Alarm.com Holdings, Inc. reports 33.1% EBITDA decline in 2018 and 7.1 pp EBITDA Margin decline from 15.4% to 8.3%
02/28/2019 • About Alarm.com Holdings, Inc. (
$ALRM) • By InTwits
Alarm.com Holdings, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Alarm.com Holdings, Inc. is a fast growth stock: 2018 revenue growth was 24.1%, 5 year revenue CAGR was 26.4% at 2018 ROIC 4.0%
- Alarm.com Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.1%. At the same time it's a lot of higher than industry average of 13.3%.
- CAPEX is quite volatile: $0m in 2018, $10m in 2017, $9m in 2016, $10m in 2015, $7m in 2014
- In the last 5 years the company invested considerably less than D&A: $37m vs. $59m. In 2018 this situation was still the same: CAPEX was 0 while D&A was 23
- The company has potentially unprofitable business model: ROIC is 4.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 24.1%. Revenue growth showed acceleration in 18Q4 - it increased 25.5% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 7.1 pp from 15.4% to 8.3% in 2018.
Gross Margin showed almost no change in 2018. Gross Margin stuck to a growing trend at 1.4 pp per annum in 2014-2018. SG&A as a % of Revenue increased on 6.9 pp from 29.2% to 36.1% in 2018. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 1.0 pp from 2.2% to 3.2% in 2018. During the last 5 years SBC as a % of Revenue bottomed in 2016 at 1.5% and was growing since that time.
Net Income margin decreased on 3.5 pp from 8.6% to 5.1% in 2018.
Investments (CAPEX, working capital and M&A)
Accounts receivable as a % of Revenue showed almost no change in 2018. Inventories as a % of Revenue increased slightly on 1.3 pp from 4.2% to 5.5% in 2018.
Return on investment
The company operates at low ROIC (4.0%) and ROE (8.4%). ROIC dropped on 10.2 pp from 14.2% to 4.0% in 2018. ROE decreased on 5.4 pp from 13.8% to 8.4% in 2018.
Leverage (Debt)
Debt level is -2.3x Net Debt / EBITDA and 1.9x Debt / EBITDA. Debt decreased on 5.6% while cash surged on 51.6%.
Alarm.com Holdings, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 4.2x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence paid by the company was 4.4% in 2018.
Valuation and dividends
Alarm.com Holdings, Inc.'s trades at EV/EBITDA 77.3x and P/E 128.8x.
Management team
Stephen S Trundle "Steve" is a the company's CEO. Stephen S Trundle "Steve" is a founder and has spent 16 years with the company. CEO total compensation was
$1,941,144 in 2018 which included
$210,000 salary. Alarm.com Holdings, Inc.'s CFO Steve Valenzuela has spent 2 years with the company.
Insider ownership is 7.3%. Insider ownership didn't change in 2018.
At the end of financial year the company had 844 employees. The number of employees increased on 7.7%. Average revenue per employee in 2018 was
$498,216 and it surged on 15.2%.
Financial and operational results
FY ended 12/31/2018
Alarm.com Holdings, Inc. ($ALRM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 167.3 | 208.9 | 261.1 | 338.9 | 420.5 | 24.1% |
| Gross Profit | 100.1 | 131.5 | 161.7 | 222.7 | 274.8 | 23.4% |
| SG&A | 51.9 | 67.7 | 96.9 | 98.9 | 151.7 | 53.4% |
| EBITDA | 25.2 | 24.2 | 21.3 | 52.1 | 34.8 | -33.1% |
| EBIT | 21.0 | 18.0 | 14.1 | 33.4 | 12.2 | -63.4% |
| Interest expence | 0.2 | 0.2 | 0.2 | | 2.9 | |
| Tax | 6.8 | 5.7 | 4.2 | 3.0 | -9.8 | -428.6% |
| Net Income | 13.5 | 11.8 | 10.2 | 29.3 | 21.5 | -26.4% |
| Stock Based Compensation | 3.3 | 3.3 | 4.0 | 7.4 | 13.4 | 81.2% |
Balance Sheet
|
|---|
| Cash | 42.6 | 128.4 | 140.6 | 96.3 | 146.1 | 51.6% |
| Accounts Receivable | 17.3 | 21.3 | 29.8 | 40.6 | 49.5 | 21.8% |
| Inventory | 6.9 | 6.5 | 10.5 | 14.2 | 23.0 | 62.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 6.7 | 6.7 | 6.7 | 71.0 | 67.0 | -5.6% |
Cash flow
|
|---|
| Capex | 6.9 | 10.3 | 9.1 | 10.5 | 0.0 | -100.0% |
| Dividends | | 20.0 | | | | |
| Acquisitions | 3.2 | 5.6 | | 154.3 | | |
Ratios
|
|---|
| Revenue growth | 28.5% | 24.8% | 25.0% | 29.8% | 24.1% | |
| EBITDA growth | 129.3% | -4.0% | -11.8% | 144.1% | -33.1% | |
|
|---|
| Gross Margin | 59.8% | 63.0% | 61.9% | 65.7% | 65.3% | -0.4% |
| EBITDA Margin | 15.1% | 11.6% | 8.2% | 15.4% | 8.3% | -7.1% |
| EBIT Margin | 12.6% | 8.6% | 5.4% | 9.8% | 2.9% | -6.9% |
| SG&A, % of revenue | 31.0% | 32.4% | 37.1% | 29.2% | 36.1% | 6.9% |
| SBC, % of revenue | 2.0% | 1.6% | 1.5% | 2.2% | 3.2% | 1.0% |
| Net Income Margin | 8.1% | 5.6% | 3.9% | 8.6% | 5.1% | -3.5% |
| CAPEX, % of revenue | 4.1% | 5.0% | 3.5% | 3.1% | 0.0% | |
|
|---|
| ROIC | 29.6% | 14.6% | 8.1% | 14.2% | 4.0% | -10.2% |
| ROE | | | 5.6% | 13.8% | 8.4% | -5.4% |
| Net Debt/EBITDA | -1.4x | -5.0x | -6.3x | -0.5x | -2.3x | -1.8x |
| Interest expence / Average debt | 2.9% | 2.7% | 2.8% | | 4.4% | |
People
|
|---|
| Insider ownership | 7.3% | 7.3% | 7.3% | 7.3% | 7.3% | 0.0% |
| Employees | 400 | 507 | 607 | 784 | 844 | 7.7% |
| Revenue/Employee, th. $ | 418 | 412 | 430 | 432 | 498 | 15.2% |
Alarm.com Holdings, Inc. ($ALRM) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 93 | 104 | 112 | 111 | | 25.0% | 21.5% | 24.3% | 25.5% |
| EBITDA | 17 | 14 | -11 | 14 | | 127.1% | 26.7% | -167.5% | -20.0% |
| Net Income | 11 | 11 | -8 | 8 | | 165.3% | 8.8% | -150.7% | 2,377.5% |
Balance Sheet
|
|---|
| Cash | 97 | 106 | 124 | 146 | | 53.3% | 53.8% | 46.8% | 51.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 70 | 69 | 68 | 67 | | -5.0% | -5.1% | -5.6% | -5.6% |
Ratios
|
|---|
| Gross Margin | 69.4% | 65.1% | 62.5% | 65.1% | | 5.3% | -0.2% | -2.2% | -3.5% |
| EBITDA Margin | 18.6% | 13.4% | -9.5% | 12.7% | | 8.4% | 0.5% | -27.0% | -7.2% |
| Net Income Margin | 11.3% | 10.3% | -6.8% | 7.1% | | 6.0% | -1.2% | -23.6% | 6.8% |
Peers in Application Software
Below you can find Alarm.com Holdings, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Alarm.com Holdings, Inc. ($ALRM) | | 24.8% | 25.0% | 29.8% | 24.1% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.7% | 64.2% | 64.4% | 66.1% |
|---|
| Alarm.com Holdings, Inc. ($ALRM) | 59.8% | 63.0% | 61.9% | 65.7% | 65.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Alarm.com Holdings, Inc. ($ALRM) | 15.1% | 11.6% | 8.2% | 15.4% | 8.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Alarm.com Holdings, Inc. ($ALRM) | 4.1% | 5.0% | 3.5% | 3.1% | 0.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Alarm.com Holdings, Inc. ($ALRM) | 29.6% | 14.6% | 8.1% | 14.2% | 4.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.2x | -0.9x | -0.9x | -0.9x | -0.6x |
|---|
| Alarm.com Holdings, Inc. ($ALRM) | -1.4x | -5.0x | -6.3x | -0.5x | -2.3x |
