $13.7 million, up 12.8%. Non-GAAP adjusted EBITDA was $35.6 million, compared with $29.2 million in the prior-year quarter. The trailing 12-month SaaS and license revenue renewal rate was 95%, compared with 93% in the prior-year period. The company grew from 1,227 employees as of March 31, 2020 to 1,414 employees as of March 31, 2021.
Operational highlights included the launch of Smarter Business Temperature Monitoring, a solution for restaurants, grocery stores, pharmacies and other commercial verticals to monitor temperature-sensitive inventory and reduce spoilage. The company received a 2021 Quest for Quality Award from CE Pro for its service provider programs. Alarm.com also enhanced its Enterprise dashboards for multi-location businesses, adding centralized multi-site security and access control plus scheduled and on-demand video health reports. EnergyHub announced a partnership with Potomac Edison to manage an electric vehicle charging program that incentivizes off-peak charging. The Alarm.com segment represented 95% of revenue in the quarter.
Guidance points to continued growth. For the second quarter of 2021, SaaS and license revenue is expected to be $108.9 million to $109.1 million. For the full year of 2021, SaaS and license revenue is expected to be $445.5 million to $446.0 million. Full year total revenue is expected to be $680.5 million to $691.0 million, including anticipated hardware and other revenue. Full year non-GAAP adjusted EBITDA is expected to be $124.0 million to $130.0 million. Non-GAAP adjusted net income attributable to common stockholders is expected to be $85.6 million to $90.0 million, based on an estimated tax rate of 21.0% and 52.4 million weighted average diluted shares outstanding, or $1.63 to $1.72 per diluted share. The company expects capital expenditure requirements of approximately $7.4 million over the final nine months of fiscal year 2021.
Risks remain substantial. The COVID-19 pandemic continues to create uncertainty around supply chain disruptions, sales channel restrictions, and general economic conditions. Vaccines are approved in the United States and other countries, but supplies remain limited and the duration and economic impact of the pandemic are difficult to predict. Tariffs on certain products imported from China, which can reach up to 25%, could increase hardware costs and reduce hardware revenue margins. The company faces competition, reliance on its service provider network, and ongoing intellectual property litigation. General and administrative expense rose partly because legal expenses increased due to intellectual property litigation. If consumers or small businesses defer purchases, SaaS and license revenue growth and hardware revenue could be lower in future periods. The company also issued convertible senior notes and repaid its credit facility, which increased interest expense through amortization of debt discount and issuance costs.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $172.5M | $165.6M | +4.2% | $151.9M | +13.5% |
| Gross profit | $106.7M | $106.3M | +0.4% | $94.0M | +13.6% |
| Gross margin | 61.9% | 64.2% | -2.3 pp | 61.8% | +0.0 pp |
| Research & development | $42.5M | $38.9M | +9.3% | $39.7M | +6.9% |
| Sales & marketing | $19.0M | $23.6M | -19.4% | $17.1M | +11.3% |
| General & administrative | $22.9M | $23.0M | -0.6% | $20.9M | +9.7% |
| Total operating expenses | $91.7M | $92.9M | -1.3% | $84.1M | +9.1% |
| Operating income (loss) | $15.0M | $13.4M | +12.1% | $9.9M | +52.1% |
| Operating margin | 8.7% | 8.1% | +0.6 pp | 6.5% | +2.2 pp |
| Net income (loss) | $14.6M | $15.6M | -7.0% | $8.6M | +69.8% |
| Net margin | 8.4% | 9.4% | -1.0 pp | 5.6% | +2.8 pp |
| Diluted EPS | $0.29 | $1.53 | -$1.24 | $0.18 | +$0.11 |
Risks
COVID-19 has disrupted and may continue to disrupt the hardware supply chain (limited inventory availability, increased lead times, shipping delays) and the sales channel as service providers are restricted from meeting property owners in person. MD&A notes that if the economy fails to fully recover or shutdowns recur, SaaS and license revenue growth rate may be lower in future periods with a corresponding reduction in hardware revenue.
A substantial portion of revenue is received from a limited number of service provider partners, and substantially all revenue is generated through service provider partner sales. Loss of or a significant reduction in orders from one or more major partners would decrease revenue and profitability.
Large technology companies including Amazon (Ring, Home Services, Key), Google's Nest Labs, Samsung SmartThings, Apple HomeKit and Arlo are actively targeting the home automation, security monitoring, video monitoring and energy management markets, and may sell competing offerings on a bundled basis at no charge or employ aggressive pricing.
Ongoing intellectual property litigation, including the Vivint patent suit and the EcoFactor ITC and district court actions seeking permanent injunctions and enhanced damages, plus indemnification of ADT in the Applied Capital matter. General and administrative expense increased $2.0 million for the three months ended March 31, 2021, driven primarily by a $2.4 million increase in legal expenses for intellectual property litigation.
The new $500.0 million 0% convertible senior notes due 2026, issued January 20, 2021, may dilute stockholders upon conversion and require cash settlement; if the conditional conversion feature is triggered, the notes could be reclassified as a current liability, materially reducing net working capital.
The company relies on service provider partners to acquire and retain subscribers, and recruiting, training and retaining qualified partners has been made more challenging by shelter-in-place orders and travel restrictions. The SaaS and license revenue renewal rate improved to 95% for the twelve months ended March 31, 2021 from 93% in the prior-year period.
U.S. trade policy changes with respect to China have subjected certain Alarm.com products to import duties of up to 25%, and approximately one-fifth to one-half of finished goods hardware products sold are imported from China. Increased or expanded tariffs could raise cost of hardware revenue and reduce hardware revenue margins.
Headcount grew to 1,414 employees as of March 31, 2021 from 1,227 as of March 31, 2020, placing strain on managerial, operational and financial resources, and the company must recruit software engineers and sales and marketing personnel to compete effectively.
SaaS KPIs
All quarters →SaaS and license revenue
Non-GAAP free cash flow
Non-GAAP adjusted EBITDA
Total Revenue
Summary, forecast, risks and KPIs are extracted from Alarm.com Holdings, Inc.'s SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.