Alarm.com(ALRM) - 2023 Q4 - Annual Results

Fourth Quarter 2023 Financial Results Alarm.com reported strong growth in the fourth quarter of 2023, with SaaS and license revenue increasing by 10.3% year-over-year to $148.3 million, total revenue growing by 8.7% to $226.2 million, and GAAP net income attributable to common stockholders seeing a significant increase to $31.3 million, or $0.58 per diluted share Q4 2023 vs Q4 2022 Financial Highlights | Metric | Q4 2023 | Q4 2022 | % Change | | :--- | :--- | :--- | :--- | | SaaS and license revenue | $148.3M | $134.6M | +10.3% | | Total revenue | $226.2M | $208.1M | +8.7% | | GAAP net income | $31.3M | $18.1M | +72.9% | | GAAP diluted EPS | $0.58 | $0.34 | +70.6% | | Non-GAAP adjusted EBITDA | $45.6M | $39.0M | +16.9% | | Non-GAAP adjusted net income | $33.9M | $28.7M | +18.1% | Full Year 2023 Financial Results For the full year 2023, Alarm.com achieved a 9.4% increase in SaaS and license revenue, reaching $569.2 million, total revenue grew 4.6% to $881.7 million, and GAAP net income attributable to common stockholders rose substantially to $81.0 million, or $1.53 per diluted share, compared to $56.3 million in 2022 Full Year 2023 vs Full Year 2022 Financial Highlights | Metric | Full Year 2023 | Full Year 2022 | % Change | | :--- | :--- | :--- | :--- | | SaaS and license revenue | $569.2M | $520.4M | +9.4% | | Total revenue | $881.7M | $842.6M | +4.6% | | GAAP net income | $81.0M | $56.3M | +43.9% | | GAAP diluted EPS | $1.53 | $1.07 | +43.0% | | Non-GAAP adjusted EBITDA | $154.0M | $146.8M | +4.9% | | Non-GAAP adjusted net income | $113.2M | $106.9M | +5.9% | Balance Sheet and Cash Flow The company strengthened its financial position in 2023, with total cash and cash equivalents increasing to $697.0 million, cash flow from operations for the full year surged to $136.0 million, a significant improvement from $56.9 million in 2022, and the company also repurchased $27.3 million of its common stock during the year - Total cash and cash equivalents increased to $697.0 million as of December 31, 2023, up from $622.2 million at the end of 2022[5] - During 2023, the company repurchased 487,918 shares of its common stock for $27.3 million[5] Cash Flow Comparison (in millions) | Metric | Full Year 2023 | Full Year 2022 | | :--- | :--- | :--- | | Cash flows from operations | $136.0 | $56.9 | | Non-GAAP free cash flow | $128.4 | $28.3 | Recent Business Highlights Alarm.com enhanced its product offerings with new features like 'Property Actions' and 'Vacation Watch', while its subsidiary EnergyHub launched Canada's largest residential virtual power plant and the company resolved litigation with Vivint Product and Service Enhancements Alarm.com introduced several key service enhancements, including 'Property Actions' for monitoring station partners to remotely control doors and lights during an alarm, and 'Vacation Watch' for subscribers to schedule video monitoring for enhanced privacy and security, augmenting the company's AI-powered alarm verification capabilities - Introduced 'Property Actions to Alarm Response Software', allowing monitoring station partners to unlock doors and turn on lights at a property during an alarm event to assist first responders[6] - Launched 'Vacation Watch', a new video analytics rule that lets subscribers schedule video monitoring start and end times, automatically disabling recording upon their return to enhance privacy[8] Strategic Developments The company's subsidiary, EnergyHub, launched a record-setting demand side management program in Ontario, creating Canada's largest residential virtual power plant, and Alarm.com resolved all outstanding litigation with Vivint, entering into a new long-term intellectual property license agreement - EnergyHub partnered with Ontario's IESO to launch the Save on Energy Peak Perks™ program, which enrolled over 100,000 homes in its first six months, becoming Canada's largest residential virtual power plant[8] - Alarm.com settled all outstanding litigation with Vivint and entered into a long-term intellectual property license agreement, licensing its IP portfolio to Vivint[9] Financial Outlook for 2024 Alarm.com provided a positive outlook for 2024, expecting full-year SaaS and license revenue between $622.5 million and $623.5 million, total revenue in the range of $912.5 million to $933.5 million, and Non-GAAP adjusted net income projected to be between $2.10 and $2.14 per diluted share First Quarter and Full Year 2024 Guidance Alarm.com provided a positive outlook for 2024, expecting full-year SaaS and license revenue between $622.5 million and $623.5 million, total revenue in the range of $912.5 million to $933.5 million, and Non-GAAP adjusted net income projected to be between $2.10 and $2.14 per diluted share Q1 2024 Outlook | Metric | Outlook Range | | :--- | :--- | | SaaS and license revenue | $148.6M - $148.8M | Full Year 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | SaaS and license revenue | $622.5M - $623.5M | | Total revenue | $912.5M - $933.5M | | Non-GAAP adjusted EBITDA | $160.0M - $164.0M | | Non-GAAP adjusted net income per diluted share | $2.10 - $2.14 | Consolidated Financial Statements The consolidated financial statements for 2023 reflect increased total revenue, operating income, and net income, alongside a stronger balance sheet with higher cash and total assets, and significantly improved cash flow from operations Consolidated Statements of Operations For the year ended December 31, 2023, total revenue increased to $881.7 million from $842.6 million in 2022, operating income grew to $66.8 million, up from $51.0 million in the prior year, while net income attributable to common stockholders increased to $81.0 million from $56.3 million Annual Income Statement Highlights (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Total revenue | $881,682 | $842,559 | | Total cost of revenue | $325,159 | $342,581 | | Operating income | $66,829 | $51,037 | | Net income attributable to common stockholders | $81,043 | $56,338 | Consolidated Balance Sheets As of December 31, 2023, Alarm.com's balance sheet showed total assets of $1.44 billion, an increase from $1.33 billion at the end of 2022, primarily driven by an increase in cash and cash equivalents, with total stockholders' equity rising to $688.5 million from $598.9 million Balance Sheet Summary (in thousands) | Line Item | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $696,983 | $622,165 | | Total current assets | $956,780 | $891,088 | | Total assets | $1,439,563 | $1,329,375 | | Total liabilities | $714,709 | $706,528 | | Total stockholders' equity | $688,546 | $598,859 | Consolidated Statements of Cash Flows For the full year 2023, the company generated $136.0 million in cash from operating activities, a significant increase from $56.9 million in 2022, with cash used in investing activities at $26.0 million and cash used in financing activities at $31.9 million, resulting in a net increase in cash of $78.2 million for the year Annual Cash Flow Summary (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Cash flows from operating activities | $135,965 | $56,901 | | Cash flows used in investing activities | ($25,966) | ($68,319) | | Cash flows (used in) / from financing activities | ($31,865) | ($76,324) | | Net increase / (decrease) in cash | $78,200 | ($87,742) | Reconciliation of Non-GAAP Measures The company provides reconciliations for several non-GAAP measures to their most comparable GAAP counterparts, with Non-GAAP adjusted EBITDA at $154.0 million, Non-GAAP adjusted net income at $113.2 million, and Non-GAAP free cash flow at $128.4 million for the full year 2023, primarily excluding items like stock-based compensation, amortization, and litigation expenses to provide a clearer view of core operating performance Non-GAAP Reconciliations The company provides reconciliations for several non-GAAP measures to their most comparable GAAP counterparts, with Non-GAAP adjusted EBITDA at $154.0 million, Non-GAAP adjusted net income at $113.2 million, and Non-GAAP free cash flow at $128.4 million for the full year 2023, primarily excluding items like stock-based compensation, amortization, and litigation expenses to provide a clearer view of core operating performance Full Year 2023 vs 2022 Non-GAAP Reconciliation Summary (in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | GAAP Net income | $80,340 | $55,631 | | Non-GAAP adjusted EBITDA | $153,967 | $146,848 | | GAAP Net income attributable to common stockholders | $81,043 | $56,338 | | Non-GAAP adjusted net income attributable to common stockholders | $113,154 | $106,945 | | Cash flows from operating activities | $135,965 | $56,901 | | Non-GAAP free cash flow | $128,448 | $28,261 | - The Non-GAAP adjusted SaaS and license revenue growth rate for the full year 2023 was 13.0%, after adjusting for the impact of Vivint license revenue from the prior year[46]