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A Bottom-Line Boost for

By Timothy Green – May 10, 2017 at 8:00AM

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Revenue continued to grow at a steady pace during the first quarter, and a combination of higher margin and a lower tax rate led to a big increase in profit.

Connected-home platform provider (ALRM -2.61%) reported its first-quarter results after the market closed on May 9. Revenue growth accelerated a bit from the fourth quarter, and profitability improved dramatically. The acquisition of the Connect and Piper business units provided a boost to the numbers, and the company slightly raised its guidance for the full year. Here's what investors need to know about's first-quarter results. results: The raw numbers


Q1 2017

Q1 2016

Change (YOY)


$74.2 million

$59.0 million


Net income

$3.96 million

$2.73 million






Data source:

The logo.

Image source:

What happened with this quarter?

Profitability improved as software-as-a-service (SaaS) and license revenue surged.

  • SaaS and license revenue rose 26% year over year to $50.2 million. This includes contributions from Connect and Piper -- two business units acquired by The acquisition of those business units closed on March 8.
  • Hardware and other revenue increased by 26% year over year to $24.0 million.
  • Adjusted EBITDA rose 30% year over year to $14.1 million.
  • Cash flow from operations totaled $13 million, up from $7.3 million in the prior-year period.
  • Total cash and cash equivalents decreased to $63.2 million from $140.6 million at the end of 2016. The decrease was driven by spending on acquisitions. provided the following guidance for the second quarter and the full year:

  • Second-quarter SaaS and license revenue is expected between $57.8 million and $58.0 million.
  • Full-year SaaS and license revenue is expected between $231.7 million and $232.7 million.
  • Full-year revenue is expected between $322.7 million and $325.7 million.
  • Adjusted EBITDA is expected between $65.5 million and $66.5. million.
  • Non-GAAP earnings per share are expected between $0.74 and $0.76.

What management had to say President and CEO Steve Trundle discussed the company's progress during the quarter: "We're off to a solid start in 2017, with continued growth in SaaS and license revenue and increased profitability. Our service provider partners continue to lead the security industry's transformation from traditional service to higher-value interactive solutions, and we announced new product initiatives to help them deliver a best-in-class experience to their customers."

The company outlined some new features that were added to its mobile app for service provider partners during the quarter:

MobileTech,'s installation and support app for technicians, includes new features to help ensure accurate and reliable installations and rapid troubleshooting. The new design is optimized to surface commands based on the device being installed for simpler navigation and feature access. New capabilities include account setup and device enrollment features, full access to security panel settings, and a comprehensive system diagnostics capability that identifies potential trouble conditions so they can be proactively addressed during the installation process.

Looking forward

Solid revenue growth continued for during the first quarter, along with a substantial improvement in profitability. The big driver of the bottom-line increase, however, was a lower tax rate; GAAP operating income was up just 5.3% year over year. boosted its full-year guidance slightly, compared with its previous outlook. The new guidance calls for revenue growth of about 24% this year, just a touch lower than its first-quarter growth rate. The company's strategy of partnering with service providers has been successful so far, and will continue to leverage those relationships to grow revenue going forward. 

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Holdings. The Motley Fool has a disclosure policy.

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