Alarm.com Q2 Results Comes In Above Expectations, But So Does Litigation Expense

AlarmCom Hldg Inc (NASDAQ: ALRM) reported its 2Q revenue ahead of expectations and raised its full-year guidance. Higher litigation expenses adversely impacted operating cash flows, Goldman Sachs’ Heather Bellini mentioned in a report. The analyst maintained a Neutral rating on the company, while raising the price target from $24 to $30.

Results Ahead

Alarm.com reported its quarterly revenue at $64.4 million, representing 24 percent y/y and 9 percent q/q growth. The results were ahead of the consensus estimate of $58.6 million, with the beat being driven mainly by 26 percent growth in hardware and other sales to $22.4 million.

Subscription revenue beat expectations for the fourth consecutive quarter. Although non-GAAP EBITDA came in ahead of expectations, litigation expense of $4.5 million, up from $3.5 million in the prior quarter, was higher than expected, Bellini said. She added that this miss resulted in the OCF being short of the GS estimate.

Guidance Raised

Alarm.com raised its 2016 revenue guidance by $3 million at the midpoint to $242.3-$245.8 million, versus the consensus estimate of $241.6 million. The upward revision was on account of higher hardware and other sales as well as higher SaaS and license revenue.

“ALRM noted that its target for 4K international sub-adds per month exiting 2016 is on track and that it has seen good progress in Australia. In terms of the competitive landscape, ALRM has seen no real change despite Comcast’s announcement to acquire iControl’s Converge platform, but ALRM does continue to view the service providers as valid competitors,” Bellini wrote.

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