Is your household secure at the moment? How about your office?
Alarm.com Holdings makes its living by providing an easy solution to these questions. Its various "connected home" offerings allow users to control the security and other key settings of their residence(s) or business(es) via an online interface.
The "smart home" is a hot corner of the Internet of Things market, and nearly everyone with a home or business has a vested interest in securing and/or monitoring their property.
So the timing seems auspicious for this IPO, which is expected to price later this week.
In spite of its name, interactive security is only one of the services Alarm.com provides.
Its offerings can be broken down into four primary solution areas: interactive security, intelligent automation (controlling household systems remotely), video monitoring, and energy management (i.e. temperature, solar panels, air conditioning, etc.).
All are cloud-based software-as-a-service products, manageable by the user through the company's one-stop online interface, also available as a mobile app.
Alarm.com's solutions are sold through a network of around 5,000 providers. According to the company, its platform currently boasts roughly 2.3 million subscribers and connects approximately 25 million devices.
The firm says these figures make it the largest connected home platform on the market.
A secure business?
In the grand tradition of nearly every publicly traded company with a ".com" attached to its name, Alarm.com has seen its revenue grow rapidly over the years ... but this has been accompanied by a bottom line typically colored in red.
Not lately, however. In both 2013 and 2014, the company posted profits. These were relatively thin ($122,000 on $130 million in revenue and $563,000 on $167 million, respectively), but they were profits nonetheless.
That 2014 revenue figure, by the way, represents nearly 30% growth over the prior year.
So far, 2015 also seems to be shaping up profitably for the company with continued revenue growth. The first quarter saw a top line of $46 million and a net profit of $146,000, compared to $37 million and $148,000 for the year-ago quarter.
Alarm.com had $19 million in long-term obligations as of the most recent quarter but over twice that amount in cash and equivalents. Interest expense only came in at $42,000 during the quarter, indicating that servicing these borrowings is currently a non-issue.
All things considered, Alarm.com looks like it should attract strong investor interest. Revenue continues to rise, and profitability is also improving.
In its IPO filing with the Securities and Exchange Commission, the company quoted encouraging research from Parks Associates. A survey showed that in 2014, 67% of broadband Internet-enabled homes polled found smart home features "appealing," but less than one in 12 had installed such equipment and services.
That is a big market to tap into, and this company is in a strong position to do so. The fresh capital it will raise with this IPO should help greatly in its efforts to lead the market.
Alarm.com is offering seven million shares in the range of $13 to $15. At the midpoint of the range, the company will have a $628 million valuation. The lead underwriters are Goldman Sachs, Credit Suisse, and Bank of America Merrill Lynch.
The company will be listed on the Nasdaq under the ticker symbol, "ALRM" -- it is expected to begin trading this Friday, June 26th.
Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Apple and Bank of America. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.