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Vivint Smart Home CEO: demand is 'incredibly high'

Vivint Smart Home Founder and CEO Todd Pedersen joins Yahoo Finance’s Zack Guzman to discuss the company’s latest quarterly earnings results and outlook amid COVID-19.

Video Transcript

ZACK GUZMAN: Right now, we are looking at shares in Vivint Smart Home up nearly 2.5% today after they gave their investors the update on their second quarter yesterday. Total revenues increased 8.9% year-over-year to $306 million. Overall, it's important to keep in mind here that 95% of their revenue is reoccurring. And a lot going on in the security space here after Google and ADT announced somewhat of a partnership there to increase their presence in the space. So what's really going on here? Well, let's chat about it with the CEO and founder of Vivint Smart Home. Todd Pedersen joins us now.

And Mr. Pedersen, appreciate you taking the time to chat. Let's start with the results you guys reported here, since you guys are notching some pretty good growth. What are you seeing right now in terms of demand? This is the kind of discussion we were just having about people staying home, maybe wanting to spend a little bit more on their home. What are you seeing in terms of demand for security now?

TODD PEDERSEN: Well, you know, this is a really important point. I think there's a reconnection in the home that's happening that's very relevant in businesses and services that are associated with the home. And we happen to be in a sector that, even in a downturn-- we've lived through several of them-- the demand for peace of mind and security, it's very prevalent. And so as you've seen with our numbers, demand is incredibly high. The-- you know, our attrition numbers went down, service margins up in our business. So the way we deliver services does provide that peace of mind and security to homeowners.

ZACK GUZMAN: Yeah, and the other thing, too, from your guys' earnings call there, you boosted your full-year guidance. When you look at that, I just want to highlight the numbers there. You expect to end the year with approximately 1.6 to 1.68 million subscribers. Per your prior guidance, it was 1.55 to 1.62. Your estimate for revenue also jumped, 1.23 to 1.28 billion, versus prior guidance of 1.2 to 1.25. And you're also boosting your adjusted EBITDA numbers there, too, as well. So what really do you attribute that to? If it's, you know, a surge in demand, but also competition rising, as well, why are you so confident in the back half of 2020?

TODD PEDERSEN: You know, Vivint is the premier smart home as a service provider in the United States. And I think that's being recognized. Again, with this reconnection with the home, people really want what we deliver, which is professional installed cameras, thermostats, door locks, all on a single platform managed by a professional company at a great value. And that is showing through in the numbers and the results.

And speaking to, you know, the competition or this investment from Google into ADT, this really just validates what we've been saying all along, that the Vivint model of professional installation and service, and ongoing service, in a seamless way is the winning model. Obviously, if you-- looking at our numbers and the margins, it's definitely where the cash pool is, or the profit pools are. But from a consumer perspective, they really demand high quality, consistency, an elegant experience. And that's what we deliver.

ZACK GUZMAN: Yeah, that's what I wanted to ask you about, too, though, because it was a pretty big move, and we saw ADT shares spike, absolutely jump on it. I mean, it was over 50%, the move when the deal was announced. But Google's saying it's going to invest more than $400 million for a 6.6% stake in the security giant. Obviously, you guys sell a lot of the equipment here from Google. You guys offer those to your customers, as well as tech from Amazon, as well.

But you're talking about where you bring value in the installation of all this. Obviously, ADT does that, too. So I mean, when we think about dealing with some of these tech giants here, how do you set your guys apart from the competition if installation becomes so important? Why go with a Vivint over an ADT? And how does it become maybe more problematic long-term to still be working with some of these tech giants, some of their hardware?

TODD PEDERSEN: Well, here's what I would say. We own our operating system, unlike an ADT, who uses like an alarm.com or a Nest platform. We have a proprietary platform that we've built out, along with the hardware and technologies that we install inside of the home. Now, we will allow companies like Amazon or Google, if they have a best-in-class product or technology, integrate into our platform, but it's important us to control that ecosystem end-to-end. And that's a major differentiator.

We're not partnering up with people that are building single-point solutions, another company that builds the platform, and trying to merge them together after the fact. It;s purpose-built. It's up-front. We have this incredible feedback loop because we own the entire technology process and stack and development. It just makes it unique and a much superior service and quality of service.

ZACK GUZMAN: And lastly, before I let you go, you guys kind of kicked off this trend that we saw here in 2020. I'm not sure-- I'm not sure you saw the coronavirus pandemic coming here, but you guys went public via SPAC back in January. Since then, we've seen a few different companies go that route to access public markets, Draft Kings being one of them. I mean, what has your take been just when you step back and look at the way you guys came to market, and seeing that play out now across a bunch of different sectors, and a lot of people following the path that you took? What's your take on that?

TODD PEDERSEN: Hey, kind of like Google following us into the smartphone as a service and getting into the home, maybe people wanted to follow us into the SPAC model, too. I don't know, but it does seem that it's in vogue. It is a bit of a cleaner process. The guaranteed proceeds that come through that are quite attractive. And that's what we were chasing. We were trying to delever. But it is another option in the market to go public, and it's quite effective.