FORM 8-K |
Delaware | 001-37461 | 26-4247032 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
8281 Greensboro Drive Tysons, Virginia | 22102 | |
(Address of principal executive offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
Alarm.com Holdings, Inc. | ||
Dated: November 8, 2017 | ||
By: | /s/ Steve Valenzuela | |
Steve Valenzuela | ||
Chief Financial Officer |
• | SaaS and license revenue increased 39% to $61.9 million for the third quarter of 2017, compared to $44.6 million for the third quarter of 2016. |
• | Total revenue increased 33% to $90.0 million for the third quarter of 2017, compared to $67.8 million for the third quarter of 2016. |
• | GAAP net income was $15.1 million, or $0.31 per diluted share, for the third quarter of 2017, compared to $2.6 million or $0.05 per diluted share, for the third quarter of 2016. |
• | GAAP net income for the third quarter of 2017 included a $5.0 million tax benefit primarily due to the new accounting standard for employee share-based transactions (ASU 2016-09). |
• | Non-GAAP adjusted EBITDA increased to $19.5 million for the third quarter of 2017, compared to $11.8 million for the third quarter of 2016. |
• | Non-GAAP adjusted net income increased to $13.3 million, or $0.27 per diluted share, for the third quarter of 2017, compared to $9.3 million or $0.19 per diluted share, for the third quarter of 2016. |
• | The effective tax rate used in calculating income tax expense within non-GAAP adjusted net income excludes a $6.1 million tax windfall benefit due to the impact from the new accounting standard (ASU 2016-09), in the third quarter. |
• | Total cash and cash equivalents were $84.6 million as of September 30, 2017, compared to $140.6 million as of December 31, 2016. |
• | On October 6, 2017, Alarm.com refinanced its $72.0 million debt outstanding under its prior revolving credit facility by entering into a new $125.0 million senior secured revolving credit facility, with no change in its outstanding debt of $72.0 million reported at September 30, 2017. The new revolving credit facility expires in October 2022. |
• | For the quarter ended September 30, 2017, cash flows from operations increased to $13.8 million from $3.6 million for the quarter ended September 30, 2016. |
• | Released New Web Dashboard for Subscribers: A completely redesigned interface brings an intuitive, app-like user experience to Alarm.com’s web dashboard. Optimized for desktop, tablet and smartphones, the responsive design and the card-based user interface streamline access to a broad range of system controls and features. The new user interface is more video-centric and subscribers can also easily control and manage automation devices directly from the main dashboard. Ease of use continued to be a focus and users can now more quickly customize intelligent rules and features such as scenes, location-based automation, real-time awareness alerts and user access control. |
• | Introduced Software Enhancements to Video Service: Alarm.com launched new software-based capabilities to provide greater security, enhanced convenience and a more deeply integrated video experience. Two-Way audio enables subscribers to communicate between the Alarm.com app and video cameras at their property, and this feature is now available on Alarm.com’s indoor residential cameras. In addition, new in-app features enable subscribers to seamlessly arm or disarm their security system as they view live video from their integrated doorbell camera. They can conveniently provide access to their property to trusted visitors, or quickly arm their security system and lock their doors from anywhere. |
• | EnergyHub Launches Mercury 3.0: EnergyHub, an Alarm.com subsidiary and provider of demand response energy management solutions, upgraded its Mercury enterprise software solution to allow utilities to connect to and manage all classes and sizes of distributed energy resources. As devices at the grid-edge increase in complexity and diversity, EnergyHub enables utilities to connect and control an expanded roster of smart energy devices, employ advanced asset management strategies including load shifting and solar monitoring, and better forecast resource consumption and production patterns. |
• | SaaS and license revenue is expected to be in the range of $63.7 million to $63.9 million. |
• | SaaS and license revenue is expected to be in the range of $234.8 million to $235.0 million. |
• | Total revenue is expected to be in the range of $332.8 million to $334.0 million, which includes anticipated hardware and other revenue in the range of $98.0 million to $99.0 million. |
• | Non-GAAP adjusted EBITDA is expected to be in the range of $68.5 million to $69.0 million. |
• | Non-GAAP adjusted net income is expected to be in the range of $43.2 million to $43.7 million, which now adjusts the effective tax rate used in calculating income tax expense to exclude the tax windfall benefit through the third quarter due to the impact from the new accounting standard for employee share-based transactions. |
• | Based on an expected 49.4 million weighted average shares outstanding (diluted), non-GAAP adjusted net income is expected to be in the range of $0.87 to $0.88 per diluted share. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
SaaS and license revenue | $ | 61,924 | $ | 44,630 | $ | 171,078 | $ | 126,652 | |||||||
Hardware and other revenue | 28,038 | 23,216 | 79,066 | 64,660 | |||||||||||
Total revenue | 89,962 | 67,846 | 250,144 | 191,312 | |||||||||||
Cost of revenue: | |||||||||||||||
Cost of SaaS and license revenue | 9,545 | 7,787 | 26,137 | 21,779 | |||||||||||
Cost of hardware and other revenue | 22,288 | 18,579 | 62,166 | 50,886 | |||||||||||
Total cost of revenue | 31,833 | 26,366 | 88,303 | 72,665 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 10,426 | 10,705 | 32,639 | 29,532 | |||||||||||
General and administrative | 12,974 | 14,804 | 41,799 | 42,124 | |||||||||||
Research and development | 19,257 | 11,477 | 53,840 | 32,224 | |||||||||||
Amortization and depreciation | 5,071 | 1,659 | 12,781 | 4,863 | |||||||||||
Total operating expenses | 47,728 | 38,645 | 141,059 | 108,743 | |||||||||||
Operating income | 10,401 | 2,835 | 20,782 | 9,904 | |||||||||||
Interest expense | (658 | ) | (49 | ) | (1,548 | ) | (137 | ) | |||||||
Other income, net | 342 | 139 | 716 | 338 | |||||||||||
Income before income taxes | 10,085 | 2,925 | 19,950 | 10,105 | |||||||||||
(Benefit from) / provision for income taxes | (5,018 | ) | 358 | (8,981 | ) | 2,927 | |||||||||
Net income | 15,103 | 2,567 | 28,931 | 7,178 | |||||||||||
Income allocated to participating securities | (6 | ) | (3 | ) | (14 | ) | (10 | ) | |||||||
Net income attributable to common stockholders | $ | 15,097 | $ | 2,564 | $ | 28,917 | $ | 7,168 | |||||||
Per share information attributable to common stockholders: | |||||||||||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.06 | $ | 0.62 | $ | 0.16 | |||||||
Diluted | $ | 0.31 | $ | 0.05 | $ | 0.59 | $ | 0.15 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 46,886,345 | 45,716,961 | 46,520,469 | 45,615,399 | |||||||||||
Diluted | 49,259,701 | 48,319,952 | 49,074,279 | 47,741,365 | |||||||||||
Stock-based compensation expense included in operating expenses: | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Sales and marketing | $ | 181 | $ | 130 | $ | 359 | $ | 422 | |||||||
General and administrative | 584 | 444 | 1,908 | 907 | |||||||||||
Research and development | 1,141 | 512 | 2,867 | 1,551 | |||||||||||
Total stock-based compensation expense | $ | 1,906 | $ | 1,086 | $ | 5,134 | $ | 2,880 |
September 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 84,640 | $ | 140,634 | |||
Accounts receivable, net | 41,201 | 29,810 | |||||
Inventory | 13,617 | 10,543 | |||||
Other current assets | 15,777 | 9,197 | |||||
Total current assets | 155,235 | 190,184 | |||||
Property and equipment, net | 23,399 | 20,180 | |||||
Intangible assets, net | 97,863 | 4,568 | |||||
Goodwill | 63,591 | 24,723 | |||||
Deferred tax assets | 27,273 | 16,752 | |||||
Other assets | 7,297 | 4,838 | |||||
Total Assets | $ | 374,658 | $ | 261,245 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable, accrued expenses and other current liabilities | $ | 35,157 | $ | 28,300 | |||
Accrued compensation | 10,857 | 8,814 | |||||
Deferred revenue | 3,115 | 2,585 | |||||
Total current liabilities | 49,129 | 39,699 | |||||
Deferred revenue | 9,587 | 10,040 | |||||
Long-term debt | 72,000 | 6,700 | |||||
Other liabilities | 14,028 | 13,557 | |||||
Total Liabilities | 144,744 | 69,996 | |||||
Stockholders’ equity | |||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2017 and December 31, 2016. | — | — | |||||
Common stock, $0.01 par value, 300,000,000 shares authorized; 47,147,364 and 46,172,318 shares issued; and 47,130,456 and 46,142,483 shares outstanding as of September 30, 2017 and December 31, 2016. | 471 | 461 | |||||
Additional paid-in capital | 318,440 | 308,697 | |||||
Accumulated deficit | (88,997 | ) | (117,909 | ) | |||
Total Stockholders’ Equity | 229,914 | 191,249 | |||||
Total Liabilities and Stockholders’ Equity | $ | 374,658 | $ | 261,245 |
Nine Months Ended September 30, | |||||||
Cash flows from operating activities: | 2017 | 2016 | |||||
Net income | $ | 28,931 | $ | 7,178 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Provision for doubtful accounts | (360 | ) | 415 | ||||
Reserve for product returns | 1,732 | 1,537 | |||||
Amortization for patents and tooling | 817 | 550 | |||||
Amortization and depreciation | 12,781 | 4,863 | |||||
Amortization of debt issuance costs | 70 | 79 | |||||
Deferred income taxes | (6,360 | ) | 385 | ||||
Change in fair value of contingent liability | — | (226 | ) | ||||
Undistributed losses from equity investee | 120 | 60 | |||||
Stock-based compensation | 5,134 | 2,880 | |||||
Changes in operating assets and liabilities (net of business acquisitions): | |||||||
Accounts receivable | (1,342 | ) | (9,337 | ) | |||
Inventory | (2,775 | ) | (5,030 | ) | |||
Other assets | (8,122 | ) | (3,056 | ) | |||
Accounts payable, accrued expenses and other current liabilities | 7,975 | 9,302 | |||||
Deferred revenue | (493 | ) | 130 | ||||
Other liabilities | 437 | 1,801 | |||||
Cash flows from operating activities | 38,545 | 11,531 | |||||
Cash flows used in investing activities: | |||||||
Business acquisitions, net of cash acquired | (154,289 | ) | — | ||||
Additions to property and equipment | (7,652 | ) | (6,110 | ) | |||
Investment in cost method investee | (42 | ) | (139 | ) | |||
Issuances of notes receivable | (5,000 | ) | (73 | ) | |||
Receipt of payment on notes receivable | 4,000 | 2,441 | |||||
Purchases of licenses to patents | — | (1,600 | ) | ||||
Cash flows used in investing activities | (162,983 | ) | (5,481 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from credit facility | 67,000 | — | |||||
Repayments of credit facility | (1,700 | ) | — | ||||
Payments of debt issuance costs | — | (131 | ) | ||||
Payments of long-term consideration for business acquisitions | — | (417 | ) | ||||
Repurchases of common stock | (9 | ) | (12 | ) | |||
Issuances of common stock from equity-based plans | 3,153 | 1,202 | |||||
Cash flows from financing activities | 68,444 | 642 | |||||
Net (decrease) / increase in cash and cash equivalents | (55,994 | ) | 6,692 | ||||
Cash and cash equivalents at beginning of the period | 140,634 | 128,358 | |||||
Cash and cash equivalents at end of the period | $ | 84,640 | $ | 135,050 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Adjusted EBITDA | |||||||||||||||
Net income | $ | 15,103 | $ | 2,567 | $ | 28,931 | $ | 7,178 | |||||||
Adjustments: | |||||||||||||||
Less: Interest expense and other income, net | 316 | (90 | ) | 832 | (201 | ) | |||||||||
Provision for income tax | (5,018 | ) | 358 | (8,981 | ) | 2,927 | |||||||||
Amortization and depreciation expense | 5,071 | 1,659 | 12,781 | 4,863 | |||||||||||
Stock-based compensation expense | 1,906 | 1,086 | 5,134 | 2,880 | |||||||||||
Acquisition-related expense | 221 | 3,187 | 5,842 | 5,797 | |||||||||||
Litigation expense | 1,879 | 3,054 | 4,923 | 11,279 | |||||||||||
Total adjustments | 4,375 | 9,254 | 20,531 | 27,545 | |||||||||||
Adjusted EBITDA | $ | 19,478 | $ | 11,821 | $ | 49,462 | $ | 34,723 | |||||||
Adjusted net income: | |||||||||||||||
Net income, as reported | $ | 15,103 | $ | 2,567 | $ | 28,931 | $ | 7,178 | |||||||
(Benefit from) / provision for income taxes | (5,018 | ) | 358 | (8,981 | ) | 2,927 | |||||||||
Income before income taxes | 10,085 | 2,925 | 19,950 | 10,105 | |||||||||||
Adjustments: | |||||||||||||||
Less: Other income, net | (342 | ) | (139 | ) | (716 | ) | (338 | ) | |||||||
Amortization expense | 3,682 | 435 | 8,705 | 1,368 | |||||||||||
Stock-based compensation expense | 1,906 | 1,086 | 5,134 | 2,880 | |||||||||||
Acquisition-related expense | 221 | 3,187 | 5,842 | 5,797 | |||||||||||
Litigation expense | 1,879 | 3,054 | 4,923 | 11,279 | |||||||||||
Non-GAAP adjusted income before income taxes | 17,431 | 10,548 | 43,838 | 31,091 | |||||||||||
Income taxes 1 | (4,096 | ) | (1,288 | ) | (12,012 | ) | (9,016 | ) | |||||||
Non-GAAP adjusted net income | $ | 13,335 | $ | 9,260 | $ | 31,826 | $ | 22,075 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Adjusted net income attributable to common stockholders: | |||||||||||||||
Net income attributable to common stockholders, as reported | $ | 15,097 | $ | 2,564 | $ | 28,917 | $ | 7,168 | |||||||
(Benefit from) / provision for income taxes | (5,018 | ) | 358 | (8,981 | ) | 2,927 | |||||||||
Income attributable to common stockholders before income taxes | 10,079 | 2,922 | 19,936 | 10,095 | |||||||||||
Adjustments: | |||||||||||||||
Less: Other income, net | (342 | ) | (139 | ) | (716 | ) | (338 | ) | |||||||
Amortization expense | 3,682 | 435 | 8,705 | 1,368 | |||||||||||
Stock-based compensation expense | 1,906 | 1,086 | 5,134 | 2,880 | |||||||||||
Acquisition-related expense | 221 | 3,187 | 5,842 | 5,797 | |||||||||||
Litigation expense | 1,879 | 3,054 | 4,923 | 11,279 | |||||||||||
Non-GAAP adjusted income attributable to common stockholders before income taxes | 17,425 | 10,545 | 43,824 | 31,081 | |||||||||||
Income taxes 1 | (4,095 | ) | (1,288 | ) | (12,008 | ) | (9,013 | ) | |||||||
Non-GAAP adjusted net income attributable to common stockholders | $ | 13,330 | $ | 9,257 | $ | 31,816 | $ | 22,068 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Adjusted net income per share: | |||||||||||||||
Net income (loss) per share - basic, as reported | $ | 0.32 | $ | 0.06 | $ | 0.62 | $ | 0.16 | |||||||
(Benefit from) / provision for income taxes | (0.11 | ) | 0.01 | (0.19 | ) | 0.06 | |||||||||
Income before income taxes | 0.21 | 0.07 | 0.43 | 0.22 | |||||||||||
Adjustments: | |||||||||||||||
Less: Other income, net | (0.01 | ) | — | (0.02 | ) | (0.01 | ) | ||||||||
Amortization expense | 0.08 | 0.01 | 0.19 | 0.03 | |||||||||||
Stock-based compensation expense | 0.04 | 0.02 | 0.11 | 0.06 | |||||||||||
Acquisition-related expense | — | 0.07 | 0.13 | 0.13 | |||||||||||
Litigation expense | 0.05 | 0.07 | 0.10 | 0.25 | |||||||||||
Non-GAAP adjusted income before income taxes | 0.37 | 0.24 | 0.94 | 0.68 | |||||||||||
Income taxes 1 | (0.09 | ) | (0.04 | ) | (0.26 | ) | (0.20 | ) | |||||||
Non-GAAP adjusted net income per share - basic | $ | 0.28 | $ | 0.20 | $ | 0.68 | $ | 0.48 | |||||||
Non-GAAP adjusted net income per share - diluted | $ | 0.27 | $ | 0.19 | $ | 0.65 | $ | 0.46 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic, as reported | 46,886,345 | 45,716,961 | 46,520,469 | 45,615,399 | |||||||||||
Diluted, as reported | 49,259,701 | 48,319,952 | 49,074,279 | 47,741,365 |