Connected-home software provider (NASDAQ:ALRM) reported its third-quarter results after the market closed on Nov. 8. Revenue and earnings continued to expand as the company picks up more subscribers, and as those subscribers add more devices to their systems. The company also boosted its full-year revenue guidance. Here's what investors need to know about's third-quarter results. results: The raw numbers


Q3 2017

Q3 2016

Year-Over-Year Change


$90.0 million

$67.8 million


Net income

$15.1 million

$2.6 million






Data source: EPS = earnings per share.

The smartphone app.

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What happened with this quarter?

  • Software-as-a-service (SaaS) and license revenue increased by 39% year over year to $61.9 million.
  • Hardware and other revenue rose 20.8% year over year to $28.0 million.
  • Adjusted EBITDA was $19.5 million, up from $11.8 million in the prior-year period.
  • GAAP net income included a $5 million tax benefit related to a new accounting standard for employee share-based transactions.
  • Cash flow from operations totaled $13.8 million, up from $3.6 million in the prior-year period.
  • Cash and cash equivalents totaled $84.6 million, down from $140.6 million at the end of 2016. In October, refinanced its $72 million of debt under a revolving credit facility by entering into a new senior secured credit facility.
  • released a new web dashboard for subscribers, rolled out software enhancements for its video service, and launched Mercury 3.0, an enterprise software solution for utilities, through its EnergyHub subsidiary. provided the following guidance for the fourth quarter and the full year:

  • Fourth-quarter SaaS and license revenue is expected between $63.7 million and $63.9 million.
  • Full-year SaaS and license revenue is expected between $234.8 million and $235 million.
  • Full-year total revenue is expected between $332.8 million and $334.0 million.
  • Full-year adjusted EBITDA is expected between $68.5 million and $69.0 million.
  • Full-year non-GAAP net income is expected $43.2 million and $43.7 million, or between $0.87 and $0.88 on a per-share basis.

What management had to say President and CEO Steve Trundle discussed the company's progress boosting attachment rates for advanced devices during the conference call:

The increase in attachment rate of advanced devices is being driven by both new and existing accounts. We defined advanced devices as either home automation devices, like smart thermostats, locks and lights; or any type of video camera. The attachment rate of advanced devices on new accounts created in the third quarter, increased 17% over the same period last year.

Trundle also detailed the success's partners are having getting subscribers to add additional devices to their systems:

We are also seeing the base of subscribers, gradually add new devices to their already installed systems. This has been particularly true with video. Among the cohort of subscriber accounts that were created in 2015 and that have video services today, nearly 30% added video services to their system, sometime after the initial installation. This is evidence that our service providers are moving to take advantage of opportunities to increase the lifetime value of their customers, who are serviced by our platform, and this is a positive trend for our business.

Looking forward's third quarter looked a lot like its second quarter, with a similar revenue growth rate and earnings expansion. The company boosted its full-year revenue guidance by about $6 million, although it lowered its outlook for non-GAAP EPS. The previous guidance range was $0.96 to $0.98, with the discrepancy due to the exclusion of certain tax benefits. If those benefits were included, it would add $0.25 to non-GAAP EPS. now has more than 6,000 service provider partners and more than 5 million subscribers. With smart-home security representing just a fraction of the total home security market, can continue to grow for years to come.