Alarm.com Stock Continues to Impress
Today’s stock represents our preferred strategy of investing in stocks that stand to benefit from the move toward digital technology. The rise of mobile penetration and concern for security is fuelling the trend for home and office security. There are few players that have innovative products and solutions to take on this rising demand and generate superlative returns for their investors.
The case in point being AlarmCom Hldg Inc (NASDAQ:ALRM), which is a technology company that provides cloud-based services for home automation, remote control, and monitoring. The company offers a suite of cloud-based solutions for smart homes and businesses, which include interactive security, intelligent automation, video monitoring, and energy management. The company’s solutions are used in both smart homes and businesses, which is termed as the connected property market.
Millions of property owners rely on its technology to monitor and manage their homes and businesses. In the last year alone, the company’s platform processed more than 30 billion data points generated by over 35 million connected devices. Given the scale of subscribers, connected devices, and data operations, Alarm.com leads in the connected property market. The growing popularity of its solutions has also been fuelling the uptrend in ALRM stock.
Alarm.com delivers its solutions through an established network of more than 6,000 trusted service providers, who have the expertise in selling, installing, and supporting the company’s solutions. Alarm.com primarily generates Software-as-a-Service (SaaS) and license revenue through its service provider partners, who resell these services and pay it monthly fees. Its robust SaaS platform and more than a decade of operating experience result in a compelling business model.
The company’s hardware sales include gateway modules and other connected devices that enable services like video cameras and smart thermostats. Recently, it expanded its energy management portfolio by introducing a new thermostat with advanced capabilities for energy-efficiency and the proactive detection of maintenance issues.
Alarm.com’s technology platform is designed to make connected properties safer, smarter, and more efficient. The company’s solutions are deployed by over five million people to protect their homes and businesses. With the rise in demand for monitored security systems, the future looks bright for Alarm.com stock.
As mentioned in the company’s annual report, the research data from Parks Associates shows that there were about 22.5 million U.S. households with professionally monitored security systems in 2015. This number is expected to grow to 29.9 million by 2020. (Source: “2016 Annual Report,” Alarm.com Holdings, Inc., February 20, 2017.)
Moreover, according to a research report by MarketsandMarkets Research Private Ltd., the Internet of Things (IoT) Security Market is expected to grow to about $29.02 billion by 2022 from about $6.62 billion in 2017, which represents a compound annual growth rate (CAGR) of 34.4% from 2017-2022. (Source: “Internet of Things (IoT) Security Market – Global Forecast to 2022,” MarketsandMarkets Research Private Ltd., June 2017.)
Alarm.com is well-positioned for current as well as future opportunities in the connected security space. The company is also focused on international expansion in order to tap into the growing global market opportunity for its products and services.
Alarm.com is also capitalizing on the opportunities being created by technology trends of mobile access, IoT, big data, and cloud technology. The company has already hopped on to the emerging trends of audio devices and voice assistants in the smart home space. It launched its integration of “Amazon Alexa” two years ago and last year, it added “Google Home,” “Legrand,” and “Sonos” as well. This bodes well for ALRM stock going forward.
The connected security company announced strong fourth-quarter and full-year 2017 results last month. SaaS and license revenue increased by 39% to reach $65.2 million and total revenue touched $88.8 million, a growth of 27%. For the full year, the total revenue increased by 30% to touch $338.9 million.
CEO Steve Trundle said, “The market continues to favor the type of innovative connected property services that we provide.” (Source: “Alarm.com Reports Fourth Quarter and Full Year 2017 Results,” Alarm.com Holdings Inc, February 27, 2018.)
The Alarm.com stock performance has been improving as well as its financial performance. ALRM stock has gone up by over 25% in the last one year, as shown in the chart below. However, it is still nowhere near its record highs.
Chart courtesy of StockCharts.com
The company is growing well in a fragmented market, which is very competitive and is evolving constantly. Its subscriber base and coverage of service providers, combined with the huge volume of data generated on the company’s platform, create a competitive advantage for Alarm.com, which shall lead Alarm.com stock to generate higher returns in the coming years.
Alarm.com is a leading cloud-based platform for the connected property. Millions of home and business owners depend on its technology to intelligently secure their properties. They also automate a broad range of connected devices through its single, intuitive user interface.
Its trusted network of service providers delivers interactive security, intelligent automation, video monitoring, and energy management solutions to these millions of property owners. This number is expected to continue rising in future.
The expected growth in users shall keep pushing ALRM stock higher in the coming years. Investors who want to play the connected security market should not miss this opportunity.