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Alarm.com Reports Third Quarter 2019 Results

TYSONS, Va.--(BUSINESS WIRE)--

-- Third quarter SaaS and license revenue increased 14.3% year-over-year to $84.9 million --

-- Third quarter total revenue increased 14.3% year-over-year to $127.9 million --

-- Third quarter GAAP net income of $17.7 million, compared to $7.7 million net loss for the third quarter of 2018 --

-- Third quarter non-GAAP adjusted EBITDA of $26.3 million, compared to $25.8 million for the third quarter of 2018 --

Alarm.com Holdings, Inc. (ALRM), the leading platform for the intelligently connected property, today reported financial results for its third quarter ended September 30, 2019. Alarm.com also provided its financial outlook for SaaS and license revenue for the fourth quarter of 2019 and increased its revenue guidance for the full year of 2019.

“We are pleased to report another quarter of solid results,” said Steve Trundle, President and CEO of Alarm.com. “Our service provider partners continued to drive adoption of the full range of our residential and commercial services. We also completed the acquisition of OpenEye which will allow us to further expand our addressable market in the commercial space and create another growth opportunity for Alarm.com and our service provider partners.”

Third Quarter 2019 Financial Results as Compared to Third Quarter 2018

  • SaaS and license revenue increased 14.3% to $84.9 million, compared to $74.3 million. SaaS and license revenue includes software license revenue of $10.8 million, compared to $10.5 million.
  • Total revenue increased 14.3% to $127.9 million, compared to $111.8 million.
  • GAAP net income was $17.7 million, or $0.35 per diluted share, compared to $7.7 million net loss, or $0.16 loss per diluted share.
  • GAAP results include a $6.9 million gain from investment activities which are reported as an increase in other income, net.
  • Non-GAAP adjusted EBITDA increased to $26.3 million, compared to $25.8 million.
  • Non-GAAP adjusted net income increased to $18.6 million, or $0.37 per diluted share, compared to $18.2 million or $0.36 per diluted share.

Balance Sheet and Cash Flow

  • Total cash and cash equivalents increased to $164.3 million as of September 30, 2019, compared to $146.1 million as of December 31, 2018. Cash and cash equivalents includes the receipt of $25.0 million in the third quarter of 2019 related to the repayment of a promissory note with a hardware supplier as well as a payment of $23.0 million, which represents the final payment of the total $28.0 million settlement of the putative class action lawsuit related to the Telephone Consumer Protection Act, or TCPA.
  • For the quarter ended September 30, 2019, cash flows from operations was $1.0 million and free cash flow was $(4.0) million, compared to cash flows from operations of $19.8 million and free cash flow of $16.6 million for the quarter ended September 30, 2018. The decrease in cash flows from operations and free cash flows was primarily due to the final payment of $23.0 million to settle the putative class action lawsuit related to the TCPA.

Recent Business Highlights

  • Introduced New Residential Video Cameras: Two new video cameras were launched which include HDR resolution for indoor and outdoor applications and which offer significantly enhanced performance and picture quality, particularly in highly variable lighting conditions. With sleek and innovative original designs and competitive price-points, Alarm.com’s service providers can now engage more of their customers with advanced video services, including video analytics.
  • Launched Smart Gateway: The Smart Gateway allows service providers to create a private and secure Wi-Fi network dedicated to Alarm.com video cameras. It is designed to streamline camera installation and reduce common support issues caused by the subscribers’ unmanaged Wi-Fi network, and to enable Alarm.com's service provider partners to more efficiently deploy video cameras and services.
  • Building36 Introduces New HVAC Monitoring Service: Building36, a division of Alarm.com, launched a new intelligent and deeply integrated HVAC monitoring service that works with select high-efficiency heating and cooling systems from Amana brand with ComfortBridge™ communicating technology. With this innovative new technology, HVAC contractors can remotely monitor and manage sophisticated residential and light commercial heating and cooling systems, allowing them to operate their businesses more efficiently and proactively address customer needs. Amana brand is the first to deploy high-efficiency systems that integrate with the Building36 service.
  • Announced Majority Stake Acquisition of OpenEye: Alarm.com announced a majority-stake acquisition of OpenEye, a leading provider of cloud-managed video surveillance solutions for the commercial market. OpenEye is an innovative leader in the growing Video-Surveillance-as-a-Service market and its technology is deployed in over 14,000 business locations in the U.S. and Canada. OpenEye’s network of partners and systems integrators have been trusted to deploy its market-leading solutions in leading restaurant chains, large retailers, school districts, universities, and other commercial locations.

Financial Outlook

Alarm.com is providing its outlook for SaaS and license revenue for the fourth quarter of 2019 and is increasing its revenue guidance for the full year 2019.

For the fourth quarter of 2019:

  • SaaS and license revenue is expected to be in the range of $87.3 million to $87.5 million.

For the full year of 2019:

  • SaaS and license revenue is expected to be in the range of $334.6 million to $334.8 million.
  • Total revenue is expected to be in the range of $472.6 million to $476.8 million, which includes anticipated hardware and other revenue in the range of $138.0 million to $142.0 million.
  • Non-GAAP adjusted EBITDA is expected to be in the range of $101.5 million to $103.0 million.
  • Non-GAAP adjusted net income is expected to be in the range of $72.0 million to $72.6 million, based on an estimated tax rate of 21.0%.
  • Based on an expected 50.4 million weighted average diluted shares outstanding, non-GAAP adjusted net income is expected to be $1.43 to $1.44 per diluted share.

Conference Call and Webcast Information

Alarm.com will host a conference call to discuss its third quarter 2019 financial results and its outlook for the fourth quarter and full year of 2019. A live audio webcast is scheduled to begin at 4:30 p.m. ET on November 5, 2019. To participate on the live call, analysts and investors should dial 866.588.3290 (U.S./Canada) or 262.558.6169 (International) at least ten minutes prior to the start time of the call. A telephonic replay of the call will be available through November 13, 2019 by dialing 855.859.2056 (U.S./Canada) or 404.537.3406 (International) and providing Conference ID: 9289779. Alarm.com will also offer a live and archived webcast of the conference call accessible on Alarm.com’s Investor Relations website at http://investors.alarm.com.

About Alarm.com Holdings, Inc.

Alarm.com is the leading platform for the intelligently connected property. Millions of consumers and businesses depend on Alarm.com's technology to manage and control their property from anywhere. Our platform integrates with a growing variety of Internet of Things (IoT) devices through our apps and interfaces. Our security, video, access control, intelligent automation, energy management, and wellness solutions are available through our network of thousands of professional service providers in North America and around the globe. Alarm.com's common stock is traded on Nasdaq under the ticker symbol ALRM. For more information, please visit www.alarm.com.

Non-GAAP Financial Measures

To supplement our consolidated selected financial data presented on a basis consistent with GAAP, this press release contains certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP adjusted income before income taxes, non-GAAP adjusted net income, non-GAAP adjusted income attributable to common stockholders before income taxes, non-GAAP adjusted net income attributable to common stockholders, non-GAAP adjusted net income per share and free cash flow. We have included non-GAAP measures in this press release because they are financial, operating or liquidity measures used by our management to (i) understand and evaluate our core operating performance and trends and generate future operating plans, (ii) make strategic decisions regarding the allocation of capital and investments in initiatives that are focused on cultivating new markets for our solutions and (iii) provide useful information to management about the amount of cash generated by the business after necessary capital expenditures. We also use certain non-GAAP financial measures, including adjusted EBITDA, as performance measures under our executive bonus plan. Further, we believe that these non-GAAP measures of our financial results provide useful information to investors and others in understanding and evaluating our results of operations, business trends and financial condition. While we believe the use of these non-GAAP measures provides useful information to investors and management in analyzing our financial performance, non-GAAP measures have inherent limitations in that they do not reflect all of the amounts and transactions that are included in our financial statements prepared in accordance with GAAP. Non-GAAP measures do not serve as an alternative to GAAP nor do we consider our non-GAAP measures in isolation, accordingly we present non-GAAP financial measures only in connection with GAAP results. We urge investors to consider non-GAAP measures only in conjunction with our GAAP financials and to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures, which are included in this press release.

We consider free cash flow to be a liquidity measure, which we define as cash flows from operating activities less purchases of property and equipment.

With respect to our expectations under “Financial Outlook” above, reconciliation of adjusted EBITDA and adjusted net income guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular, non-ordinary course litigation expense, acquisition-related expense and tax windfall adjustments can have unpredictable fluctuations based on unforeseen activity that is out of our control and/or cannot reasonably be predicted. We expect the above charges to have a significant and potentially highly variable impact on our future GAAP financial results.

We exclude one or more of the following items from non-GAAP financial and operating measures:

Stock-based compensation expense: We exclude stock-based compensation expense, which relates to stock options and other forms of equity incentives primarily awarded to employees of Alarm.com, because they are non-cash charges that we do not consider when assessing the operating performance of our business. Additionally, the determination of stock-based compensation expense can be calculated using various methodologies and is dependent upon subjective assumptions and other factors that vary on a company by company basis. Therefore, we believe that excluding stock-based compensation from our non-GAAP financial measures improves the comparability of our results to the results of other companies in our industry.

Litigation expense: We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes, particularly costs incurred in ongoing intellectual property litigation, to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

Acquisition-related expense: Included in operating expenses are incremental costs directly related to business and asset acquisitions. We exclude acquisition-related expense from our non-GAAP financial measures because we believe it is useful for investors to understand the effects of this transaction and its integration costs on our total operating expenses.

Depreciation expense: We record depreciation primarily for investments in property and equipment. We exclude depreciation in calculating adjusted EBITDA because we do not consider depreciation when we evaluate our ongoing business operations. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income per share, basic and diluted, we do not exclude depreciation.

Amortization expense: GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed technology and trade names. We exclude amortization of intangibles from our non-GAAP financial measures because we do not consider amortization expense when we evaluate our ongoing business operations, nor do we factor amortization expense into our evaluation of potential acquisitions, or our measurement of the performance of those acquisitions. We believe that the exclusion of amortization expense enables the comparison of our performance to other companies in our industry as other companies may be more or less acquisitive than us and therefore, amortization expense may vary significantly by company based on their acquisition history.

Interest expense: We record interest expense primarily related to our debt facility. We exclude interest expense in calculating our adjusted EBITDA calculation. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income per share, basic and diluted, we do not exclude interest expense.

Interest income and other income, net: We exclude interest income and other income, net from our non-GAAP financial measures because we do not consider it part of our ongoing results of operations.

Income taxes: We exclude the impact related to our provision for income taxes from our adjusted EBITDA calculation. We do not consider this tax adjustment to be part of our ongoing results of operations.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by their use of terms and phrases such as “anticipate,” “expect,” “will,” “believe,” “continue,” “enable” and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding the continued success of the Company’s service provider partners and the Company’s future financial performance for the fourth quarter and full year 2019. The events described in these forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: the Company’s ability to retain service provider partners and residential and commercial subscribers and grow sales, the Company’s ability to manage growth and execute on its business strategies, the effects of increased competition and evolving technologies, the Company’s ability to integrate acquired assets and businesses and to manage service provider partners, customers and employees, consumer demand for interactive security, video monitoring, intelligent automation, energy management and wellness solutions, the reliability of the Company’s network operations centers, the Company’s reliance on its service provider network to attract new customers and retain existing customers, the Company's dependence on its suppliers, the reliability of the Company’s hardware and wireless network suppliers, future financial prospects and enhanced United States tax, tariff, import/export restrictions, or other trade barriers, particularly tariffs from China as well as other risks and uncertainties discussed in the “Risk Factors” section of the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2019 and other subsequent filings the Company makes with the Securities and Exchange Commission from time to time. In addition, the forward-looking statements included in this press release represent the Company’s views and expectations as of the date hereof and are based on information currently available to the Company. The Company anticipates that subsequent events and developments may cause the Company’s views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so except as required by law. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof.

 

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Revenue:

 

 

 

 

SaaS and license revenue

$

84,924

 

$

74,292

 

$

247,313

 

$

213,248

 

Hardware and other revenue

 

42,956

 

 

37,556

 

 

114,562

 

 

95,844

 

Total revenue

 

127,880

 

 

111,848

 

 

361,875

 

 

309,092

 

Cost of revenue:

 

 

 

 

Cost of SaaS and license revenue

 

12,438

 

 

11,501

 

 

37,428

 

 

33,334

 

Cost of hardware and other revenue

 

35,085

 

 

30,491

 

 

93,601

 

 

73,523

 

Total cost of revenue

 

47,523

 

 

41,992

 

 

131,029

 

 

106,857

 

Operating expenses:

 

 

 

 

Sales and marketing

 

14,533

 

 

14,128

 

 

43,392

 

 

39,562

 

General and administrative

 

18,701

 

 

43,662

 

 

51,785

 

 

77,943

 

Research and development

 

29,461

 

 

22,869

 

 

84,375

 

 

64,767

 

Amortization and depreciation

 

5,467

 

 

5,891

 

 

15,833

 

 

16,154

 

Total operating expenses

 

68,162

 

 

86,550

 

 

195,385

 

 

198,426

 

Operating income / (loss)

 

12,195

 

 

(16,694

)

 

35,461

 

 

3,809

 

Interest expense

 

(715

)

 

(736

)

 

(2,322

)

 

(2,159

)

Interest income

 

2,703

 

 

661

 

 

4,317

 

 

1,442

 

Other income, net

 

6,380

 

 

56

 

 

6,468

 

 

91

 

Income / (loss) before income taxes

 

20,563

 

 

(16,713

)

 

43,924

 

 

3,183

 

Provision for / (benefit from) income taxes

 

2,873

 

 

(9,061

)

 

3,428

 

 

(10,413

)

Net income / (loss)

 

17,690

 

 

(7,652

)

 

40,496

 

 

13,596

 

Income allocated to participating securities

 

(2

)

Net income / (loss) attributable to common stockholders

$

17,690

 

$

(7,652

)

$

40,496

 

$

13,594

 

 

 

 

 

 

Per share information attributable to common stockholders:

 

 

 

 

Net income / (loss) per share:

 

 

 

 

Basic

$

0.36

 

$

(0.16

)

$

0.84

 

$

0.29

 

Diluted

$

0.35

 

$

(0.16

)

$

0.81

 

$

0.27

 

Weighted average common shares outstanding:

 

 

 

 

Basic

 

48,518,041

 

 

47,812,642

 

 

48,360,927

 

 

47,494,926

 

Diluted

 

50,152,807

 

 

47,812,642

 

 

50,238,409

 

 

49,593,918

 

 

 

 

 

 

Stock-based compensation expense included in operating expenses:

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Sales and marketing

$

534

 

$

301

 

$

1,385

 

$

855

 

General and administrative

 

1,714

 

 

1,191

 

 

4,762

 

 

3,700

 

Research and development

 

2,787

 

 

1,965

 

 

8,574

 

 

5,115

 

Total stock-based compensation expense

$

5,035

 

$

3,457

 

$

14,721

 

$

9,670

 

 

 

 

 

 

 

 

 

ALARM.COM HOLDINGS, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

 

 

 

 

 

 

September 30,

2019

 

December 31,

2018

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

164,323

 

 

$

146,061

 

Accounts receivable, net

 

 

64,897

 

 

 

49,510

 

Inventory, net

 

 

20,978

 

 

 

22,990

 

Other current assets

 

 

13,495

 

 

 

9,502

 

Total current assets

 

 

263,693

 

 

 

228,063

 

Property and equipment, net

 

 

32,332

 

 

 

27,757

 

Intangible assets, net

 

 

68,802

 

 

 

79,067

 

Goodwill

 

 

63,591

 

 

 

63,591

 

Deferred tax assets

 

 

27,450

 

 

 

28,952

 

Operating lease right-of-use assets

 

 

27,520

 

 

 

Other assets

 

 

17,618

 

 

 

13,555

 

Total assets

 

$

501,006

 

 

$

440,985

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable, accrued expenses and other current liabilities

 

$

33,566

 

 

$

58,430

 

Accrued compensation

 

 

13,392

 

 

 

13,484

 

Deferred revenue

 

 

3,063

 

 

 

3,356

 

Operating lease liabilities

 

 

6,684

 

 

 

Total current liabilities

 

56,705

 

 

 

75,270

 

Deferred revenue

 

6,960

 

 

 

7,820

 

Long-term debt

 

64,000

 

 

 

67,000

 

Operating lease liabilities

 

35,291

 

 

 

Other liabilities

 

1,884

 

 

 

13,306

 

Total liabilities

 

164,840

 

 

 

163,396

 

Stockholders’ equity

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2019 and December 31, 2018.

 

 

 

Common stock, $0.01 par value, 300,000,000 shares authorized; 48,572,086 and 48,103,038 shares issued; and 48,571,676 and 48,102,081 shares outstanding as of September 30, 2019 and December 31, 2018, respectively.

 

486

 

 

 

481

 

Additional paid-in capital

 

359,178

 

 

 

341,139

 

Accumulated deficit

 

(23,498

)

 

 

(64,031

)

Total stockholders’ equity

 

336,166

 

 

 

277,589

 

Total liabilities and stockholders’ equity

$

501,006

 

 

$

440,985

 

 
 

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Nine Months Ended
September 30,

Cash flows from operating activities:

2019

 

2018

Net income

$

40,496

 

 

$

13,596

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

Provision for doubtful accounts

 

722

 

 

 

108

 

Reserve for product returns

 

(105

)

 

 

210

 

Provision for notes receivable

 

(3,319

)

 

Amortization on patents and tooling

 

506

 

 

 

701

 

Amortization and depreciation

 

15,833

 

 

 

16,154

 

Amortization of debt issuance costs

 

81

 

 

 

81

 

Amortization of operating lease right-of-use assets

 

4,296

 

 

Deferred income taxes

 

1,502

 

 

 

(9,108

)

Stock-based compensation

 

14,721

 

 

 

9,670

 

Gain on notes receivable

 

(6,931

)

 

Acquired in-process research and development

 

850

 

 

Impairment of investment

 

605

 

 

Disposal of property and equipment

 

 

285

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(16,004

)

 

 

(15,145

)

Inventory

 

2,012

 

 

 

(2,729

)

Other current and non-current assets

 

(6,813

)

 

 

(5,072

)

Accounts payable, accrued expenses and other current liabilities

 

(22,959

)

 

 

28,472

 

Deferred revenue

 

(1,153

)

 

 

(804

)

Operating lease liabilities

 

(681

)

 

Other liabilities

 

188

 

 

 

(1,441

)

Cash flows from operating activities

 

23,847

 

 

 

34,978

 

Cash flows used in investing activities:

 

 

 

Additions to property and equipment

 

(10,660

)

 

 

(9,317

)

Purchases of in-process research and development

 

(850

)

 

Issuances or purchases of notes receivable

 

(26,074

)

 

Receipt of payment on notes receivable

 

31,695

 

 

Cash flows used in investing activities

 

(5,889

)

 

 

(9,317

)

Cash flows from financing activities:

 

 

 

Repayments of credit facility

 

(3,000

)

 

 

(3,000

)

Repurchases of common stock

 

 

(1

)

Issuances of common stock from equity-based plans

 

3,304

 

 

 

5,254

 

Cash flows from financing activities

 

304

 

 

 

2,253

 

Net increase in cash and cash equivalents

 

18,262

 

 

 

27,914

 

Cash and cash equivalents at beginning of the period

 

146,061

 

 

 

96,329

 

Cash and cash equivalents at end of the period

$

164,323

 

 

$

124,243

 

 
 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures

(in thousands)

(unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Adjusted EBITDA:

 

 

 

 

Net income / (loss)

$

17,690

 

$

(7,652

)

$

40,496

 

$

13,596

 

Adjustments:

 

 

 

 

Interest expense, interest income and other income, net

 

(8,368

)

 

19

 

 

(8,463

)

 

626

 

Provision for / (benefit from) income taxes

 

2,873

 

 

(9,061

)

 

3,428

 

 

(10,413

)

Amortization and depreciation expense

 

5,467

 

 

5,891

 

 

15,833

 

 

16,154

 

Stock-based compensation expense

 

5,035

 

 

3,457

 

 

14,721

 

 

9,670

 

Acquisition-related expense

 

1,590

 

 

1,590

 

Litigation expense

 

2,033

 

 

33,167

 

 

10,682

 

 

42,555

 

Total adjustments

 

8,630

 

 

33,473

 

 

37,791

 

 

58,592

 

Adjusted EBITDA

$

26,320

 

$

25,821

 

$

78,287

 

$

72,188

 

 

 

 

 

 

Adjusted net income:

 

 

 

 

Net income / (loss), as reported

$

17,690

 

$

(7,652

)

$

40,496

 

$

13,596

 

Provision for / (benefit from) income taxes

 

2,873

 

 

(9,061

)

 

3,428

 

 

(10,413

)

Income / (loss) before income taxes

 

20,563

 

 

(16,713

)

 

43,924

 

 

3,183

 

Adjustments:

 

 

 

 

Less: interest income and other income, net

 

(9,083

)

 

(717

)

 

(10,785

)

 

(1,533

)

Amortization expense

 

3,404

 

 

3,801

 

 

10,338

 

 

11,418

 

Stock-based compensation expense

 

5,035

 

 

3,457

 

 

14,721

 

 

9,670

 

Acquisition-related expense

 

1,590

 

 

1,590

 

Litigation expense

 

2,033

 

 

33,167

 

 

10,682

 

 

42,555

 

Non-GAAP adjusted income before income taxes

 

23,542

 

 

22,995

 

 

70,470

 

 

65,293

 

Income taxes 1

 

(4,944

)

 

(4,829

)

 

(14,799

)

 

(13,712

)

Non-GAAP adjusted net income

$

18,598

 

$

18,166

 

$

55,671

 

$

51,581

 

 

1 Income taxes are calculated using a rate of 21.0% for each of the three and nine months ended September 30, 2019 and 2018. The 21.0% effective tax rate for each of the three and nine months ended September 30, 2019 and 2018 exclude the income tax effect on the non-GAAP adjustments and reflect the estimated long-term corporate tax rate.

 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2019

2018

2019

2018

Adjusted net income attributable to common stockholders:

 

 

 

 

Net income / (loss) attributable to common stockholders, as reported

$

17,690

 

$

(7,652

)

$

40,496

 

$

13,594

 

Provision for / (benefit from) income taxes

 

2,873

 

 

(9,061

)

 

3,428

 

 

(10,413

)

Income / (loss) attributable to common stockholders before income taxes

 

20,563

 

 

(16,713

)

 

43,924

 

 

3,181

 

Adjustments:

 

 

 

 

Less: interest income and other income, net

 

(9,083

)

 

(717

)

 

(10,785

)

 

(1,533

)

Amortization expense

 

3,404

 

 

3,801

 

 

10,338

 

 

11,418

 

Stock-based compensation expense

 

5,035

 

 

3,457

 

 

14,721

 

 

9,670

 

Acquisition-related expense

 

1,590

 

 

 

1,590

 

 

Litigation expense

 

2,033

 

 

33,167

 

 

10,682

 

 

42,555

 

Non-GAAP adjusted income attributable to common stockholders before income taxes

 

23,542

 

 

22,995

 

 

70,470

 

 

65,291

 

Income taxes 1

 

(4,944

)

 

(4,829

)

 

(14,799

)

 

(13,711

)

Non-GAAP adjusted net income attributable to common stockholders

$

18,598

 

$

18,166

 

$

55,671

 

$

51,580

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Adjusted net income per share:

 

 

 

 

 

 

 

Net income / (loss) per share - basic, as reported

$

0.36

 

 

$

(0.16

)

 

$

0.84

 

 

$

0.29

 

Provision for / (benefit from) income taxes

 

0.06

 

 

 

(0.20

)

 

 

0.08

 

 

 

(0.22

)

Income / (loss) before income taxes

 

0.42

 

 

 

(0.36

)

 

 

0.92

 

 

 

0.07

 

Adjustments:

 

 

 

 

 

 

 

Less: interest income and other income, net

 

(0.18

)

 

 

(0.01

)

 

 

(0.22

)

 

 

(0.03

)

Amortization expense

 

0.07

 

 

 

0.08

 

 

 

0.21

 

 

 

0.24

 

Stock-based compensation expense

 

0.10

 

 

 

0.07

 

 

 

0.30

 

 

 

0.20

 

Acquisition-related expense

 

0.03

 

 

 

 

0.03

 

 

Litigation expense

 

0.04

 

 

 

0.70

 

 

 

0.22

 

 

 

0.90

 

Non-GAAP adjusted income before income taxes

 

0.48

 

 

 

0.48

 

 

 

1.46

 

 

 

1.38

 

Income taxes 1

 

(0.10

)

 

 

(0.10

)

 

 

(0.31

)

 

 

(0.29

)

Non-GAAP adjusted net income per share - basic

$

0.38

 

 

$

0.38

 

 

$

1.15

 

 

$

1.09

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted net income per share - diluted

$

0.37

 

 

$

0.36

 

 

$

1.11

 

 

$

1.04

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic, as reported

 

48,518,041

 

 

 

47,812,642

 

 

 

48,360,927

 

 

 

47,494,926

 

Diluted, as reported 2

 

50,152,807

 

 

 

49,808,615

 

 

 

50,238,409

 

 

 

49,593,918

 

 

1 Income taxes are calculated using a rate of 21.0% for each of the three and nine months ended September 30, 2019 and 2018. The 21.0% effective tax rate for each of the three and nine months ended September 30, 2019 and 2018 exclude the income tax effect on the non-GAAP adjustments and reflect the estimated long-term corporate tax rate.

 

2 For periods with GAAP net losses and non-GAAP adjusted net income, the weighted-average outstanding shares used to calculate diluted non-GAAP adjusted net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.

 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(in thousands)

(unaudited)

 

 

Three Months Ended
September 30,

Nine Months Ended
September 30,

 

2019

2018

2019

2018

Free cash flow:

 

 

 

 

Cash flows from operating activities

$

980

 

$

19,774

 

$

23,847

 

$

34,978

 

Additions to property and equipment

 

(4,952

)

 

(3,186

)

 

(10,660

)

 

(9,317

)

Non-GAAP free cash flow

$

(3,972

)

$

16,588

 

$

13,187

 

$

25,661

 

 

 

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