's Profits Soar

Connected-home software provider (NASDAQ:ALRM) reported its first-quarter results after the market closed on May 3. Revenue was boosted by an acquisition last year, and the company expects its growth rate to slow now that that acquisition is lapped. still expects its adjusted earnings to soar this year, though, and investors got a preview of that in the company’s first-quarter report. results: The raw numbers


Q1 2018

Q1 2017

Year-Over-Year Change


$92.8 million

$74.2 million


Net income

$10.5 million

$4.0 million


Non-GAAP earnings per share




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What happened with this quarter?
Software-as-a-service (SaaS) and license revenue rose 35% year over year to $68 million. This number includes an extra $7.6 million of revenue related to the acquisition of the Connect line of business from Icontrol Networks compared to the first quarter of 2017. The acquisition closed during the first quarter of 2017, contributing less than a full quarter’s worth of revenue. Adjusted EBITDA was $23 million, up from $14.1 million in the prior-year period. The switch to the new ASC 606 revenue recognition standard did not have a material impact on the company’s first-quarter results. Cash flow from operations was $3.5 million during the first quarter, down from $13 million in the prior-year period. Cash and cash equivalents totaled $96.8 million at the end of the quarter, up slightly from the end of 2017. Recent developments include the deployment of for Business, a new access control solution, an enhanced mobile app for service provider partners, and a third-generation image sensor. provided the following guidance for the second quarter and the full year:

For the second quarter, SaaS and license revenue is expected between $69.4 million and $69.6 million. Full-year SaaS and license revenue is expected between $284 million and $284.5 million, with hardware and other revenue expected between $97.5 million and $99 million. Full-year adjusted EBITDA is expected between $82.5 million and $83.2 million. Full-year non-GAAP earnings per share is expected between $1.14 and $1.15, a slight increase compared to previous guidance, and up from $0.92 in the 2017. software running on various devices.

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What management had to say CEO Steve Trundle summed up the quarter: “We are pleased to report a solid start to 2018 as our service provider partners continued to drive the adoption of smarter home and business security and automation services. During the quarter, we expanded our for Business platform to enable new growth opportunities for our service provider partners in the small and medium sized business market.”

Looking forward’s revenue growth was helped during the first quarter by the acquisition of Connect last year. For the full year, the company expects revenue to grow at a slower pace of 12.9%, based on the midpoint of its guidance range. Hardware and other revenue is expected to decline slightly from 2017, with stronger SaaS and license growth picking up some of the slack.

Despite this growth slowdown, the market for smart-home technology is still in its infancy, leaving with no shortage of growth opportunities in the coming years.

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