x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 26-4247032 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
8281 Greensboro Drive, Suite 100, Tysons, Virginia | 22102 | |
(Address of principal executive offices) | (zip code) |
Large accelerated filer | ¨ | Accelerated filer | þ | |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | |||
Smaller reporting company | ¨ | Emerging growth company | þ |
Page | |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Revenue: | |||||||
SaaS and license revenue | $ | 50,226 | $ | 40,012 | |||
Hardware and other revenue | 23,968 | 19,031 | |||||
Total revenue | 74,194 | 59,043 | |||||
Cost of revenue(1): | |||||||
Cost of SaaS and license revenue | 8,092 | 6,781 | |||||
Cost of hardware and other revenue | 18,543 | 14,335 | |||||
Total cost of revenue | 26,635 | 21,116 | |||||
Operating expenses: | |||||||
Sales and marketing | 10,314 | 8,976 | |||||
General and administrative | 15,375 | 13,129 | |||||
Research and development | 14,521 | 9,970 | |||||
Amortization and depreciation | 2,864 | 1,591 | |||||
Total operating expenses | 43,074 | 33,666 | |||||
Operating income | 4,485 | 4,261 | |||||
Interest expense | (216 | ) | (41 | ) | |||
Other income, net | 237 | 111 | |||||
Income before income taxes | 4,506 | 4,331 | |||||
Provision for income taxes | 543 | 1,593 | |||||
Net income | 3,963 | 2,738 | |||||
Income allocated to participating securities | (2 | ) | (5 | ) | |||
Net income attributable to common stockholders | $ | 3,961 | $ | 2,733 | |||
Per share information attributable to common stockholders: | |||||||
Net income per share: | |||||||
Basic | $ | 0.09 | $ | 0.06 | |||
Diluted | $ | 0.08 | $ | 0.06 | |||
Weighted average common shares outstanding: | |||||||
Basic | 46,225,473 | 45,526,058 | |||||
Diluted | 48,758,774 | 47,303,896 |
(1) | Exclusive of amortization and depreciation shown in operating expenses below. |
March 31, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 63,150 | $ | 140,634 | |||
Accounts receivable, net | 38,889 | 29,810 | |||||
Inventory | 7,289 | 10,543 | |||||
Other current assets | 9,931 | 9,197 | |||||
Total current assets | 119,259 | 190,184 | |||||
Property and equipment, net | 20,788 | 20,180 | |||||
Intangible assets, net | 104,664 | 4,568 | |||||
Goodwill | 64,102 | 24,723 | |||||
Deferred tax assets | 22,036 | 16,752 | |||||
Other assets | 4,791 | 4,838 | |||||
Total Assets | $ | 335,640 | $ | 261,245 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable, accrued expenses and other current liabilities | $ | 31,829 | $ | 28,300 | |||
Accrued compensation | 6,230 | 8,814 | |||||
Deferred revenue | 2,944 | 2,585 | |||||
Total current liabilities | 41,003 | 39,699 | |||||
Deferred revenue | 10,039 | 10,040 | |||||
Long-term debt | 73,700 | 6,700 | |||||
Other liabilities | 12,491 | 13,557 | |||||
Total Liabilities | 137,233 | 69,996 | |||||
Commitments and contingencies (Note 11) | |||||||
Stockholders’ equity | |||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016. | — | — | |||||
Common stock, $0.01 par value, 300,000,000 shares authorized; 46,310,450 and 46,172,318 shares issued; and 46,283,227 and 46,142,483 shares outstanding as of March 31, 2017 and December 31, 2016. | 463 | 461 | |||||
Additional paid-in capital | 311,909 | 308,697 | |||||
Accumulated deficit | (113,965 | ) | (117,909 | ) | |||
Total Stockholders’ Equity | 198,407 | 191,249 | |||||
Total Liabilities and Stockholders’ Equity | $ | 335,640 | $ | 261,245 |
Three Months Ended March 31, | |||||||
Cash flows from operating activities: | 2017 | 2016 | |||||
Net income | $ | 3,963 | $ | 2,738 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Provision for doubtful accounts | 128 | 155 | |||||
Reserve for product returns | 554 | 473 | |||||
Amortization for patents and tooling | 247 | 134 | |||||
Amortization and depreciation | 2,864 | 1,591 | |||||
Amortization of debt issuance costs | 23 | 26 | |||||
Deferred income taxes | (1,123 | ) | 113 | ||||
Change in fair value of contingent liability | — | (60 | ) | ||||
Undistributed (gains) / losses from equity investees | (5 | ) | 12 | ||||
Stock-based compensation | 1,313 | 852 | |||||
Changes in operating assets and liabilities (net of business acquisitions): | |||||||
Accounts receivable | 1,580 | (2,812 | ) | ||||
Inventory | 3,553 | (1,109 | ) | ||||
Other assets | 668 | 199 | |||||
Accounts payable, accrued expenses and other current liabilities | 483 | 3,661 | |||||
Deferred revenue | (213 | ) | 237 | ||||
Other liabilities | (1,066 | ) | 1,076 | ||||
Cash flows from operating activities | 12,969 | 7,286 | |||||
Cash flows used in investing activities: | |||||||
Business acquisitions, net of cash acquired | (154,289 | ) | — | ||||
Additions to property and equipment | (2,637 | ) | (2,538 | ) | |||
Issuances of notes receivable | (1,000 | ) | (73 | ) | |||
Repayments of notes receivable | — | 2,441 | |||||
Cash flows used in investing activities | (157,926 | ) | (170 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from credit facility | 67,000 | — | |||||
Issuances of common stock from equity-based plans | 473 | 371 | |||||
Cash flows from financing activities | 67,473 | 371 | |||||
Net (decrease) / increase in cash and cash equivalents | (77,484 | ) | 7,487 | ||||
Cash and cash equivalents at beginning of the period | 140,634 | 128,358 | |||||
Cash and cash equivalents at end of the period | $ | 63,150 | $ | 135,845 |
Supplemental disclosure of noncash investing and financing activities: | 2017 | 2016(1) | |||||
Cash not yet paid for business acquisitions | $ | — | $ | 417 | |||
Assumed options from business acquisition | $ | 1,375 | $ | — | |||
Contingent liability from business acquisition | $ | — | $ | 170 | |||
Cash not yet paid for capital expenditures | $ | 374 | $ | 1,271 |
Preferred Stock | Common Stock | Additional Paid-In- Capital | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Balance as of January 1, 2017 | — | $ | — | 46,142 | $ | 461 | $ | 308,697 | $ | (117,909 | ) | $ | 191,249 | ||||||||||||
Adoption of accounting standard on employee share-based payments | — | — | — | — | 31 | (19 | ) | 12 | |||||||||||||||||
Common stock issued in connection with equity-based plans | — | — | 137 | 1 | 472 | — | 473 | ||||||||||||||||||
Vesting of common stock subject to repurchase | — | — | 4 | 1 | 21 | — | 22 | ||||||||||||||||||
Stock-based compensation | — | — | — | — | 1,313 | — | 1,313 | ||||||||||||||||||
Assumed stock options | — | — | — | — | 1,375 | — | 1,375 | ||||||||||||||||||
Net income | — | — | — | — | — | 3,963 | 3,963 | ||||||||||||||||||
Balance as of March 31, 2017 | — | $ | — | 46,283 | $ | 463 | $ | 311,909 | $ | (113,965 | ) | $ | 198,407 |
• | Persuasive evidence of an arrangement exists; |
• | Delivery to the customer, which may be either a service provider partner, distributor or a subscriber, has occurred or service has been rendered; |
• | Fees are fixed or determinable; and |
• | Collection of the fees is reasonably assured. |
• | Tax windfall benefits or deficiencies from stock-based awards are now recorded in provision for income taxes in the period incurred, whereas previous guidance required the tax windfall benefits to be recorded in accumulated paid-in-capital. This change has been applied prospectively. |
• | Tax windfall benefits from stock-based awards after adoption will be reported in cash flows from operating activities in the statement of cash flows. For comparability, we elected to retrospectively apply this guidance which resulted in a reclassification of $366 thousand from tax windfall benefit from stock options (a financing activity) to deferred income taxes (an operating activity) for the three months ended March 31, 2016. |
• | We elected to record forfeitures as they occur in our calculation of stock-based compensation expense. In prior periods, we estimated forfeitures for the calculation of stock-based compensation expense. We adopted this change using the modified retrospective method, which resulted in an increase to accumulated deficit of $19 thousand; an increase to additional paid-in capital of $31 thousand; and an increase to deferred tax assets of $12 thousand as of January 1, 2017. |
• | Cash flows from tax windfall benefits from stock-based awards will no longer factor into the calculation of the number of shares for diluted earnings per share. This change was applied prospectively and did not have a material impact on diluted earnings per share for the three months ended March 31, 2017. |
March 31, 2017 | December 31, 2016 | ||||||
Accounts receivable | $ | 42,601 | $ | 33,406 | |||
Allowance for doubtful accounts | (1,385 | ) | (1,282 | ) | |||
Allowance for product returns | (2,327 | ) | (2,314 | ) | |||
Accounts receivable, net | $ | 38,889 | $ | 29,810 |
March 31, 2017 | December 31, 2016 | ||||||
Raw materials | $ | 3,984 | $ | 4,313 | |||
Finished goods | 3,305 | 6,230 | |||||
Total inventory | $ | 7,289 | $ | 10,543 |
March 8, 2017 | |||
Calculation of Purchase Consideration: | |||
Cash paid, net of working capital adjustment | $ | 148,500 | |
Assumed stock options | 1,375 | ||
Total consideration | $ | 149,875 | |
Estimated Tangible and Intangible Net Assets: | |||
Cash | $ | 211 | |
Accounts receivable | 11,342 | ||
Current assets | 823 | ||
Long-term assets | 4,446 | ||
Customer relationships | 93,250 | ||
Developed technology | 4,770 | ||
Trade name | 170 | ||
Current liabilities | (1,605 | ) | |
Long-term liabilities | (253 | ) | |
Goodwill | 36,721 | ||
Total estimated tangible and intangible net assets | $ | 149,875 |
January 1, 2017 | |||
Calculation of Purchase Consideration: | |||
Cash paid, net of working capital adjustment | $ | 6,000 | |
Estimated Tangible and Intangible Net Assets: | |||
Developed technology | $ | 3,400 | |
Current liabilities | (58 | ) | |
Goodwill | 2,658 | ||
Total estimated tangible and intangible net assets | $ | 6,000 |
Pro Forma Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(unaudited) | |||||||
Revenue | $ | 85,264 | $ | 73,643 | |||
Net income / (loss) | 6,433 | (8,380 | ) | ||||
Net income / (loss) per diluted share | $ | 0.13 | $ | (0.18 | ) |
Three Months Ended March 31, 2017 | |||
Revenue | $ | 2,557 | |
Net loss | (885 | ) |
Alarm.com | Other | Total | |||||||||
Balance as of January 1, 2017 | $ | 24,723 | $ | — | $ | 24,723 | |||||
Goodwill acquired | 39,379 | — | 39,379 | ||||||||
Balance as of March 31, 2017 | $ | 64,102 | $ | — | $ | 64,102 |
Customer Relationships | Developed Technology | Trade Name | Total | ||||||||||||
Balance as of January 1, 2017 | $ | 3,363 | $ | 1,048 | $ | 157 | $ | 4,568 | |||||||
Intangible assets acquired | 93,250 | 8,169 | 170 | 101,589 | |||||||||||
Amortization | (833 | ) | (646 | ) | (14 | ) | (1,493 | ) | |||||||
Balance as of March 31, 2017 | $ | 95,780 | $ | 8,571 | $ | 313 | $ | 104,664 |
March 31, 2017 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Weighted- Average Remaining Life | ||||||||||
Customer relationships | $ | 103,916 | $ | (8,136 | ) | $ | 95,780 | 11.5 | |||||
Developed technology | 13,559 | (4,988 | ) | 8,571 | 2.7 | ||||||||
Trade name | 1,084 | (771 | ) | 313 | 3.9 | ||||||||
Other | 234 | (234 | ) | — | 0.0 | ||||||||
Total intangible assets | $ | 118,793 | $ | (14,129 | ) | $ | 104,664 |
December 31, 2016 | |||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | Weighted- Average Remaining Life | ||||||||||
Customer relationships | $ | 10,666 | $ | (7,303 | ) | $ | 3,363 | 3.8 | |||||
Developed technology | 5,390 | (4,342 | ) | 1,048 | 4.1 | ||||||||
Trade name | 914 | (757 | ) | 157 | 4.3 | ||||||||
Other | 234 | (234 | ) | — | 0.0 | ||||||||
Total intangible assets | $ | 17,204 | $ | (12,636 | ) | $ | 4,568 |
Year Ending December 31, | Amortization | |||
Remainder of 2017 | $ | 10,551 | ||
2018 | 14,981 | |||
2019 | 13,692 | |||
2020 | 12,208 | |||
2021 and thereafter | 53,232 | |||
Total future amortization expense | $ | 104,664 |
Fair Value Measurements on a Recurring Basis as of March 31, 2017 | |||||||||||||||
Fair Value Measurements in: | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: | |||||||||||||||
Money market account | $ | 50,484 | $ | — | $ | — | $ | 50,484 | |||||||
Total | $ | 50,484 | $ | — | $ | — | $ | 50,484 | |||||||
Liabilities: | |||||||||||||||
Subsidiary unit awards | $ | — | $ | — | $ | 2,978 | $ | 2,978 | |||||||
Contingent consideration liability from acquisition | — | — | — | — | |||||||||||
Total | $ | — | $ | — | $ | 2,978 | $ | 2,978 |
Fair Value Measurements on a Recurring Basis as of December 31, 2016 | |||||||||||||||
Fair value measurements in: | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Assets: | |||||||||||||||
Money market account | $ | 135,204 | $ | — | $ | — | $ | 135,204 | |||||||
Total | $ | 135,204 | $ | — | $ | — | $ | 135,204 | |||||||
Liabilities: | |||||||||||||||
Subsidiary unit awards | $ | — | $ | — | $ | 2,768 | $ | 2,768 | |||||||
Contingent consideration liability from acquisition | — | — | — | — | |||||||||||
Total | $ | — | $ | — | $ | 2,768 | $ | 2,768 |
Fair Value Measurements Using Significant Unobservable Inputs | |||||||||||||||
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | ||||||||||||||
Subsidiary unit awards | Contingent consideration liability from acquisition | Subsidiary unit awards | Contingent consideration liability from acquisition | ||||||||||||
Beginning of period balance | $ | 2,768 | $ | — | $ | 532 | $ | 230 | |||||||
Total (gains) losses included in earnings | 210 | — | 18 | (60 | ) | ||||||||||
Ending of period balance | $ | 2,978 | $ | — | $ | 550 | $ | 170 |
March 31, 2017 | December 31, 2016 | ||||||
Accounts payable | $ | 20,051 | $ | 18,289 | |||
Accrued expenses | 4,853 | 5,298 | |||||
Subsidiary unit awards | 2,711 | 2,506 | |||||
Other current liabilities | 4,214 | 2,207 | |||||
Accounts payable, accrued expenses and other current liabilities | $ | 31,829 | $ | 28,300 |
March 31, 2017 | December 31, 2016 | ||||||
Deferred rent | $ | 11,152 | $ | 11,056 | |||
Other liabilities | 1,339 | 2,501 | |||||
Other liabilities | $ | 12,491 | $ | 13,557 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Sales and marketing | $ | 113 | $ | 141 | |||
General and administrative | 569 | 227 | |||||
Research and development | 631 | 484 | |||||
Total stock-based compensation expense | $ | 1,313 | $ | 852 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Stock options and assumed options | $ | 983 | $ | 833 | |||
Restricted stock units | 288 | — | |||||
Restricted stock awards | 19 | — | |||||
Employee stock purchase plan | 23 | 19 | |||||
Total stock-based compensation expense | $ | 1,313 | $ | 852 | |||
Tax benefit from stock-based awards | $ | 1,217 | $ | 294 |
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Volatility | 46.7 - 47.2% | 50.5 | % | ||
Expected term | 6.3 years | 6.3 years | |||
Risk-free interest rate | 2.1 - 2.2% | 1.4 | % | ||
Dividend rate | — | % | — | % |
Number of Options | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding as of December 31, 2016 | 3,547,528 | $ | 6.91 | 6.4 | $ | 74,267 | ||||||
Granted | 56,150 | 28.90 | 13.9 | |||||||||
Exercised | (122,926 | ) | 0.94 | 3,310 | ||||||||
Forfeited | (32,607 | ) | 11.59 | |||||||||
Expired | (414 | ) | 8.70 | |||||||||
Outstanding as of March 31, 2017 | 3,447,731 | $ | 7.44 | 6.4 | $ | 80,355 | ||||||
Vested and expected to vest as of March 31, 2017 | 3,473,524 | $ | 7.42 | 6.4 | $ | 81,016 | ||||||
Exercisable as of March 31, 2017 | 2,224,394 | $ | 4.14 | 5.4 | $ | 59,170 |
Three Months Ended March 31, 2017 | ||
Volatility | 42.7 - 44.4% | |
Expected term | 2.5 - 5.0 years | |
Risk-free interest rate | 1.4 - 2.0% | |
Dividend rate | — | % |
Number of Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value (in thousands) | ||||||||||
Outstanding as of December 31, 2016 | — | $ | — | — | $ | — | |||||||
Options assumed from Connect | 70,406 | 5.48 | |||||||||||
Outstanding as of March 31, 2017 | 70,406 | $ | 5.48 | 8.0 | $ | 1,778 | |||||||
Vested and expected to vest as of March 31, 2017 | 70,406 | $ | 5.48 | 8.0 | $ | 1,778 | |||||||
Exercisable as of March 31, 2017 | 1,775 | $ | 4.39 | 7.2 | $ | 46 |
Number of RSUs | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value (in thousands) | ||||||||
Outstanding as of December 31, 2016 | 61,482 | $ | 30.00 | $ | 1,711 | |||||
Granted | 108,850 | 29.19 | 3,177 | |||||||
Vested | — | — | — | |||||||
Forfeited | (60 | ) | 32.93 | — | ||||||
Outstanding as of March 31, 2017 | 170,272 | 29.48 | 5,234 | |||||||
Vested and expected to vest after March 31, 2017 | 170,272 | $ | 29.48 | $ | 5,234 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 3,963 | $ | 2,738 | |||
Less: income allocated to participating securities | $ | (2 | ) | $ | (5 | ) | |
Net income attributable to common stockholders (A) | $ | 3,961 | $ | 2,733 | |||
Weighted average common shares outstanding — basic (B) | 46,225,473 | 45,526,058 | |||||
Dilutive effect of stock options | 2,533,301 | 1,777,838 | |||||
Weighted average common shares outstanding — diluted (C) | 48,758,774 | 47,303,896 | |||||
Net income per share: | |||||||
Basic (A/B) | $ | 0.09 | $ | 0.06 | |||
Diluted (A/C) | $ | 0.08 | $ | 0.06 |
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Stock options | 133,750 | 514,122 | |||
Common stock subject to repurchase | 25,793 | 77,670 |
• | Alarm.com segment |
• | Other segment |
Three Months Ended March 31, 2017 | |||||||||||||||||||
Alarm.com | Other | Intersegment Alarm.com | Intersegment Other | Total | |||||||||||||||
Revenue | $ | 70,512 | $ | 4,452 | $ | (649 | ) | $ | (121 | ) | $ | 74,194 | |||||||
Operating income | 6,584 | (2,213 | ) | (22 | ) | 136 | 4,485 | ||||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||||||
Alarm.com | Other | Intersegment Alarm.com | Intersegment Other | Total | |||||||||||||||
Revenue | $ | 56,010 | $ | 3,847 | $ | (586 | ) | $ | (228 | ) | $ | 59,043 | |||||||
Operating income | 6,867 | (2,683 | ) | (47 | ) | 124 | 4,261 | ||||||||||||
Alarm.com | Other | Intersegment Alarm.com | Intersegment Other | Total | |||||||||||||||
Assets as of March 31, 2017 | $ | 316,924 | $ | 18,716 | $ | — | $ | — | $ | 335,640 | |||||||||
Assets as of December 31, 2016 | 246,798 | 14,447 | — | — | 261,245 |
• | Revenue increased 26% from $59.0 million in the first quarter of 2016 to $74.2 million in the first quarter of 2017. |
• | SaaS and license revenue increased 26% from $40.0 million in the first quarter of 2016 to $50.2 million in the first quarter of 2017. |
• | Net income was $4.0 million in the first quarter of 2017 and $2.7 million in the first quarter of 2016. |
• | Adjusted EBITDA, a non-GAAP measurement of operating performance, increased from $10.8 million in the first quarter of 2016 to $14.1 million in the first quarter of 2017. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
SaaS and license revenue | $ | 50,226 | $ | 40,012 | |||
Adjusted EBITDA | 14,103 | 10,823 | |||||
Twelve Months Ended March 31, | |||||||
2017 | 2016 | ||||||
SaaS and license revenue renewal rate | 93 | % | 94 | % |
Three Months Ended March 31, | |||||||||||||
2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||
SaaS and license revenue | $ | 50,226 | 68 | % | $ | 40,012 | 68 | % | |||||
Hardware and other revenue | 23,968 | 32 | 19,031 | 32 | |||||||||
Total revenue | 74,194 | 100 | 59,043 | 100 | |||||||||
Cost of revenue(1): | |||||||||||||
Cost of SaaS and license revenue | 8,092 | 11 | 6,781 | 11 | |||||||||
Cost of hardware and other revenue | 18,543 | 25 | 14,335 | 24 | |||||||||
Total cost of revenue | 26,635 | 36 | 21,116 | 36 | |||||||||
Operating expenses(2): | |||||||||||||
Sales and marketing | 10,314 | 14 | 8,976 | 15 | |||||||||
General and administrative | 15,375 | 21 | 13,129 | 22 | |||||||||
Research and development | 14,521 | 20 | 9,970 | 17 | |||||||||
Amortization and depreciation | 2,864 | 4 | 1,591 | 3 | |||||||||
Total operating expenses | 43,074 | 58 | 33,666 | 57 | |||||||||
Operating income | 4,485 | 6 | 4,261 | 7 | |||||||||
Interest expense | (216 | ) | — | (41 | ) | — | |||||||
Other income, net | 237 | — | 111 | — | |||||||||
Income before income taxes | 4,506 | 6 | 4,331 | 7 | |||||||||
Provision for income taxes | 543 | 1 | 1,593 | 3 | |||||||||
Net income | $ | 3,963 | 5 | % | $ | 2,738 | 5 | % |
(1) | Exclusive of amortization and depreciation shown in operating expenses below. |
(2) | Operating expenses include stock-based compensation expense as follows (in thousands): |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Stock-based compensation expense data: | |||||||
Sales and marketing | $ | 113 | $ | 141 | |||
General and administrative | 569 | 227 | |||||
Research and development | 631 | 484 | |||||
Total stock-based compensation expense | $ | 1,313 | $ | 852 |
Three Months Ended March 31, | |||||
2017 | 2016 | ||||
Components of cost of revenue as a percentage of revenue: | |||||
Cost of SaaS and license revenue as a percentage of SaaS and license revenue | 16 | % | 17 | % | |
Cost of hardware and other revenue as a percentage of hardware and other revenue | 77 | % | 75 | % | |
Total cost of revenue as a percentage of total revenue | 36 | % | 36 | % |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
Revenue: | ||||||||||
SaaS and license revenue | $ | 50,226 | $ | 40,012 | 26 | % | ||||
Hardware and other revenue | 23,968 | 19,031 | 26 | % | ||||||
Total revenue | $ | 74,194 | $ | 59,043 | 26 | % |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
Cost of revenue(1): | ||||||||||
Cost of SaaS and license revenue | $ | 8,092 | $ | 6,781 | 19 | % | ||||
Cost of hardware and other revenue | 18,543 | 14,335 | 29 | % | ||||||
Total cost of revenue | $ | 26,635 | $ | 21,116 | 26 | % | ||||
% of total revenue | 36 | % | 36 | % |
(1) | Excludes amortization and depreciation. |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
Sales and marketing | $ | 10,314 | $ | 8,976 | 15 | % | ||||
% of total revenue | 14 | % | 15 | % |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
General and administrative | $ | 15,375 | $ | 13,129 | 17 | % | ||||
% of total revenue | 21 | % | 22 | % |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
Research and development | $ | 14,521 | $ | 9,970 | 46 | % | ||||
% of total revenue | 20 | % | 17 | % |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
Amortization and depreciation | $ | 2,864 | $ | 1,591 | 80 | % | ||||
% of total revenue | 4 | % | 3 | % |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
Interest expense | $ | (216 | ) | $ | (41 | ) | 427 | % | ||
% of total revenue | — | % | — | % |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
Other income, net | $ | 237 | $ | 111 | 114 | % | ||||
% of total revenue | — | % | — | % |
Three Months Ended March 31, | % Change | |||||||||
2017 | 2016 | |||||||||
Provision for income taxes | $ | 543 | $ | 1,593 | (66 | )% | ||||
% of total revenue | 1 | % | 3 | % |
Three Months Ended March 31, | |||||||||||||||
2017 | 2016 | ||||||||||||||
Revenue | Operating expenses | Revenue | Operating expenses | ||||||||||||
Alarm.com | $ | 70,512 | $ | 39,240 | $ | 56,010 | $ | 29,857 | |||||||
Other | 4,452 | 3,834 | 3,847 | 3,809 | |||||||||||
Intersegment Alarm.com | (649 | ) | — | (586 | ) | — | |||||||||
Intersegment Other | (121 | ) | — | (228 | ) | — | |||||||||
Total | $ | 74,194 | $ | 43,074 | $ | 59,043 | $ | 33,666 |
March 31, 2017 | December 31, 2016 | ||||||
Cash and cash equivalents | $ | 63,150 | $ | 140,634 | |||
Accounts receivable, net | 38,889 | 29,810 | |||||
Working capital, excluding deferred revenue | 81,200 | 153,070 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | $ | 12,969 | $ | 7,286 | |||
Cash flows used in investing activities | (157,926 | ) | (170 | ) | |||
Cash flows from financing activities | 67,473 | 371 |
• | Our accounts receivable balance, net of reserves, decreased by $2.2 million, net of $11.3 million in acquired accounts receivable, during the first quarter of 2017 and increased $2.2 million during the first quarter of 2016 resulting in a year-over-year increase in cash flows of $4.4 million. The increase in cash flows was primarily from the timing of service provider payments. |
• | Our inventory balances decreased by $3.6 million, net of $0.3 million of acquired inventory, during the first quarter of 2017 from timing of in-transit inventory and from generally lower inventory on-hand. This decrease resulted in an increase in cash flows of $4.7 million year-over-year as the first quarter of 2016 cash flows from inventory decreased by $1.1 million. |
• | Cash flows from other assets increased $0.5 million year-over-year from a decrease in the other assets balance of $0.7 million during the first quarter of 2017 compared to a decrease of $0.2 million in 2016. The $0.7 million decrease in the other assets balance was primarily from a decrease in tax receivables, net of $0.6 million of other assets acquired and $1.0 million paid to a service provider in the form of a note receivable in the first quarter of 2017, which are investing activities. |
• | Our accounts payable, accrued expenses and other current liabilities including accrued compensation balances increased by $0.5 million, net of $1.3 million of acquired accrued expenses, during the first quarter of 2017 compared to an increase of $3.7 million, net of non-cash accrued expenses, during the first quarter of 2016 from the growth of our business and employee base. This increase was offset by the timing of payments, resulting in a year-over-year decrease in cash flows of $3.2 million. |
• | Cash flows from the change in deferred revenue balances, net of $0.6 million of acquired deferred revenue, decreased by $0.5 million year-over-year primarily from the timing of revenue for activations. |
• | Our other liabilities balance decreased by $1.1 million in the first quarter of 2017 primarily due to a $1.2 million liability that was reclassified to other current liabilities. This was partially offset by a $0.1 million increase in our deferred rent balance as we continue to add and develop additional office space in our new corporate headquarters in 2017, although on a much smaller scale than in 2016. These activities and the timing of rent payments drove the $2.1 million decrease in cash flows year-over-year. |
Contractual Obligations | Less Than 1 Year | 1 to 3 Years | 3 to 5 Years | More Than 5 Years | Total | |||||||||||||||
Debt: | ||||||||||||||||||||
Principal payments | $ | — | $ | 73,700 | $ | — | $ | — | $ | 73,700 | ||||||||||
Interest payments | 2,282 | 1,388 | — | — | 3,670 | |||||||||||||||
Unused line fee payments | 3 | 2 | — | — | 5 | |||||||||||||||
Operating lease commitments | 5,453 | 8,822 | 9,373 | 20,240 | 43,888 | |||||||||||||||
Other current liabilities1 | 2,711 | — | — | — | 2,711 | |||||||||||||||
Other long-term liabilities | — | 823 | 240 | 276 | 1,339 | |||||||||||||||
Total contractual obligations | $ | 10,449 | $ | 84,735 | $ | 9,613 | $ | 20,516 | $ | 125,313 |
(1) | Represents the current portion of our liability to repurchase subsidiary unit awards for our professional residential property management and vacation rental management subsidiary. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Adjusted EBITDA: | |||||||
Net income | $ | 3,963 | $ | 2,738 | |||
Adjustments: | |||||||
Less: Interest expense and other income, net | (21 | ) | (70 | ) | |||
Provision for income taxes | 543 | 1,593 | |||||
Amortization and depreciation | 2,864 | 1,591 | |||||
Stock-based compensation expense | 1,313 | 852 | |||||
Acquisition-related expense | 3,648 | 570 | |||||
Litigation expense | 1,793 | 3,549 | |||||
Total adjustments | 10,140 | 8,085 | |||||
Adjusted EBITDA | $ | 14,103 | $ | 10,823 |
• | making it more difficult to satisfy our obligations, including under the terms of the 2014 Facility; |
• | limiting our ability to refinance our debt on terms acceptable to us or at all; |
• | limiting our flexibility to plan for and adjust to changing business and market conditions and increasing our vulnerability to general adverse economic and industry conditions; |
• | limiting our ability to use our available cash flow to fund future acquisitions, working capital, business activities, and other general corporate requirements; and |
• | limiting our ability to obtain additional financing for working capital, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity. |
• | Customers, service providers and other third-party business partners may delay or defer purchase decisions or may seek to terminate or renegotiate their relationships with us as a result of the Acquisition, whether pursuant to the terms of their existing agreements or otherwise; and |
• | Current and prospective employees may experience uncertainty about their future roles, which might adversely affect our ability to retain, recruit and motivate key personnel. |
• | lost sales and customers as a result of customers deciding not to do business with the combined company; |
• | the loss of key employees; |
• | integrating Connect and Piper personnel while maintaining focus on providing consistent, high-quality products and service to customers; |
• | complexities associated with managing the larger, more complex business; and |
• | potential unknown liabilities and unforeseen expenses. |
• | the portion of our revenue attributable to software as a service, or SaaS, and license versus hardware and other sales; |
• | our ability to manage the recently acquired Connect and Piper business units and any future acquisitions of businesses; |
• | fluctuations in demand, including due to seasonality, for our platform and solutions; |
• | changes in pricing by us in response to competitive pricing actions; |
• | our ability to increase, retain and incentivize the service provider partners that market, sell, install and support our platform and solutions; |
• | the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient products to meet our demands; |
• | the timing and success of introductions of new solutions, products or upgrades by us or our competitors and the entrance of new competitors; |
• | changes in our business and pricing policies or those of our competitors; |
• | the ability to accurately forecast revenue as we generally rely upon our service provider partner network to generate new revenue; |
• | our ability to control costs, including our operating expenses and the costs of the hardware we purchase; |
• | competition, including entry into the industry by new competitors and new offerings by existing competitors; |
• | issues related to introductions of new or improved products such as shortages of prior generation products or short-term decreased demand for next generation products; |
• | the amount and timing of expenditures, including those related to expanding our operations, including through acquisitions, increasing research and development, introducing new solutions or paying litigation expenses; |
• | the ability to effectively manage growth within existing and new markets domestically and abroad; |
• | changes in the payment terms for our platform and solutions; |
• | the strength of regional, national and global economies; and |
• | the impact of natural disasters such as earthquakes, fire, power outages, floods and other catastrophic events or man made problems such as terrorism or global or regional economic, political and social conditions. |
• | maintain our relationships with existing service provider partners and add new service provider partners; |
• | increase our subscribers and help our service provider partners maintain and improve their revenue retention rates, while also expanding their cross-sell effectiveness; |
• | add, train and integrate sales and marketing personnel; |
• | expand our international operations; and |
• | continue to implement and improve our administrative, financial and operational systems, procedures and controls. |
• | our platform and solutions’ functionality, performance, ease of use, reliability, availability and cost effectiveness relative to that of our competitors’ products; |
• | our success in utilizing new and proprietary technologies to offer solutions and features previously not available in the marketplace; |
• | our success in identifying new markets, applications and technologies; |
• | our ability to attract and retain service provider partners; |
• | our name recognition and reputation; |
• | our ability to recruit software engineers and sales and marketing personnel; and |
• | our ability to protect our intellectual property. |
• | selling at a discount; |
• | offering products similar to our platform and solutions on a bundled basis at no charge; |
• | announcing competing products combined with extensive marketing efforts; |
• | providing financing incentives to consumers; and |
• | asserting intellectual property rights irrespective of the validity of the claims. |
• | any decline in demand for our connected property solutions; |
• | the failure of our connected property solutions to achieve continued market acceptance; |
• | the introduction of products and technologies that serve as a replacement or substitute for, or represent an improvement over, our connected property solutions; |
• | technological innovations or new communications standards that our connected property solutions do not address; and |
• | our inability to release enhanced versions of our connected property solutions on a timely basis. |
• | incurring higher than anticipated capital expenditures and operating expenses; |
• | failing to assimilate the operations and personnel or failing to retain the key personnel of the acquired company or business; |
• | failing to integrate the acquired technologies, or incurring significant expense to integrate acquired technologies into our platform and solutions; |
• | disrupting our ongoing business; |
• | diverting our management’s attention and other company resources; |
• | failing to maintain uniform standards, controls and policies; |
• | incurring significant accounting charges; |
• | impairing relationships with employees, service provider partners or subscribers; |
• | finding that the acquired technology, asset or business does not further our business strategy, that we overpaid for the technology, asset or business or that we may be required to write off acquired assets or investments partially or entirely; |
• | failing to realize the expected synergies of the transaction; |
• | being exposed to unforeseen liabilities and contingencies that were not identified prior to acquiring the company; and |
• | being unable to generate sufficient revenue and profits from acquisitions to offset the associated acquisition costs. |
• | localization of our solutions, including the addition of foreign languages and adaptation to new local practices and regulatory requirements; |
• | lack of experience in other geographic markets; |
• | strong local competitors; |
• | the cost and burden of complying with, lack of familiarity with, and unexpected changes in, foreign legal and regulatory requirements, including more stringent privacy regulations; |
• | difficulties in managing and staffing international operations; |
• | fluctuations in currency exchange rates or restrictions on foreign currency; |
• | potentially adverse tax consequences, including the complexities of transfer pricing, value added or other tax systems, double taxation and restrictions and/or taxes on the repatriation of earnings; |
• | dependence on third parties, including commercial partners with whom we do not have extensive experience; |
• | increased financial accounting and reporting burdens and complexities; |
• | political, social, and economic instability, terrorist attacks, and security concerns in general; and |
• | reduced or varied protection for intellectual property rights in some countries. |
• | actual or anticipated fluctuations in our financial condition and operating results; |
• | variance in our financial performance from expectations of securities analysts; |
• | announcements by us or our competitors of significant business developments, acquisitions or new solutions and market assumptions regarding the impact of the Acquisition on our operating results; |
• | changes in the prices of our platform and solutions; |
• | changes in our projected operating and financial results; |
• | changes in laws or regulations applicable to our platform and solutions or marketing techniques; |
• | our involvement in any litigation; |
• | our sale of our common stock or other securities in the future; |
• | changes in senior management or key personnel; |
• | trading volume of our common stock; |
• | changes in the anticipated future size and growth rate of our market; and |
• | general economic, regulatory and market conditions. |
• | authorize our board of directors to issue preferred stock, without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; |
• | require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent, and limit the ability of our stockholders to call special meetings; |
• | establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; |
• | establish that our board of directors is divided into three classes, with directors in each class serving three-year staggered terms; |
• | require the approval of holders of two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or amend or repeal the provisions of our certificate of incorporation regarding the election and removal of directors and the ability of stockholders to take action by written consent or call a special meeting; |
• | prohibit cumulative voting in the election of directors; and |
• | provide that vacancies on our board of directors may be filled only by the vote of a majority of directors then in office, even though less than a quorum. |
Exhibit Number | Description | |
3.1(1) | Amended and Restated Certificate of Incorporation of Alarm.com Holdings, Inc. | |
3.2(2) | Amended and Restated Bylaws of Alarm.com Holdings, Inc. | |
10.1(3) | Fifth Amendment to Deed of Office Lease Agreement by and between Alarm.com Incorporated and Marshall Property LLC, dated January 31, 2017 | |
10.2(4) | Alarm.com Holdings, Inc. 2017 Executive Bonus Plan | |
31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1** | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
ALARM.COM HOLDINGS, INC. | |||||
Date: | May 9, 2017 | By: | /s/ Steve Valenzuela | ||
Steve Valenzuela | |||||
Chief Financial Officer | |||||
(On behalf of the registrant and in his capacity as Principal Financial Officer and Principal Accounting Officer) |
Exhibit Number | Description | |
3.1(1) | Amended and Restated Certificate of Incorporation of Alarm.com Holdings, Inc. | |
3.2(2) | Amended and Restated Bylaws of Alarm.com Holdings, Inc. | |
10.1(3) | Fifth Amendment to Deed of Office Lease Agreement by and between Alarm.com Incorporated and Marshall Property LLC, dated January 31, 2017 | |
10.2(4) | Alarm.com Holdings, Inc. 2017 Executive Bonus Plan | |
31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1** | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
1. | I have reviewed this quarterly report on Form 10-Q of Alarm.com Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
a. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
b. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 9, 2017 | /s/ Stephen Trundle | |
Stephen Trundle | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Alarm.com Holdings, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
a. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
b. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 9, 2017 | /s/ Steve Valenzuela | |
Steve Valenzuela | |||
Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
(1) | The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2017, to which this Certification is attached as Exhibit 32.1 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and |
(2) | The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 9, 2017 | /s/ Stephen Trundle | |
Stephen Trundle | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) |
Date: | May 9, 2017 | /s/ Steve Valenzuela | |
Steve Valenzuela | |||
Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 01, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ALARM.COM HOLDINGS, INC. | |
Entity Central Index Key | 0001459200 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 46,318,997 |
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Current assets: | ||
Cash and cash equivalents | $ 63,150 | $ 140,634 |
Accounts receivable, net | 38,889 | 29,810 |
Inventory | 7,289 | 10,543 |
Other current assets | 9,931 | 9,197 |
Total current assets | 119,259 | 190,184 |
Property and equipment, net | 20,788 | 20,180 |
Intangible assets, net | 104,664 | 4,568 |
Goodwill | 64,102 | 24,723 |
Deferred tax assets | 22,036 | 16,752 |
Other assets | 4,791 | 4,838 |
Total Assets | 335,640 | 261,245 |
Current liabilities: | ||
Accounts payable, accrued expenses and other current liabilities | 31,829 | 28,300 |
Accrued compensation | 6,230 | 8,814 |
Deferred revenue | 2,944 | 2,585 |
Total current liabilities | 41,003 | 39,699 |
Deferred revenue | 10,039 | 10,040 |
Long-term debt | 73,700 | 6,700 |
Other liabilities | 12,491 | 13,557 |
Total Liabilities | 137,233 | 69,996 |
Commitments and contingencies | ||
Stockholders’ equity | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2017 and December 31, 2016. | 0 | 0 |
Common stock, $0.01 par value, 300,000,000 shares authorized; 46,310,450 and 46,172,318 shares issued; and 46,283,227 and 46,142,483 shares outstanding as of March 31, 2017 and December 31, 2016. | 463 | 461 |
Additional paid-in capital | 311,909 | 308,697 |
Accumulated deficit | (113,965) | (117,909) |
Total Stockholders’ Equity | 198,407 | 191,249 |
Total Liabilities and Stockholders’ Equity | $ 335,640 | $ 261,245 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 46,310,450 | 46,172,318 |
Common stock, shares outstanding (in shares) | 46,283,227 | 46,142,483 |
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Cash flows from operating activities: | ||
Net income | $ 3,963 | $ 2,738 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Provision for doubtful accounts | 128 | 155 |
Reserve for product returns | 554 | 473 |
Amortization for patents and tooling | 247 | 134 |
Amortization and depreciation | 2,864 | 1,591 |
Amortization of debt issuance costs | 23 | 26 |
Deferred income taxes | (1,123) | 113 |
Change in fair value of contingent liability | 0 | (60) |
Undistributed (gains) / losses from equity investees | (5) | 12 |
Stock-based compensation | 1,313 | 852 |
Changes in operating assets and liabilities (net of business acquisitions): | ||
Accounts receivable | 1,580 | (2,812) |
Inventory | 3,553 | (1,109) |
Other assets | 668 | 199 |
Accounts payable, accrued expenses and other current liabilities | 483 | 3,661 |
Deferred revenue | (213) | 237 |
Other liabilities | (1,066) | 1,076 |
Cash flows from operating activities | 12,969 | 7,286 |
Cash flows used in investing activities: | ||
Business acquisitions, net of cash acquired | (154,289) | 0 |
Additions to property and equipment | (2,637) | (2,538) |
Issuances of notes receivable | (1,000) | (73) |
Repayments of notes receivable | 0 | 2,441 |
Cash flows used in investing activities | (157,926) | (170) |
Cash flows from financing activities: | ||
Proceeds from credit facility | 67,000 | 0 |
Issuances of common stock from equity-based plans | 473 | 371 |
Cash flows from financing activities | 67,473 | 371 |
Net (decrease) / increase in cash and cash equivalents | (77,484) | 7,487 |
Cash and cash equivalents at beginning of the period | 140,634 | 128,358 |
Cash and cash equivalents at end of the period | 63,150 | 135,845 |
Supplemental disclosure of noncash investing and financing activities: | ||
Cash not yet paid for business acquisitions | 0 | 417 |
Assumed options from business acquisition | 1,375 | 0 |
Contingent liability from business acquisition | 0 | 170 |
Cash not yet paid for capital expenditures | $ 374 | $ 1,271 |
Condensed Consolidated Statement of Equity - USD ($) $ in Thousands |
Total |
Preferred Stock |
Common Stock |
Additional Paid-In- Capital |
Accumulated Deficit |
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Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Adoption of accounting standard on employee share-based payments | $ 12 | $ 31 | $ (19) | ||
Balance (in shares) at Dec. 31, 2016 | 0 | 46,142,483.000 | |||
Balance at Dec. 31, 2016 | 191,249 | $ 0 | $ 461 | 308,697 | (117,909) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock issued in connection with equity based plans (in shares) | 137,000 | ||||
Common stock issued in connection with equity based plans | 473 | $ 1 | 472 | ||
Vesting of common stock subject to repurchase (in shares) | 4,000 | ||||
Vesting of common stock subject to repurchase | 22 | $ 1 | 21 | ||
Stock-based compensation expense | 1,313 | 1,313 | |||
Assumed stock options | 1,375 | 1,375 | |||
Net income | 3,963 | ||||
Balance (in shares) at Mar. 31, 2017 | 0 | 46,283,000 | |||
Balance at Mar. 31, 2017 | $ 198,407 | $ 0 | $ 463 | $ 311,909 | $ (113,965) |
Organization |
3 Months Ended |
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Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Organization Alarm.com Holdings, Inc. (referred to herein as Alarm.com, the Company, or we) is the leading platform for the intelligently connected property. We offer a comprehensive suite of cloud-based solutions for the smart home and business, including interactive security, video monitoring, intelligent automation and energy management. Millions of property owners rely on our technology to intelligently secure, monitor and manage their homes and businesses. Our solutions are delivered through an established network of over 6,000 trusted service provider partners, who are experts at selling, installing and supporting our solutions. We derive revenue from the sale of our cloud-based Software-as-a-Service, or SaaS, services, license fees, software, hardware, activation fees and other revenue. Our fiscal year ends on December 31st. |
Basis of Presentation |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation Basis of Presentation The accompanying unaudited condensed consolidated financial statements include our accounts and those of our majority-owned and controlled subsidiaries after elimination of intercompany accounts and transactions. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual financial statements. They should be read together with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2016 appearing in our Annual Report on Form 10-K filed with the SEC on March 16, 2017, or the 2016 Annual Report. The condensed consolidated balance sheet data as of December 31, 2016 was derived from our audited financial statements, but does not include all disclosures required by GAAP for annual financial statements. In the opinion of management, these condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of the results of operations, financial position and cash flows. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2017. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates. Estimates are used when accounting for revenue recognition, allowances for doubtful accounts receivable, allowance for hardware returns, estimates of obsolete inventory, long-term incentive compensation, stock-based compensation, income taxes, legal reserves, contingent consideration and goodwill and intangible assets. Significant Accounting Policies The following significant accounting policies were updated as a result of acquiring the Connect line of business from Icontrol Networks, Inc., or Icontrol during the first quarter of 2017. We generate SaaS and license revenue from monthly fees charged to service providers on a per subscriber basis for access to our newly-acquired Connect software platform. The Connect software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center. During the three months ended March 31, 2017, there were no other material changes to our significant accounting policies from those disclosed in our Annual Report on Form 10-K filed on March 16, 2017 with the SEC. Internal-Use Software We capitalize the costs directly related to the design of internal-use software for development of our Alarm.com and other SaaS platforms during the application development stage of the projects. The costs are primarily comprised of salaries, benefits and stock-based compensation expense of the project engineers and product development teams. Our internally developed software is reported at cost less accumulated depreciation. Depreciation begins once the project is ready for its intended use, which is usually when the code goes into production in weekly software builds on our platform. We depreciate the asset on a straight-line basis over a period of three years, which is the estimated useful life. We utilize continuous agile development methods to update our software for our SaaS multi-tenant platform on a weekly basis, which primarily consists of bug-fixes and user interface changes. We evaluate whether a project should be capitalized if it adds significant functionality to our platform. Maintenance activities or minor upgrades are expensed in the period performed. External Software Costs incurred in researching and developing a computer software product that will be marketed and sold are charged to expense when incurred until technological feasibility is established. Technological feasibility is established upon completion of a detailed program design or, in its absence, completion of a working model (a beta version). After technological feasibility is established, the salaries, benefits and stock-based compensation expense of the project engineers and product development teams performing coding and testing are capitalized. Cost capitalization ceases when the product is available for general release. The Connect software is typically developed in an agile environment with frequent revisions to product release features and functions. Agile development results in a short duration between completion of the product specifications and general release of the product. Accordingly, as of March 31, 2017, we do not have any capitalized external software due to the shorter development cycle associated with agile development. Revenue Recognition and Deferred Revenue We derive our revenue from three primary sources: the sale of cloud-based SaaS services on our integrated Alarm.com platform, the sale of licenses and services on the newly-acquired Connect software platform and the sale of hardware products. We sell our platform and hardware solutions to service provider partners that resell our solutions and hardware to home and business owners, who are the service provider partners’ customers, and whom we refer to as our subscribers. We also sell our hardware to distributors who resell the hardware to service provider partners. We enter into contracts with our service provider partners that establish pricing for access to our platform solutions and for the sale of hardware. These contracts typically have an initial term of one year, with subsequent renewal terms of one year. Our service provider partners typically enter into contracts with our subscribers, which our service provider partners have indicated range from three to five years in length. Our hardware includes cellular radio modules that enable access to our cloud-based platform, as well as video cameras, image sensors and other peripherals. Our service provider partners may purchase our hardware in anticipation of installing the hardware in a home or business when they create a new subscriber account, or for use in an existing subscriber’s property. The purchase of hardware occurs in a transaction that is separate and typically in advance of the purchase of our platform services. Service provider partners transact with us to purchase our platform solutions and resell our solutions to a new subscriber, or to upgrade or downgrade the solutions of an existing subscriber, at which time the subscriber’s access to our platform solutions is enabled and the delivery of the services commences. The purchase of platform solutions and the purchase of hardware are separate transactions because at the time of sale of the hardware, the service provider partner is not obligated to and may not purchase a platform solution for the hardware sold, and the level and duration of platform solutions, if any, to be provided through the hardware sold cannot be determined. We recognize revenue with respect to our solutions when all of the following conditions are met:
We consider a signed contract with a service provider partner to be persuasive evidence that an agreement exists, and the fees to be fixed or determinable if the fees are contractually agreed to with our service provider partners. Collectibility is evaluated based on a number of factors, including a credit review of new service provider partners, and the payment history of existing service provider partners. If collectibility is not reasonably assured, revenue is deferred until collection becomes reasonably assured, which is generally upon the receipt of payment. SaaS and License Revenue We generate the majority of our SaaS and license revenue primarily from monthly fees charged to our service provider partners sold on a per subscriber basis for access to our cloud-based intelligently connected property platform and related solutions. Our fees per subscriber vary based upon the service plan and features utilized. Under terms in our contractual arrangements with our service provider partners, we are entitled to payment and recognize revenue based on a monthly fee that is billed in advance of the month of service. We have demonstrated that we can sell our SaaS offering on a stand-alone basis, as it can be sold separately from hardware and activation services. As there is neither a minimum required initial service term nor a stated renewal term in our contractual arrangements, we recognize revenue over the period of service, which is monthly. Our service provider partners typically incur and pay the same monthly fee per subscriber account for the entire period a subscriber account is active. We also generate SaaS and license revenue from monthly fees charged to service providers sold on a per subscriber basis for access to our newly-acquired Connect software platform. The Connect software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center. Our agreements for the Connect platform solution typically include software and services, such as post-contract customer support, or PCS. Software sales that include multiple elements are typically allocated to the various elements based on vendor-specific objective evidence of fair value, or VSOE. There have been no separate sales of PCS, as PCS is always bundled with the software license for the Connect platform solution. Therefore, the VSOE of fair value for PCS cannot be established. The entire Connect arrangement fee is recognized ratably over the period during which the services are expected to be performed or the PCS period, whichever is longer, once the software is delivered and services have commenced, if all the other basic revenue recognition criteria have been met. Under terms in our contractual arrangements with our service provider partners, we are entitled to payment of a monthly fee for Connect that is billed per subscriber for the month of service. We recognize revenue over the period of service, which is monthly. Our service provider partners typically incur and pay the same monthly fee per subscriber account for the entire period a subscriber account is active. We offer multiple service level packages for our platform solutions including a range of solutions and a range of a la carte add-ons for additional features. The fee paid by our service provider partners each month for the delivery of our solutions is based on the combination of packages and add-ons enabled for each subscriber. We utilize tiered pricing plans where our service provider partners may receive prospective pricing discounts driven by volume. We also generate SaaS and license revenue from the fees paid to us when we license our intellectual property to service provider partners on a per customer basis for use of our patents. In addition, in certain markets our EnergyHub subsidiary sells its demand response software with an annual service fee, with pricing based on the number of subscribers or amount of aggregate electricity demand made available for a utility’s or market’s control. Hardware and Other Revenue We generate hardware and other revenue from the sale of cellular radio modules that provide access to our cloud-based platform, from the sale of video cameras and from the sale of other devices, including image sensors and peripherals. We recognize hardware and other revenue when the hardware is received by our service provider partner or distributor, net of a reserve for estimated returns. Amounts due from the sale of hardware are payable in accordance with the terms of our agreements with our service provider partners or distributors, and are not contingent on resale to end-users, or to service provider partners in the case of sales of hardware to distributors. Our terms for hardware sales sold directly to either service provider partners or distributors typically allow for the return of hardware up to one year past the date of sale. Our distributors sell directly to our service provider partners under terms between the two parties. We record a percentage of hardware and other revenue of approximately 2 to 5%, based on historical returns, as a reserve against revenue for hardware returns. We evaluate our hardware reserve on a quarterly basis or if there is an indication of significant changes in return experience. Historically, our returns of hardware have not significantly differed from our estimated reserve. Hardware and other revenue also includes activation fees charged to service provider partners for activation of a new subscriber account on our platform, as well as fees paid by service provider partners for our marketing services. Our service provider partners use services on our platform, such as support tools and applications, to assist in the installation of our solutions in a subscriber’s property. This installation marks the beginning of the service period on our platform and on occasion, we earn activation revenue for fees charged for this service. The activation fee is non-refundable, separately negotiated and specified in our contractual arrangements with our service provider partners and is charged to the service provider partner for each subscriber activated on our platform. Activation fees are not offered on a stand-alone basis separate from our SaaS offering and are billed and received at the beginning of the arrangement. We record activation fees initially as deferred revenue and we recognize these fees ratably over the expected term of the subscribers’ account which we estimate is ten years based on our annual attrition rate. The portion of these activation fees included in current and long-term deferred revenue as of our balance sheet date represents the amounts that will be recognized ratably as revenue over the following twelve months, or longer as appropriate, until the ten-year expected term is complete. The combined current and long-term balance for deferred revenue for activation fees was $11.0 million and $11.2 million as of March 31, 2017 and December 31, 2016. Cost of Revenue Our cost of SaaS and license revenue primarily includes the amounts paid to wireless network providers and, to a lesser extent, the costs of running our network operation centers. We record the salaries and benefits of the department dedicated to providing service exclusively to a specific service provider for the Connect platform to cost of SaaS and license revenue. Our cost of hardware and other revenue primarily includes cost of raw materials and amounts paid to our third-party manufacturer for production and fulfillment of our cellular radio modules and image sensors, and procurement costs for our video cameras, which we purchase from an original equipment manufacturer, and other devices. Our cost of revenue excludes amortization and depreciation. Recent Accounting Pronouncements Adopted On March 30, 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” which simplifies several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and we adopted ASU 2016-09 during the first quarter of 2017. The adoption of this standard had the following impact on our financial statements:
On July 22, 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires entities to measure most inventory "at the lower of cost and net realizable value," thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market (market in this context is defined as one of three different measures). The guidance does not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. Under current guidance, an entity subsequently measures inventory at the lower of cost or market, with market defined as replacement cost provided that it is not above the ceiling (net realizable value) or below the floor (net realizable value less an approximately normal profit margin) which is unnecessarily complex. The amendment does not change other guidance on measuring inventory. The amendment is effective for annual periods, including periods within those annual periods beginning after December 15, 2016 with early adoption permitted. We adopted this pronouncement prospectively in the first quarter of 2017, and the adoption of this pronouncement did not have a material effect on our financial statements. On January 26, 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment," which removes step two of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment amount will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted for goodwill impairment tests performed after January 1, 2017. We adopted this guidance prospectively during the three months ended March 31, 2017. Our goodwill impairment test is performed annually as of October 1st, therefore the adoption had no impact to our financial statements. . Not yet adopted Revenue from Contracts with Customers (Topic 606): We are required to adopt ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" and its updates and amendments in the first quarter of 2018. We have developed a project plan for adoption focused first on the largest volume of contracts, our standard service provider partner agreement, in an effort to determine the impact of adoption on our revenue recognition policies, processes and systems. We expect to complete our evaluation of this standard service provider partner agreement in the second quarter of 2017. During the first quarter of 2017, we began to evaluate our non-standard service provider partner agreements including our 10 largest revenue service provider partners which account for approximately 60% of our revenue. The next stages of our adoption plan will focus on assessing the impact of adopting this standard on our subsidiaries' service provider partner agreements and sales commissions. The new standard requires significantly more disclosures and we anticipate putting processes in place to collect the data required for these additional disclosures. A summary of these standards and requirements are as follows: On May 9, 2016, the FASB issued ASU 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients," and on April 14, 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”. ASU 2016-12 and 2016-10 both amend the guidance in ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is not yet effective. ASU 2016-12 clarifies guidance on assessing collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modification within Topic 606. ASU 2016-10 clarifies guidance related to identifying performance obligations and licensing implementation guidance. These updates are effective with the same transition requirements as ASU 2014-09, as amended. On March 17, 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net)” which amends the guidance in ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is not yet effective. The update clarifies the implementation guidance on principal versus agent considerations. The update is effective with the same transition requirements as ASU 2014-09, as amended. On August 12, 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which defers the effective date for all entities for one year of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” issued on May 28, 2014. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The guidance supersedes the revenue recognition guidance in Topic 605, “Revenue Recognition,” and most industry-specific guidance throughout the Industry Topics of the FASB Accounting Standards Codification. The guidance also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition - Contract-Type and Production-Type Contracts." ASU 2014-09, as amended, is effective for annual periods, and interim periods within those years, beginning after December 31, 2017. An entity is required to apply the amendments using one of the following two methods: (1) retrospectively to each prior period presented with three possible expedients: (a) for completed contracts that begin and end in the same reporting period no restatement is required; (b) for completed contract with variable consideration an entity may use the transaction price at completion rather than restating estimated variable consideration amounts in comparable reporting periods; and (c) for comparable reporting periods before date of initial application reduced disclosure requirements related to transaction price; (2) retrospectively with the cumulative effect of initially applying the amendment recognized at the date of initial application with additional disclosures for the differences of the prior guidance to the reporting periods compared to the new guidance and an explanation of the reasons for significant changes. Other accounting standards: On January 5, 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805) - Clarifying the Definition of a Business," which provides guidance to assist entities in evaluating when a set of transferred assets and activities is a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. The amendment is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We are required to adopt ASU 2017-01 no later than the first quarter of 2018. On February 25, 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. The update also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are required to adopt ASU 2016-02 no later than the first quarter of 2019, and we are currently assessing the impact of this pronouncement on our financial statements. We have begun to evaluate our existing leases which all have been classified as operating leases under Topic 840. We anticipate using some of the available practical expedients upon adoption. We have not yet determined the amount of operating and financing lease liabilities and corresponding right-of-use assets we will record on our balance sheet, however, we anticipate that assets and liabilities will increase materially when our leases are recorded under the new standard. |
Accounts Receivable, Net |
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Accounts Receivable, Net | Accounts Receivable, Net The components of accounts receivable, net are as follows (in thousands):
For the three months ended March 31, 2017 and 2016, we recorded a $0.1 million and $0.2 million provision for doubtful accounts receivable. For the three months ended March 31, 2017 and 2016, we recorded a $0.6 million and $0.5 million reserve for product returns in our hardware and other revenue. Historically, we have not experienced write-offs for uncollectible accounts or sales returns that have differed significantly from our estimates. |
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Inventory | Inventory The components of inventory are as follows (in thousands):
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Acquisitions |
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Acquisitions | Acquisitions Connect and Piper Business Units from Icontrol Networks On March 8, 2017, in accordance with a single asset purchase agreement we entered into with Icontrol Networks, Inc., or Icontrol, on June 23, 2016, we acquired certain assets and assumed certain liabilities of the Connect line of business and all of the outstanding equity interests of the two subsidiaries through which Icontrol conducts its Piper line of business, or the Acquisition. Connect provides an interactive security and home automation platform for service providers. Piper, designs, produces and sells an all-in-one video and home automation hub. The addition of new technology infrastructure, talent, key relationships and hardware devices is expected to help accelerate our development of intelligent, data-driven smart home and business services. The Acquisition constituted a business. The cash consideration was $148.5 million, after the estimated working capital adjustment, of which $14.5 million was deposited in escrow in accordance with the asset purchase agreement for indemnifications obligations of Icontrol stockholders and the final determination of closing working capital. We used $81.5 million of cash on hand and drew $67.0 million under our senior line of credit with Silicon Valley Bank and a syndicate of lenders to fund the Acquisition. The Acquisition also included non-cash consideration. In accordance with the terms of the asset purchase agreement, we were obligated to assume the Icontrol Networks, Inc. 2013 Equity Incentive Plan and Icontrol Networks, Inc. 2003 Stock Plan, or collectively the Icontrol Plans, and converted the 2,001,387 unvested employee stock options into 70,406 Alarm.com stock options using a conversion ratio stated in the agreement to convert the original exercise price and number of options. The fair value of the unvested stock options on the acquisition date was $1.7 million calculated using a Black-Scholes model with a volatility and risk-free interest rate over the expected term of the options and the closing price of the Alarm.com common stock on the date of acquisition. We applied our graded vesting accounting policy to the fair value of these assumed options and determined $1.4 million of the fair value was attributable to pre-combination services and is included as a component of total purchase consideration. The remaining $0.3 million of the fair value was determined to be attributable to post-combination services and will be recognized over the remaining service periods of the stock options. The table below sets forth the purchase consideration and the preliminary allocation to estimated fair value of the tangible and intangible net assets acquired (in thousands):
Goodwill of $36.7 million reflects the value of acquired workforce and synergies we expect to achieve from integrating support for Connect's security service providers and for the Connect platform. The goodwill will be deductible for tax purposes. We allocate goodwill to reporting units based on expected benefit from synergies, and have preliminarily allocated the goodwill to the Alarm.com segment. The purchase price allocation including the identification of tangible and intangible assets acquired and liabilities assumed, and the determination of the fair value of those assets acquired and liabilities assumed, as well as the assignment of goodwill to reporting units was not finalized as of the filing date of this Quarterly Report. Fair Value of Net Assets Acquired and Intangibles In accordance with ASC 805, the assets and liabilities of the Acquisition were recorded at their respective fair values as of March 8, 2017. We developed our estimate of the fair value of intangible net assets using a multi-period excess earnings method for customer relationships, the relief from royalty method for the developed technology and the relief-from-royalty method for the trade name. Customer Relationships We recorded the customer relationships intangible separately from goodwill based on determination of the length, strength and contractual nature of the relationship that Connect shared with its customers. We valued two groups of customer relationships using the multi-period excess earnings method, an income approach. We used several assumptions in the income approach, including attrition and renewal rate, margin and discount rate. We are amortizing the first customer relationship, valued at $92.5 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of twelve years and the second group of customer relationships, valued at $0.7 million, on the same basis, over an estimated useful life of four years. Developed Technology Developed technology primarily consists of intellectual property of proprietary software that is marketed for sale. The Connect platform is software for interactive security, automation and related solutions that was typically deployed and operated by the service provider in its own network operations center. We valued the developed technology by applying the relief from royalty method, an income approach. We used several assumptions in the relief from royalty method, which included royalty rate and discount rate. We are amortizing the Connect developed technology, valued at $4.4 million, on an attribution method based on the discounted cash flows of the model over an estimated useful life of three years. Other developed technologies, valued at $0.3 million, were also acquired. Trade Name We determined that there was no fair value for the Connect trade name as the largest customer for Connect had re-branded the interactive security and automation platform and marketed it under the customer's own name. We valued the other trade names acquired using a relief-from-royalty method. We used several assumptions in the income approach, including royalty and discount rates. We are amortizing the other trade names, valued at $0.2 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of three years. Deferred Tax Asset The equity interests in the subsidiaries we acquired provided for a carryover tax basis in goodwill and intangible assets that arose from a previous acquisition. We have recorded a deferred tax asset of $4.1 million that represents the excess of the carryover tax basis in those previously acquired goodwill and intangible assets over the fair value of goodwill and intangible assets we recorded on the Acquisition date. ObjectVideo On January 1, 2017, in accordance with an asset purchase agreement, we acquired certain assets of ObjectVideo, Inc., or ObjectVideo, that constituted a business now called ObjectVideo Labs, LLC, or ObjectVideo Labs, including products, technology portfolio and engineering team. ObjectVideo is a pioneer in the fields of video analytics and computer vision with technology that extracts meaning and intelligence from video streams in real-time to enable object tracking, pattern recognition and activity identification. We anticipate that the ObjectVideo Labs engineering team's capabilities and expertise will accelerate our research and development of video services and video analytic applications. In addition, ObjectVideo Labs will continue to perform advanced research and engineering services for the federal government. The consideration included $6.0 million of cash paid at closing. The table below sets forth the purchase consideration and the preliminary allocation to estimated fair value of the tangible and intangible net assets acquired (in thousands):
Goodwill of $2.7 million reflects the value of acquired workforce and expected synergies from pairing ObjectVideo Labs' video analytics capabilities with our offerings. The goodwill will be deductible for tax purposes. The purchase price allocation including the identification of tangible and intangible assets acquired and liabilities assumed, and the determination of the fair value of those assets acquired and liabilities assumed, as well as the assignment of goodwill to reporting units was not finalized as of the filing date of this Quarterly Report. Fair Value of Net Assets Acquired and Intangibles In accordance with ASC 805, the assets and liabilities of ObjectVideo Labs we acquired were recorded at their respective fair values as of January 1, 2017, the date of the acquisition. We developed our estimate of the fair value of intangible assets using the replacement cost method for the developed technology. Developed Technology Developed technology recorded separately from goodwill consists of intellectual property such as proprietary software used internally for revenue producing activities. ObjectVideo Labs proprietary software consists of source code and video analytics testing programs used internally to provide video analytics consulting services and research and development to customers and for the SaaS Alarm.com platform. We valued the developed technology by applying the replacement cost method. We used several assumptions in this cost approach, which included analyzing costs that a company would expect to incur to recreate an asset of equivalent utility. We are amortizing the developed technology, valued at $3.4 million, on a straight-line basis over an estimated useful life of two years which coincides with the rapidly developing technology of video analytics. Unaudited Pro Forma Information The following unaudited pro forma data is presented as if the Acquisition and ObjectVideo Labs were included in our historical consolidated statements of operations beginning January 1, 2016. These pro forma results do not necessarily represent what would have occurred if all the business combinations had taken place on January 1, 2016, nor do they represent the results that may occur in the future. This pro forma financial information includes our historical financial statements and those of our business combinations with the following adjustments: (i) we adjusted the pro form adjustments for income taxes, (ii) we applied interest expense as if the additional borrowing for the acquisitions were as of January 1, 2016, (iii) we adjusted for amortization expense assuming the fair value adjustments to intangible assets had been applied beginning January 1, 2016 and (iv) we adjusted for transaction fees incurred and reclassified them to January 1, 2016. The pro forma adjustments were based on available information and upon assumptions that we believe are reasonable to reflect the impact of these acquisitions on our historical financial information on a supplemental pro forma basis, as follows (in thousands):
Business Combinations in Operations The operations of each of the business combinations discussed above were included in the consolidated financial statements as of each of their respective acquisition dates. The following table presents the revenue and earnings of the business combinations in the year of acquisition as reported within the consolidated financial statements for the three months ended March 31, 2017 (in thousands):
For the Acquisition, we included the results of Connect's operations since its acquisition date in the Alarm.com segment and the results of Piper's operations since its acquisition date in the Other segment. We included the results of ObjectVideo Labs operations since its acquisition date in the Alarm.com segment. |
Goodwill and Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net The changes in goodwill by reportable segment are outlined below (in thousands):
On January 1, 2017, we acquired ObjectVideo Labs and preliminarily recorded $2.7 million of goodwill in the Alarm.com segment. On March 8, 2017, in connection with the Acquisition, we preliminarily recorded $36.7 million of goodwill in the Alarm.com segment. There were no impairments of goodwill during the three months ended March 31, 2017 and 2016. The following table reflects changes in the net carrying amount of the components of intangible assets (in thousands):
We recorded $1.5 million of amortization related to our intangible assets for the three months ended March 31, 2017 as compared to $0.5 million for the same period in the prior year. There were no impairments of long-lived assets during the three months ended March 31, 2017 and 2016. The following tables reflect the weighted average remaining life and carrying value of finite-lived intangible assets (in thousands):
The following table reflects the future estimated amortization expense for intangible assets (in thousands):
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Investments in Other Entities |
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Mar. 31, 2017 | |
Investments [Abstract] | |
Investments in Other Entities | Investments in Other Entities Cost Method Investment in Connected Home Service Provider Partner We own 20,000 Series A Convertible Preferred Membership Units and 2,667 Series B Convertible Preferred Membership Units of a Brazilian connected home solutions provider, which represents an interest of 12.4% on a fully diluted basis, and was purchased for $0.4 million. On April 15, 2015, we purchased 2,333 Series B-1 Convertible Preferred Membership Units at $23.31 per unit, for a purchase price of $0.1 million, which increased our aggregate equity interest to 12.6% on a fully diluted basis. On April 20, 2016, we purchased an additional 6,904 Series B-1 Convertible Preferred Membership Units at $20.19 per unit, for a purchase prices of $0.1 million, which increased our aggregate equity interest to 14.3% on a fully diluted basis. The entity resells our products and services to residential and commercial customers in Brazil. Based upon the level of equity investment at risk, the connected home service provider partner is a VIE. We do not control the marketing, sales, installation, or customer maintenance functions of the entity and therefore do not direct the activities of the entity that most significantly impact its economic performance. We have determined that we are not the primary beneficiary of the entity and do not consolidate its financial results into ours. We account for this investment using the cost method. As of March 31, 2017 and December 31, 2016, the fair value of this cost method investment was not estimated as there were no events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment. The investment is included in other assets in our condensed consolidated balance sheets and was $0.6 million as of March 31, 2017 and December 31, 2016. Investments in and Loans to an Installation Partner We own 48,190 common units of an installation partner which represents an interest of 48.2% on a fully diluted basis, and was purchased for $1.0 million. The entity performs installation services for security dealers, as well as subsidiaries reported in our Other segment. Based upon the level of equity investment at risk, we determined at the time of investment that the installation partner was not a VIE. We accounted for this investment under the equity method because we have the ability to exercise significant influence over the operating and financial policies of the entity. Under the equity method, we recognize our share of the earnings or losses of the installation partner in other income, net in our condensed consolidated statements of operations in the periods they are reported by the installation partner. In September 2014, we loaned $0.3 million to our installation partner under a secured promissory note that accrues interest at 8.0% per annum. Interest is payable monthly with the entire principal balance plus any accrued but unpaid interest due on the note's maturity date. This event did not cause us to reconsider our conclusion that the installation partner has sufficient equity investment at risk and therefore was not a VIE. We have continued to account for the investment under the equity method. In the fourth quarter of 2015, accumulated operating losses of our installation partner exceeded its equity contributions, and we began to record 100% of its net losses, which amounted to $0.2 million, against our $0.3 million note receivable. The note was amended in September 2016 to extend the maturity date to September 2018. In our condensed consolidated balance sheets, the $0.1 million note receivable balance was included in other assets as of March 31, 2017 and December 31, 2016. On December 11, 2015, we purchased an additional 9,290 common units of the same company for $0.2 million, which did not change our proportional share of ownership interest. This event caused us to reconsider our conclusion that the installation partner has sufficient equity investment at risk and we now consider the installation partner to be a VIE. We do not control the ability to obtain funding, the annual operating plan, marketing, sales or cash management functions of the entity and therefore, do not direct the activities of the entity that most significantly impact its economic performance. We have determined that we are not the primary beneficiary of our installation partner and do not consolidate its financial results into ours. We continue to account for the investment under the equity method. Due to the terms of the investment, the investment partner received additional equity contributions, and we returned to recording our share of its earnings or losses against our investment. We recorded our share of the installation partner's earnings and losses in other income, net in our condensed consolidated statements of operations. We recorded earnings of $5 thousand for the three months ended March 31, 2017 as compared to losses of $12 thousand for the same period in the prior year. Our $1.2 million investment, net of equity losses, is included in other assets in our condensed consolidated balance sheets and was $40 thousand as of March 31, 2017 and $35 thousand as of December 31, 2016. Investments in and Loans to a Platform Partner We have invested in the form of loans and equity investment in a platform partner which produces connected devices to provide it with the capital required to bring its devices to market and integrate them onto our connected home platform. In 2013, we paid $3.5 million in cash to purchase 3,548,820 shares of our platform partner’s Series A convertible preferred shares, or an 18.7% interest on as-converted and fully diluted basis. The terms of our investment in the convertible preferred shares included a freestanding option to make an additional investment in the platform partner, or the 2013 Option. The investment in Series A convertible preferred shares was recorded at its initial fair value of $3.5 million and was accounted for as a cost method investment. We also loaned the same platform partner $2.0 million in the form of a secured convertible note, or the 2013 Note. The 2013 Note converted automatically into equity at a 12.5% discount from the price per share at which new shares of capital stock are issued by the platform partner in a qualified financing, or the Automatic Conversion Feature. We recorded the 2013 Option at its initial fair value of $0.2 million. The 2013 Option did not meet the definition of a derivative as it was private company stock that was not readily convertible into cash and therefore, was not measured at fair value at each reporting period. The 2013 Note was accounted for as an available for sale security and was recorded at fair value in marketable securities at an initial fair value of $1.9 million. The Automatic Conversion Feature was an embedded derivative that required bifurcation from the 2013 Note. It was recorded at its initial fair value of $0.1 million in other assets as a marketable security and was remeasured at fair value each reporting period with changes recorded in other income, net. In 2014, we entered into a Series 1 Preferred Stock purchase agreement with the platform partner and another investor. The other investor invested cash to purchase shares of the platform partner’s Series 1 Preferred Stock. As a result of the purchase, our 3,548,820 shares of Series A convertible preferred shares converted into 3,548,820 shares of common stock, and we hold an 8.6% interest in the platform partner on an as-converted and fully diluted basis. In conjunction with the transaction, we received a $2.5 million dividend that we recorded as a return of investment as it was in excess of the accumulated earnings and profits of the investee since the date of the investment. Additionally, the platform partner repaid the $2.0 million 2013 Note and accrued interest of $0.2 million and as a result, the Automatic Conversion Feature expired. As a result of the transaction, we recorded $0.1 million realized gain on the 2013 Note, our 2013 Option and Automatic Conversion Feature expired and we recognized $0.3 million of impairment losses in other income, net in our consolidated statement of operations for the year ended December 31, 2014. Based upon the level of equity investment at risk, the platform partner is a VIE. We have concluded that we are not the primary beneficiary of the platform partner VIE. We do not control the product design, software development, manufacturing, marketing, or sales functions of the platform partner and therefore, we do not direct the activities of the platform partner that most significantly impact its economic performance. We account for this investment under the cost method. As of March 31, 2017 and December 31, 2016, the fair value of this cost method investment was not estimated as there were no events or changes in circumstances that may have had a significant adverse effect on the fair value of the investment. As of March 31, 2017 and December 31, 2016, our $1.0 million cost method investment in the platform partner was recorded in other assets in our condensed consolidated balance sheets. |
Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Patent Licenses From time to time, we enter into agreements to license patents. The balance, net of amortization, was $3.0 million and $3.2 million as of March 31, 2017 and December 31, 2016 and was included in other assets. We have $4.9 million of historical cost in patent licenses related to such agreements. We are amortizing the patent licenses over the estimated useful lives of the patents, which range from three to eleven years. Amortization expense on patent licenses was $0.2 million for the three months ended March 31, 2017, as compared to $0.1 million for the three months ended March 31, 2016 and was included in cost of SaaS and license revenue in our condensed consolidated statements of operations. Loan to a Distribution Partner In September 2016, we entered into dealer and loan agreements with a distribution partner. The dealer agreement enables the distribution partner to resell our SaaS services and hardware to their subscribers. Under the loan agreements, we agreed to loan the distribution partner up to $4.0 million, collateralized by all assets owned by the distribution partner. The loan has two advance periods which begin each year in October and end during the following January until August 31, 2019, the term date of the loan. Interest on the outstanding principal accrues at a rate per annum equal to the greater of 6% or the LIBOR rate plus 4%, as determined on the first date of each annual advance period. The borrower has the option to extend the term of the loan for two successive terms of one year each. During the first quarter of 2017, our distribution partner drew an additional $1.0 million at a rate of 6.0% per annum. The $4.0 million and $3.0 million loan receivable balances as of March 31, 2017 and December 31, 2016 were included in other current assets. Subsequent to March 31, 2017 and prior to the filing of this Quarterly Report on Form 10-Q, we entered into a subordinated credit agreement with the distribution partner. Under the subordinated credit agreement we loaned the distribution partner $3.0 million, with a maturity date of November 21, 2022. Interest on the outstanding principal balance accrues at a rate of 8.5% per annum and requires monthly interest payments. |
Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements The following table presents our assets and liabilities measured at fair value on a recurring basis (in thousands):
The following table summarizes the change in fair value of the Level 3 liabilities for subsidiary unit awards and contingent consideration liability from acquisition (in thousands):
The money market account is included in our cash and cash equivalents in our condensed consolidated balance sheets. Our money market assets are valued using quoted prices in active markets. The liability for the subsidiary unit awards relates to agreements established with two employees of our subsidiaries for cash awards contingent upon the subsidiary companies meeting certain financial milestones such as revenue, working capital, EBITDA and EBITDA margin. We account for these subsidiary awards using fair value and establish liabilities for the future payment for the repurchase of subsidiary units under the terms of the agreements based on estimating revenue, working capital, EBITDA and EBITDA margin of the subsidiary units over the periods of the two awards through the anticipated repurchase dates. We estimated the fair value of each liability by using a Monte Carlo simulation model for determining each of the projected measures by using an expected distribution of potential outcomes. The fair value of each liability is calculated with thousands of projected outcomes, the results of which are averaged and then discounted to estimate the present value. At each reporting date until the respective payment dates, we will remeasure these liabilities, using the same valuation approach based on the applicable subsidiary's revenue, an unobservable input, and we will record any changes in the employee's compensation expense. One of the awards is subject to the employee's continued employment and therefore recorded on a straight-line basis over the remaining service period. The liability balances are included in either accounts payable, accrued expenses and other current liabilities or other liabilities in our condensed consolidated balance sheets (see Note 11). The amount of contingent consideration liability to be paid, up to a maximum of $2.0 million, from our acquisition of SecurityTrax in the first quarter of 2015, will be determined based on revenue and adjusted EBITDA for the year ended December 31, 2017. We estimated the fair value of the contingent consideration liability by using a Monte Carlo simulation model for determining projected revenue by using an expected distribution of potential outcomes. The fair value of contingent consideration liability is calculated with thousands of projected revenue outcomes, the results of which are averaged and then discounted to estimate the present value. At each reporting date until payment in first quarter of 2018, we will remeasure the contingent consideration liability, using the same valuation approach based on our subsidiary’s revenue, an unobservable input, and we will record any changes in general and administrative expense. The contingent consideration liability balance is included in our other liabilities in our condensed consolidated balance sheets (see Note 5). We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2017 and 2016. We also monitor the value of the investments for other than temporary impairment on a quarterly basis. No other-than-temporary impairments occurred during the three months ended March 31, 2017 and 2016. |
Liabilities |
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Liabilities | Liabilities The components of accounts payable, accrued expenses and other current liabilities are as follows (in thousands):
The components of other liabilities are as follows (in thousands):
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Debt, Commitments and Contingencies |
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Mar. 31, 2017 | |
Debt, Commitments and Contingencies Disclosure [Abstract] | |
Debt, Commitments and Contingencies | Debt, Commitments and Contingencies The debt, commitments and contingencies described below would require us, or our subsidiaries, to make payments to third parties under certain circumstances. Debt We have a $75.0 million revolving credit facility with Silicon Valley Bank, as administrative agent, and a syndicate of lenders that matures in November 2018, or the 2014 Facility. We have the option to increase the borrowing capacity of the 2014 Facility to $125.0 million with the consent of the lenders. The 2014 Facility is secured by substantially all of our assets, including our intellectual property. The outstanding principal balance on the 2014 Facility accrues interest at a rate equal to either (1) the Eurodollar Base Rate, or LIBOR, plus an applicable margin based on our consolidated leverage ratio, or (2) the higher of (a) the Wall Street Journal prime rate, and (b) the Federal Funds rate plus 0.50% plus an applicable margin based on our consolidated leverage ratio, at our option. For the three months ended March 31, 2017 and 2016, we elected for the outstanding principal balance to accrue interest at LIBOR plus 2.00%, LIBOR plus 2.25%, and LIBOR plus 2.50% when our consolidated leverage ratio was less than 1.00:1.00, greater than or equal to 1.00:1.00 but less than 2.00:1.00, and greater than or equal to 2.00:1.00, respectively. For the three months ended March 31, 2017 and 2016, the effective interest rate on the 2014 Facility was 3.13% and 2.46%. On March 7 2017, we drew $67.0 million under the 2014 Facility to partially fund the Acquisition. The carrying value of the 2014 Facility was $73.7 million and $6.7 million as of March 31, 2017 and December 31, 2016. The 2014 Facility includes a variable interest rate that approximates market rates and, as such, we determined that the carrying amount of the 2014 Facility approximates its fair value as of March 31, 2017. The 2014 Facility carries an unused line commitment fee of 0.20% to 0.25% depending on our consolidated leverage ratio. The 2014 Facility contains various financial and other covenants that require us to maintain a maximum consolidated leverage ratio not to exceed 3.00:1.00 and a consolidated fixed charge coverage ratio of at least 1.25:1.00. As of March 31, 2017, we were in compliance with all financial and non-financial covenants and there were no events of default. Commitments and Contingencies Repurchase of Subsidiary Units In 2012, we formed a subsidiary to develop and market home and commercial energy management devices and services. We granted an award of subsidiary stock to the founder and president. The terms of the award for the founder, who is also our employee, require a payment in cash on either the third or the fourth anniversary from the date the subsidiary first makes its products and services commercially available, which was determined to be April 1, 2014. The vesting of the award is based on the subsidiary meeting certain minimum financial targets. We did not record a liability in our condensed consolidated balance sheets as of March 31, 2017 and December 31, 2016, as the fair value of this commitment was zero. In 2011, we formed a subsidiary that offers to professional residential property management and vacation rental management companies technology solutions for remote monitoring and control of properties, including access control and energy management. Since its formation, we granted an award of subsidiary stock to the founder and president. The terms of the award, as amended, requires a payment in cash on the fourth anniversary of the date that the subsidiary’s products and services first become commercially available, which was determined to be June 1, 2013. The vesting of the award is based on the subsidiary meeting certain minimum financial targets. In 2016, we amended the term of the award, extending the valuation date for the payment in cash to December 31, 2017, amending the financial targets and allowing for payments in cash from 2018 through 2020 based on collection of financed customer receivables that existed as of the valuation date. We recorded a liability of $2.7 million in accounts payable, accrued expenses and other current liabilities and $0.3 million in other liabilities related to this commitment in our condensed consolidated balance sheet as of March 31, 2017. We recorded a liability of $2.5 million in accounts payable, accrued expenses and other current liabilities and a liability of $0.3 million in other liabilities related to this commitment in our condensed consolidated balance sheet as of December 31, 2016. At each reporting date until the respective payment dates, we will remeasure these liabilities, and we will record any changes in fair value in general and administrative expense (see Note 9). Leases We lease office space and office equipment under non-cancelable operating leases with various expiration dates through 2026. In August 2014, we signed a lease for new office space in Tysons, Virginia, where we relocated our headquarters in February 2016. This lease term ends in 2026 and includes a five-year renewal option, an $8.0 million tenant improvement allowance and scheduled rent increases. During 2016, we entered into amendments to this lease which provide for 30,662 square feet of additional office space and an additional $1.7 million in tenant improvement allowances. We took possession of the additional space in February 2017 and we are allowed to utilize the tenant improvement allowance for design prior to moving into the space. As of March 31, 2017, we have utilized $7.9 million of our total $9.7 million tenant improvement allowance. Rent expense was $1.4 million for the three months ended March 31, 2017 and $1.3 million for the same period in the prior year. Indemnification Agreements We have various agreements that may obligate us to indemnify the other party to the agreement with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business. Although we cannot predict the maximum potential amount of future payments that may become due under these indemnification agreements, we do not believe any potential liability that might arise from such indemnity provisions is probable or material. Letters of Credit As of March 31, 2017 and December 31, 2016, we had no outstanding letters of credit under our 2014 Facility. Commitments for Long-Lead Time Parts As of March 31, 2017, we assessed that our commitments for long-lead time parts related to our contract with a camera manufacturer were approximately $0.6 million. We would incur these charges only if we terminated our orders as they represent commitments made on our behalf by the manufacturer for fulfilling orders. We do not hold title to these parts and we will not be obligated to pay for invoices to our manufacturer until we receive the finished goods. Legal Proceedings On April 25, 2017, Alarm.com Incorporated and its wholly owned subsidiary ICN Acquisition, LLC, filed a patent infringement complaint against Protect America, Inc. and SecureNet Technologies, LLC in the United States District Court for the Eastern District of Virginia. The complaint seeks injunctive relief to stop the further sale of the infringing Protect America and SecureNet products and systems, and damages for the infringement of Alarm.com’s patents. The complaint asserts that the technology in the Protect America and SecureNet Alarm Systems products infringe one or more claims of Alarm.com’s patents: United States Patent Numbers 7,113,090; 7,633,385; 8,395,494; 8,493,202; 8,612,591; 8,860,804; and 9,141,276. If the litigation is successful, Alarm.com will be entitled to receive monetary damages, injunctive relief, and any other relief, including attorney’s fees, from Protect America and SecureNet. SecureNet and Protect America have not yet responded to the complaint or asserted counterclaims and defenses. On June 2, 2015, Vivint, Inc., or Vivint, filed a lawsuit against us in U.S. District Court, District of Utah, alleging that our technology directly and indirectly infringes six patents that Vivint purchased. Vivint is seeking permanent injunctions, enhanced damages and attorney’s fees. We answered the complaint on July 23, 2015. Among other things, we asserted defenses based on non-infringement and invalidity of the patents in question. On August 19, 2016, the U.S. District Court, District of Utah stayed the litigation pending inter partes review by the U.S. Patent Trial and Appeal Board (PTAB) of certain patents in suit. The PTAB has ruled on all but one of the pending applications for inter partes review, and we anticipate the Utah court action will recommence in June 2017 on the remaining patent claims not overturned by the PTAB. Should Vivint prevail on its claims that one or more elements of our solution infringe one or more of its patents, we could be required to pay damages of Vivint’s lost profits and/or a reasonable royalty for sales of our solution, enjoined from making, using and selling our solution if a license or other right to continue selling such elements is not made available to us or we are unable to design around such patents, and required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us. The outcome of the legal claim and proceeding against us cannot be predicted with certainty. We believe we have valid defenses to Vivint’s claims. Based on currently available information, we determined a loss is not probable or reasonably estimable at this time. On December 30, 2015, a putative class action lawsuit was filed against us in the U.S. District Court for the Northern District of California, alleging violations of the Telephone Consumer Protection Act, or TCPA. The complaint does not allege that Alarm.com itself violated the TCPA, but instead seeks to hold us responsible for the marketing activities of our service provider partners under principles of agency and vicarious liability. The complaint seeks monetary damages under the TCPA, injunctive relief, and other relief, including attorney’s fees. We answered the complaint on February 26, 2016. On May 5, 2017, the court granted plaintiffs' motion for class certification. Discovery is underway, and the matter remains pending in the U.S. District Court for the Northern District of California. Based on the current schedule, we anticipate a trial will take place either at the end of 2017 or beginning of 2018. Based on currently available information, we determined a loss is not probable or reasonably estimable at this time. On February 9, 2016, we were sued along with one of our service provider partners in the Circuit Court for the City of Virginia Beach, Virginia by the estate of a deceased service provider partner customer alleging wrongful death, among other claims. The suit seeks a total of $7 million in compensatory damages and $350,000 in punitive damages. We filed our answer on March 22, 2016. Discovery has commenced, and the matter remains pending. Based on currently available information, we determined a loss is not probable or reasonably estimable at this time. On February 22, 2017, Honeywell International Inc., or Honeywell, filed an action in the U.S. District Court for the District of New Jersey against us and Icontrol Networks, Inc., or Icontrol, seeking to enjoin the completion of our acquisition of two business units from Icontrol. On March 3, 2017, we settled the litigation effective upon the closing of the acquisition of the business units from Icontrol, which occurred on March 8, 2017. On March 21, 2017, Taraneh Vessal filed a complaint against us and Monitronics International, Inc. in the United States District Court for the Northern District of Illinois, alleging violation of the TCPA and the Illinois Consumer Fraud and Deceptive Business Practices Act. Our response to the complaint is due on May 12, 2017. Based on currently available information, we determined a loss is not probable or reasonably estimable at this time. In September, 2014, Icontrol Networks, Inc., or Icontrol, filed a Complaint in the United States District Court, District of Delaware, asserting that Zonoff Inc., or Zonoff, infringes certain U.S. Patents owned by Icontrol, all of which are now owned by Alarm.com through a subsidiary. In November, 2015, Icontrol filed a second lawsuit, also in the United States District Court, District of Delaware, alleging that Zonoff infringes additional U.S. Patents owned by Icontrol, now owned by Alarm.com through a subsidiary. The Court held a claim construction hearing in the first case on March 14, 2016 and consolidated the cases on August 1, 2016. Zonoff has not filed any proceedings at the United States Patent Office, or asserted any counterclaims. On March 8, 2017, the Court stayed the case for 60 days pending the close of the Acquisition by Alarm.com. In September, 2014, Icontrol filed a Complaint in the United States District Court, District of Delaware, asserting that SecureNet Technologies LLC, or SecureNet, infringes certain U.S. Patents owned by Icontrol, patents now owned by Alarm.com through a subsidiary. In March, 2015, Icontrol voluntarily agreed to dismiss the case, reserving the right to refile. In September, 2015, Icontrol refiled the case against SecureNet in the same district court alleging infringement of some of the same patents. SecureNet filed petitions for inter partes review of the patents-in-suit before the PTAB. Proceedings as to one of the patents in suit has been instituted. The PTAB has rejected the remaining applications for inter partes review, and Securenet has appealed the rejection as to one of the patents in suit. From time to time, we may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Other than the preceding matters, we are not a party to any lawsuit or proceeding that, in the opinion of management, is reasonably possible or probable of having a material adverse effect on our financial position, results of operations or cash flows. We reserve for contingent liabilities based on ASC 450, “Contingencies,” when it is determined that a liability, inclusive of defense costs, is probable and reasonably estimable. Litigation is subject to many factors that are difficult to predict, so there can be no assurance that, in the event of a material unfavorable result in one or more claims, we will not incur material costs. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is included in the following line items in the accompanying condensed consolidated statements of operations (in thousands):
The following table summarizes the components of non-cash stock-based compensation expense (in thousands):
2015 Equity Incentive Plan We issue stock options pursuant to our 2015 Equity Incentive Plan, or the 2015 Plan. The 2015 Plan allows for the grant of incentive stock options to employees and for the grant of nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, or RSUs, performance-based stock awards, and other forms of equity compensation to our employees, directors and non-employee directors and consultants. In June 2015, our board of directors adopted and our stockholders approved our 2015 Plan pursuant to which we initially reserved a total of 4,700,000 shares of common stock for issuance under the 2015 Plan, which included shares of our common stock previously reserved for issuance under our Amended and Restated 2009 Stock Incentive Plan, or the 2009 Plan. The number of shares of common stock reserved for issuance under the 2015 Plan will automatically increase on January 1st each year, for a period of not more than ten years, commencing on January 1, 2016 through January 1, 2024, by 5% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, or a lesser number of shares as may be determined by our board of directors. As a result of the adoption of the 2015 Plan, no further grants may be made under the 2009 Plan. As of March 31, 2017, 8,495,384 shares remained available for future grant under the 2015 Plan. Stock Options Stock options under the 2015 Plan have been granted at exercise prices based on the closing price of our common stock on the date of grant. Stock options under the 2009 Plan were granted at exercise prices as determined by our board of directors to be the fair market value of our common stock. Our stock options generally vest over a five-year period and each option, if not exercised or forfeited, expires on the tenth anniversary of the grant date. Certain stock options granted under the 2015 Plan and previously granted under the 2009 Plan may be exercised before the options have vested. Unvested shares issued as a result of early exercise are subject to repurchase by us upon termination of employment or services at the original exercise price. The proceeds from the early exercise of stock options are initially recorded as a current liability and are reclassified to common stock and additional paid-in capital as the awards vest and our repurchase right lapses. There were 25,793 and 29,835 unvested shares of common stock outstanding subject to our right of repurchase as of March 31, 2017 and December 31, 2016. We repurchased zero unvested shares of common stock related to early exercised stock options in connection with employee terminations during the three months ended March 31, 2017 and 2016. As of March 31, 2017 and December 31, 2016, we recorded $0.1 million and $0.2 million in accounts payable, accrued expenses and other current liabilities on our condensed consolidated balance sheets for the proceeds from the early exercise of the unvested stock options. We account for stock-based compensation awards based on the fair value of the award as of the grant date. We recognize stock-based compensation expense using the accelerated attribution method, net of actual forfeitures, in which compensation cost for each vesting tranche in an award is recognized ratably from the service inception date to the vesting date for that tranche. We value our stock options using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including the risk-free interest rate, expected term, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of our stock options. The expected term represents the period of time the stock options are expected to be outstanding and is based on the “simplified method.” Under the “simplified method,” the expected term of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. We use the “simplified method” due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected term of the stock options. Expected volatility is based on historical volatilities for publicly traded stock of comparable companies over the estimated expected term of the stock options. There were 56,150 and 456,550 stock options granted during the three months ended March 31, 2017 and 2016. We declared and paid dividends in June 2015 in anticipation of our IPO, which we closed on July 1, 2015. We do not expect to declare or pay dividends on a recurring basis. As such, we assume that the dividend rate is zero. The following table summarizes the assumptions used for estimating the fair value of stock options granted :
The following table summarizes stock option activity for the three months ended March 31, 2017:
The weighted average grant date fair value for our stock options granted during the three months ended March 31, 2017 and 2016 was $13.92 and $7.47. The total fair value of stock options vested during the three months ended March 31, 2017 and 2016 was $1.1 million and $0.3 million. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2017 and 2016 was $3.3 million and $1.0 million. As of March 31, 2017, the total compensation cost related to nonvested awards not yet recognized was $4.5 million, which will be recognized over a weighted average period of 2.2 years. Assumed Stock Options On March 15, 2017, we filed a Form S-8 Registration Statement related to the March 8, 2017 acquisition of the Connect business unit of Icontrol and assumed the Icontrol Networks, Inc. 2013 Equity Incentive Plan and the Icontrol Networks, Inc. 2003 Stock Plan. The assumed unvested stock options are exercisable for 70,406 shares of Alarm.com common stock. The registration also covers an additional 2,308,615 shares of common stock that were automatically added to the shares authorized for issuance under the 2015 Plan pursuant to an evergreen provision contained in the 2015 Plan and an additional 461,723 shares of common stock that were automatically added to the shares authorized for issuance under the 2015 Employee Stock Purchase Plan, or 2015 ESPP, pursuant to an evergreen provision contained in the 2015 ESPP. In accordance with the terms of the asset purchase agreement, we were obligated to assume the Icontrol Networks, Inc. 2013 Equity Incentive Plan and Icontrol Networks, Inc. 2003 Stock Plan, or collectively the Icontrol Plans, and converted the 2,001,387 unvested employee stock options into 70,406 Alarm.com stock options using a conversion ratio stated in the agreement to convert the original exercise price and number of options. The fair value of the unvested stock options on the acquisition date was $1.7 million calculated using a Black-Scholes model with a volatility and risk-free interest rate over the expected term of the options and the closing price of the Alarm.com common stock on the date of acquisition. We applied our graded vesting accounting policy to the fair value of these assumed options and determined that $1.4 million of the fair value was attributed to pre-combination services that is included as a component of total purchase consideration. The remaining $0.3 million of the fair value was determined to be attributable to post-combination services and will be recognized over the remaining service periods of the stock options. The following table summarizes the assumptions used for estimating the fair value of stock options assumed from the Connect business unit of Icontrol:
The following table summarizes assumed stock option activity for the three months ended March 31, 2017:
The weighted average grant date fair value for the assumed stock options during the three months ended March 31, 2017 was $4.78. The total fair value of assumed stock options vested during the three months ended March 31, 2017 was less than $0.1 million. As of March 31, 2017, the total compensation cost related to nonvested awards not yet recognized was $0.3 million, which will be recognized over a weighted average period of 1.9 years. Restricted Stock Units There was an aggregate of 108,850 restricted stock units, or RSUs, granted to certain of our employees for the three months ended March 31, 2017. Each of the RSUs vests over a five-year period from the vesting commencement date, which is generally the grant date. We account for RSUs based on the fair value of the award as of the grant date. We recognize stock-based compensation expense using the accelerated attribution method, net of actual forfeitures, in which compensation cost for each vesting tranche in an award is recognized ratably from the grant date to the vesting date for that tranche. The condition for vesting of the RSUs is based on continued employment. There were no outstanding RSUs for the three months ended March 31, 2016. As of March 31, 2017, the total unrecognized compensation expense related to RSU awards granted amounted to $4.6 million, which is expected to be recognized over a weighted average period of 3.2 years. The following table summarizes activity for the RSUs for the three months ended March 31, 2017:
Restricted Stock Awards In March 2017, we assumed 1,622 stock options from Connect upon completion of the Acquisition which had been early exercised according to the provisions of the Icontrol Plans for which the employees had not yet provided service for the vesting period. We canceled those stock options and issued restricted stock awards with no exercise price at the fair value of the Alarm.com common stock upon the closing of the Acquisition and recorded $19 thousand of compensation expense in the three months ended March 31, 2017. We expect these restricted stock awards, or RSA, to vest over two years and we will recognize compensation expense for the fair value of the awards in stock-based compensation. Employee Stock Purchase Plan Our board of directors adopted our 2015 ESPP in June 2015. As of March 31, 2017, 1,616,342 shares have been reserved for future grant under the 2015 ESPP, with provisions established to increase the number of shares available on January 1st of each subsequent year for nine years. The annual automatic increase in the number of shares available for issuance under the 2015 ESPP is the lesser of 1% of each class of common stock outstanding as of December 31st of the preceding fiscal year, 1,500,000 shares of common stock, or such lesser number as determined by the board of directors. The 2015 ESPP allows eligible employees to purchase shares of our common stock at 90% of the fair market value, rounded up to the nearest cent, based on the closing price of our common stock on the purchase date. The maximum number of shares of our common stock that a participant may purchase during any calendar year shall not exceed such number of shares having a fair market value equal to the lesser of $15,000 or 10% of the participant's base compensation for that year. The 2015 ESPP is considered compensatory for purposes of stock-based compensation expense due to the 10% discount on the fair market value of our common stock. For the three months ended March 31, 2017 and 2016, an aggregate of 13,584 shares and 18,705 shares were purchased by employees. We recognized less than $0.1 million of compensation expense for the three months ended March 31, 2017 and 2016. Compensation expense is recognized for the amount of the discount, net of actual forfeitures and voluntary withdrawals, over the six-month purchase period. Repurchase of Subsidiary Units We have an agreement, as amended, with an employee, who is the president and founder of our subsidiary formed to offer professional property management and vacation rental management companies technology solutions for remote monitoring and control of properties, for the repurchase of subsidiary stock for cash. The vesting of the award is contingent upon the subsidiary meeting certain minimum financial targets from the date of commercial availability, which was determined to be June 1, 2013, until the fourth anniversary. In 2016, we amended the term of the award, extending the valuation date for the payment in cash to December 31, 2017, and the financial targets and allowed for payments in cash from 2018 through 2020 based on collection of financed customer receivables that existed as of the valuation date. We established a liability for the future payment for the repurchase of subsidiary units under the terms of the agreement based on estimating revenue, working capital, EBITDA and EBITDA margin of the subsidiary units over the period of the award through the repurchase date. We estimated the fair value of the liability by using a Monte Carlo simulation model for determining each of the projected measures by using an expected distribution of potential outcomes. The fair value of the liability is calculated with thousands of projected outcomes, the results of which are averaged and then discounted to estimate the present value. At each reporting date until the respective payment dates, we remeasure this liability, using the same valuation approach and record any changes in the employee's compensation expense in general and administrative expense. We recorded a liability of $2.7 million in accounts payable, accrued expenses and other current liabilities and $0.3 million in other liabilities related to this commitment in our condensed consolidated balance sheet as of March 31, 2017. We recorded a liability of $2.5 million in accounts payable, accrued expenses and other current liabilities and a liability of $0.3 million in other liabilities related to this commitment in our condensed consolidated balance sheet as of December 31, 2016. For the three months ended March 31, 2017 and 2016, we recorded compensation expense of $0.2 million related to this award in general and administrative expense. As this award is payable in cash, the expense was not recorded in stock-based compensation for any of the periods. Warrants On March 30, 2015, we issued performance-based warrants to two employees, which give these individuals the right to purchase up to 54,694 shares of our common stock in the aggregate if certain performance targets are achieved. The performance-based warrants, each for 27,347 shares of our common stock, have an exercise price of $10.97 per share and we may elect to terminate the warrants in exchange for a one-time cash settlement in the event we have a change in control. If the warrants become exercisable, the number of shares that become exercisable which cannot exceed 27,347 shares for each warrant, is based upon the achievement of certain minimum annual revenue targets. These warrants will expire upon the earlier of March 2025 or the date upon which the holder of the warrant is no longer our employee or an employee of an affiliate of ours. We believe that the achievement of the minimum annual revenue targets is probable, and we began recognizing expense related to these performance-based warrants as of April 1, 2015. These warrants were not exercisable as of March 31, 2017 and December 31, 2016 because the performance requirements had not been met. We recorded less than $0.1 million of expense associated with the performance-based warrants during the three months ended March 31, 2017 and 2016. |
Earnings Per Share |
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Earnings Per Share | Earnings Per Share Basic and Diluted Earnings Per Share The components of basic and diluted earnings per share, or EPS, are as follows (in thousands, except share and per share amounts):
The following securities have been excluded from the calculation of diluted weighted average common shares outstanding because the effect is anti-dilutive:
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Significant Service Providers |
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Mar. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Significant Service Providers | Significant Service Provider Partners During the three months ended March 31, 2017 and 2016, our 10 largest revenue service provider partners accounted for 60% of our revenue. Two of our service provider partners individually represented greater than 10% but not more than 15% of our revenue for the three months ended March 31, 2017. One of our service provider partners individually represented greater than 10% but not more than 15% of our revenue for the three months ended March 31, 2016. Trade accounts receivable from one service provider partner totaled $8.6 million as of March 31, 2017. No other individual service provider partner represented more than 10% of accounts receivable as of March 31, 2017. No individual service provider partner represented more than 10% of accounts receivable as of December 31, 2016. |
Income Taxes |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For purposes of interim reporting, our annual effective income tax rate is estimated in accordance with ASC 740-270, "Interim Reporting." This rate is applied to the pre-tax book income of the entities expected to be benefited during the year. Discrete items that impact the tax provision were recorded in the period incurred. Our effective income tax rate was 12.1% for the three months ended March 31, 2017, as compared to 36.8% for the same period in the prior year. Our effective tax rate was below the statutory rate primarily due to recognizing the tax windfall benefits from employee stock-based payment transactions through the income statement provision for income taxes in the period incurred, as well as the research and development tax credits claimed, partially offset by the impact of state taxes and non-deductible meal and entertainment expenses. We adopted the accounting provision that simplified the tax for employee-stock based exercises in the first quarter of 2017. Prior to adoption of the new accounting provision, tax windfall benefits were required to be recorded in accumulated paid-in capital. We recognize a valuation allowance if, based on the weight of available evidence, both positive and negative, it is more likely than not that some portion, or all, of net deferred tax assets will not be realized. Based on our historical and expected future taxable earnings, we believe it is more likely than not that we will realize all of the benefit of the existing deferred tax assets as of March 31, 2017 and December 31, 2016. Accordingly, we have not recorded a valuation allowance as of March 31, 2017 and December 31, 2016. We apply guidance for uncertainty in income taxes that requires the application of a more likely than not threshold to the recognition and de-recognition of uncertain tax positions. If the recognition threshold is met, this guidance permits us to recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is more likely than not to be realized upon settlement. We recorded an unrecognized tax benefit of less than $0.1 million for research and development tax credits claimed during the three months ended March 31, 2017. For the three months ended March 31, 2017, we recorded interest for the period on prior year research and development tax credits we claimed. As of March 31, 2017 and December 31, 2016, we had accrued $26 thousand and $21 thousand of total interest expense related to unrecognized tax benefits. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. We are not aware of any events that make it reasonably possible that there would be a significant change in our unrecognized tax benefits over the next 12 months. Our cumulative liability for uncertain tax positions was $0.7 million as of March 31, 2017 and December 31, 2016, and if recognized, would reduce our income tax expense and the effective tax rate. |
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Segment Information | Segment Information We have two reportable segments:
Our chief operating decision maker is our chief executive officer. Management determined the operational data used by the chief operating decision maker is that of the two reportable segments. Management bases strategic goals and decisions on these segments and the data presented below is used to measure financial results. On March 8, 2017, we completed the Acquisition. Connect provides an interactive security and home automation software platform for service providers. Piper designs, produces and sells an all-in-one video and home automation hub. Piper currently operates both a retail do-it-yourself product business and a channel oriented business. On January 1, 2017, we completed the acquisition of ObjectVideo Labs from ObjectVideo. ObjectVideo was a pioneer in the fields of video analytics and computer vision with technology that extracted meaning and intelligence from video streams in real-time to enable object tracking, pattern recognition and activity identification. We anticipate that the ObjectVideo Labs engineering team's capabilities and expertise will accelerate our research and development of video services and video analytic applications. Connect's and ObjectVideo Labs' financial results from the closing of the respective acquisitions through March 31, 2017 are included in the Alarm.com segment. Piper's financial results from the closing of the acquisition through March 31, 2017 are included in the Other segment. Our Alarm.com segment represents our cloud-based platform for the intelligently connected property and related solutions that contributed over 94% of our revenue for the three months ended March 31, 2017 and 2016. Our Other segment is focused on researching and developing home and commercial automation, and energy management products and services in adjacent markets. Inter-segment revenue includes sales of hardware between our segments. Management evaluates the performance of its segments and allocates resources to them based on operating income. The reportable segment operational data is presented in the table below (in thousands):
We derived substantially all revenue from North America for the three months ended March 31, 2017 and 2016. Substantially all of our long-lived assets were located in North America as of March 31, 2017 and December 31, 2016. |
Related Party Transactions |
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Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions In September 2016, we entered into dealer and loan agreements with a distribution partner. The dealer agreement enables the distribution partner to resell our SaaS services and hardware to their subscribers. Under the loan agreements, we agreed to loan the distribution partner up to $4.0 million, collateralized by all assets owned by the distribution partner. The loan has two advance periods which begin each year in October and end during the following January until August 31, 2019, the term date of the loan. Interest on the outstanding principal accrues at a rate per annum equal to the greater of 6% or the LIBOR rate plus 4%, as determined on the first date of each annual advance period. The borrower has the option to extend the term of the loan for two successive terms of one year each. During the first quarter of 2017, our distribution partner drew $1.0 million at a rate of 6.0% per annum. The $4.0 million and $3.0 million loan receivable balances as of March 31, 2017 and December 31, 2016 were included in other current assets. For the three months ended March 31, 2017, we recorded less than $0.1 million of interest income related to this note receivable and we recognized $0.2 million of revenue. No interest income and no revenue was recognized during the three months ended March 31, 2016 related to this distribution partner. Our accounts receivable balance from this distribution partner was less than $0.1 million as of March 31, 2017 and December 31, 2016. Subsequent to March 31, 2017 and prior to the filing of this Quarterly Report on Form 10-Q, we entered into a subordinated credit agreement with the distribution partner. Under the subordinated credit agreement we agreed to loan the distribution partner $3.0 million, with a maturity date of November 21, 2022. Interest on the outstanding principal balance accrues at a rate of 8.5% per annum and requires monthly interest payments. Our installation partner in which we have a 48.2% ownership interest performs installation services for security dealers and also provides installation services for us and certain of our subsidiaries. On December 11, 2015, we purchased an additional 9,290 common units of the same company for $0.2 million, which did not change our proportional share of ownership interest. We account for this investment using the equity method (see Note 7). We recorded $0.3 million of cost of hardware and other revenue in connection with this installation partner for the three months ended March 31, 2017, as compared to $0.4 million for the same period in the prior year. As of March 31, 2017 and December 31, 2016, the accounts payable balance to our installation partner was $0.1 million. In September 2014, we loaned $0.3 million to our installation partner under a secured promissory note that accrues interest at 8.0%. Interest is payable monthly with the entire principal balance plus accrued but unpaid interest due at maturity in September 2018. We recorded $6,300 of interest income related to this note receivable for the three months ended March 31, 2017, as compared to $6,000 for the same period in the prior year. |
Basis of Presentation (Policies) |
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Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include our accounts and those of our majority-owned and controlled subsidiaries after elimination of intercompany accounts and transactions. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission, or SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual financial statements. They should be read together with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2016 appearing in our Annual Report on Form 10-K filed with the SEC on March 16, 2017, or the 2016 Annual Report. The condensed consolidated balance sheet data as of December 31, 2016 was derived from our audited financial statements, but does not include all disclosures required by GAAP for annual financial statements. In the opinion of management, these condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of the results of operations, financial position and cash flows. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2017. |
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Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates. Estimates are used when accounting for revenue recognition, allowances for doubtful accounts receivable, allowance for hardware returns, estimates of obsolete inventory, long-term incentive compensation, stock-based compensation, income taxes, legal reserves, contingent consideration and goodwill and intangible assets. |
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Internal-Use Software | Internal-Use Software We capitalize the costs directly related to the design of internal-use software for development of our Alarm.com and other SaaS platforms during the application development stage of the projects. The costs are primarily comprised of salaries, benefits and stock-based compensation expense of the project engineers and product development teams. Our internally developed software is reported at cost less accumulated depreciation. Depreciation begins once the project is ready for its intended use, which is usually when the code goes into production in weekly software builds on our platform. We depreciate the asset on a straight-line basis over a period of three years, which is the estimated useful life. We utilize continuous agile development methods to update our software for our SaaS multi-tenant platform on a weekly basis, which primarily consists of bug-fixes and user interface changes. We evaluate whether a project should be capitalized if it adds significant functionality to our platform. Maintenance activities or minor upgrades are expensed in the period performed. |
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External Software | External Software Costs incurred in researching and developing a computer software product that will be marketed and sold are charged to expense when incurred until technological feasibility is established. Technological feasibility is established upon completion of a detailed program design or, in its absence, completion of a working model (a beta version). After technological feasibility is established, the salaries, benefits and stock-based compensation expense of the project engineers and product development teams performing coding and testing are capitalized. Cost capitalization ceases when the product is available for general release. The Connect software is typically developed in an agile environment with frequent revisions to product release features and functions. Agile development results in a short duration between completion of the product specifications and general release of the product. Accordingly, as of March 31, 2017, we do not have any capitalized external software due to the shorter development cycle associated with agile development. |
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Revenue Recognition and Deferred Revenue, SaaS and License Revenue, and Hardware and Other Revenue | Revenue Recognition and Deferred Revenue We derive our revenue from three primary sources: the sale of cloud-based SaaS services on our integrated Alarm.com platform, the sale of licenses and services on the newly-acquired Connect software platform and the sale of hardware products. We sell our platform and hardware solutions to service provider partners that resell our solutions and hardware to home and business owners, who are the service provider partners’ customers, and whom we refer to as our subscribers. We also sell our hardware to distributors who resell the hardware to service provider partners. We enter into contracts with our service provider partners that establish pricing for access to our platform solutions and for the sale of hardware. These contracts typically have an initial term of one year, with subsequent renewal terms of one year. Our service provider partners typically enter into contracts with our subscribers, which our service provider partners have indicated range from three to five years in length. Our hardware includes cellular radio modules that enable access to our cloud-based platform, as well as video cameras, image sensors and other peripherals. Our service provider partners may purchase our hardware in anticipation of installing the hardware in a home or business when they create a new subscriber account, or for use in an existing subscriber’s property. The purchase of hardware occurs in a transaction that is separate and typically in advance of the purchase of our platform services. Service provider partners transact with us to purchase our platform solutions and resell our solutions to a new subscriber, or to upgrade or downgrade the solutions of an existing subscriber, at which time the subscriber’s access to our platform solutions is enabled and the delivery of the services commences. The purchase of platform solutions and the purchase of hardware are separate transactions because at the time of sale of the hardware, the service provider partner is not obligated to and may not purchase a platform solution for the hardware sold, and the level and duration of platform solutions, if any, to be provided through the hardware sold cannot be determined. We recognize revenue with respect to our solutions when all of the following conditions are met:
We consider a signed contract with a service provider partner to be persuasive evidence that an agreement exists, and the fees to be fixed or determinable if the fees are contractually agreed to with our service provider partners. Collectibility is evaluated based on a number of factors, including a credit review of new service provider partners, and the payment history of existing service provider partners. If collectibility is not reasonably assured, revenue is deferred until collection becomes reasonably assured, which is generally upon the receipt of payment. SaaS and License Revenue We generate the majority of our SaaS and license revenue primarily from monthly fees charged to our service provider partners sold on a per subscriber basis for access to our cloud-based intelligently connected property platform and related solutions. Our fees per subscriber vary based upon the service plan and features utilized. Under terms in our contractual arrangements with our service provider partners, we are entitled to payment and recognize revenue based on a monthly fee that is billed in advance of the month of service. We have demonstrated that we can sell our SaaS offering on a stand-alone basis, as it can be sold separately from hardware and activation services. As there is neither a minimum required initial service term nor a stated renewal term in our contractual arrangements, we recognize revenue over the period of service, which is monthly. Our service provider partners typically incur and pay the same monthly fee per subscriber account for the entire period a subscriber account is active. We also generate SaaS and license revenue from monthly fees charged to service providers sold on a per subscriber basis for access to our newly-acquired Connect software platform. The Connect software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center. Our agreements for the Connect platform solution typically include software and services, such as post-contract customer support, or PCS. Software sales that include multiple elements are typically allocated to the various elements based on vendor-specific objective evidence of fair value, or VSOE. There have been no separate sales of PCS, as PCS is always bundled with the software license for the Connect platform solution. Therefore, the VSOE of fair value for PCS cannot be established. The entire Connect arrangement fee is recognized ratably over the period during which the services are expected to be performed or the PCS period, whichever is longer, once the software is delivered and services have commenced, if all the other basic revenue recognition criteria have been met. Under terms in our contractual arrangements with our service provider partners, we are entitled to payment of a monthly fee for Connect that is billed per subscriber for the month of service. We recognize revenue over the period of service, which is monthly. Our service provider partners typically incur and pay the same monthly fee per subscriber account for the entire period a subscriber account is active. We offer multiple service level packages for our platform solutions including a range of solutions and a range of a la carte add-ons for additional features. The fee paid by our service provider partners each month for the delivery of our solutions is based on the combination of packages and add-ons enabled for each subscriber. We utilize tiered pricing plans where our service provider partners may receive prospective pricing discounts driven by volume. We also generate SaaS and license revenue from the fees paid to us when we license our intellectual property to service provider partners on a per customer basis for use of our patents. In addition, in certain markets our EnergyHub subsidiary sells its demand response software with an annual service fee, with pricing based on the number of subscribers or amount of aggregate electricity demand made available for a utility’s or market’s control. Hardware and Other Revenue We generate hardware and other revenue from the sale of cellular radio modules that provide access to our cloud-based platform, from the sale of video cameras and from the sale of other devices, including image sensors and peripherals. We recognize hardware and other revenue when the hardware is received by our service provider partner or distributor, net of a reserve for estimated returns. Amounts due from the sale of hardware are payable in accordance with the terms of our agreements with our service provider partners or distributors, and are not contingent on resale to end-users, or to service provider partners in the case of sales of hardware to distributors. Our terms for hardware sales sold directly to either service provider partners or distributors typically allow for the return of hardware up to one year past the date of sale. Our distributors sell directly to our service provider partners under terms between the two parties. We record a percentage of hardware and other revenue of approximately 2 to 5%, based on historical returns, as a reserve against revenue for hardware returns. We evaluate our hardware reserve on a quarterly basis or if there is an indication of significant changes in return experience. Historically, our returns of hardware have not significantly differed from our estimated reserve. Hardware and other revenue also includes activation fees charged to service provider partners for activation of a new subscriber account on our platform, as well as fees paid by service provider partners for our marketing services. Our service provider partners use services on our platform, such as support tools and applications, to assist in the installation of our solutions in a subscriber’s property. This installation marks the beginning of the service period on our platform and on occasion, we earn activation revenue for fees charged for this service. The activation fee is non-refundable, separately negotiated and specified in our contractual arrangements with our service provider partners and is charged to the service provider partner for each subscriber activated on our platform. Activation fees are not offered on a stand-alone basis separate from our SaaS offering and are billed and received at the beginning of the arrangement. We record activation fees initially as deferred revenue and we recognize these fees ratably over the expected term of the subscribers’ account which we estimate is ten years based on our annual attrition rate. The portion of these activation fees included in current and long-term deferred revenue as of our balance sheet date represents the amounts that will be recognized ratably as revenue over the following twelve months, or longer as appropriate, until the ten-year expected term is complete. |
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Cost of Revenue | Cost of Revenue Our cost of SaaS and license revenue primarily includes the amounts paid to wireless network providers and, to a lesser extent, the costs of running our network operation centers. We record the salaries and benefits of the department dedicated to providing service exclusively to a specific service provider for the Connect platform to cost of SaaS and license revenue. Our cost of hardware and other revenue primarily includes cost of raw materials and amounts paid to our third-party manufacturer for production and fulfillment of our cellular radio modules and image sensors, and procurement costs for our video cameras, which we purchase from an original equipment manufacturer, and other devices. Our cost of revenue excludes amortization and depreciation. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted On March 30, 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” which simplifies several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The update is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and we adopted ASU 2016-09 during the first quarter of 2017. The adoption of this standard had the following impact on our financial statements:
On July 22, 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which requires entities to measure most inventory "at the lower of cost and net realizable value," thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market (market in this context is defined as one of three different measures). The guidance does not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. Under current guidance, an entity subsequently measures inventory at the lower of cost or market, with market defined as replacement cost provided that it is not above the ceiling (net realizable value) or below the floor (net realizable value less an approximately normal profit margin) which is unnecessarily complex. The amendment does not change other guidance on measuring inventory. The amendment is effective for annual periods, including periods within those annual periods beginning after December 15, 2016 with early adoption permitted. We adopted this pronouncement prospectively in the first quarter of 2017, and the adoption of this pronouncement did not have a material effect on our financial statements. On January 26, 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment," which removes step two of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment amount will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption permitted for goodwill impairment tests performed after January 1, 2017. We adopted this guidance prospectively during the three months ended March 31, 2017. Our goodwill impairment test is performed annually as of October 1st, therefore the adoption had no impact to our financial statements. . Not yet adopted Revenue from Contracts with Customers (Topic 606): We are required to adopt ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" and its updates and amendments in the first quarter of 2018. We have developed a project plan for adoption focused first on the largest volume of contracts, our standard service provider partner agreement, in an effort to determine the impact of adoption on our revenue recognition policies, processes and systems. We expect to complete our evaluation of this standard service provider partner agreement in the second quarter of 2017. During the first quarter of 2017, we began to evaluate our non-standard service provider partner agreements including our 10 largest revenue service provider partners which account for approximately 60% of our revenue. The next stages of our adoption plan will focus on assessing the impact of adopting this standard on our subsidiaries' service provider partner agreements and sales commissions. The new standard requires significantly more disclosures and we anticipate putting processes in place to collect the data required for these additional disclosures. A summary of these standards and requirements are as follows: On May 9, 2016, the FASB issued ASU 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients," and on April 14, 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”. ASU 2016-12 and 2016-10 both amend the guidance in ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is not yet effective. ASU 2016-12 clarifies guidance on assessing collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modification within Topic 606. ASU 2016-10 clarifies guidance related to identifying performance obligations and licensing implementation guidance. These updates are effective with the same transition requirements as ASU 2014-09, as amended. On March 17, 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net)” which amends the guidance in ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," which is not yet effective. The update clarifies the implementation guidance on principal versus agent considerations. The update is effective with the same transition requirements as ASU 2014-09, as amended. On August 12, 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which defers the effective date for all entities for one year of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” issued on May 28, 2014. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The guidance supersedes the revenue recognition guidance in Topic 605, “Revenue Recognition,” and most industry-specific guidance throughout the Industry Topics of the FASB Accounting Standards Codification. The guidance also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition - Contract-Type and Production-Type Contracts." ASU 2014-09, as amended, is effective for annual periods, and interim periods within those years, beginning after December 31, 2017. An entity is required to apply the amendments using one of the following two methods: (1) retrospectively to each prior period presented with three possible expedients: (a) for completed contracts that begin and end in the same reporting period no restatement is required; (b) for completed contract with variable consideration an entity may use the transaction price at completion rather than restating estimated variable consideration amounts in comparable reporting periods; and (c) for comparable reporting periods before date of initial application reduced disclosure requirements related to transaction price; (2) retrospectively with the cumulative effect of initially applying the amendment recognized at the date of initial application with additional disclosures for the differences of the prior guidance to the reporting periods compared to the new guidance and an explanation of the reasons for significant changes. Other accounting standards: On January 5, 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805) - Clarifying the Definition of a Business," which provides guidance to assist entities in evaluating when a set of transferred assets and activities is a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. The amendment is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We are required to adopt ASU 2017-01 no later than the first quarter of 2018. On February 25, 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. The update also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are required to adopt ASU 2016-02 no later than the first quarter of 2019, and we are currently assessing the impact of this pronouncement on our financial statements. We have begun to evaluate our existing leases which all have been classified as operating leases under Topic 840. We anticipate using some of the available practical expedients upon adoption. We have not yet determined the amount of operating and financing lease liabilities and corresponding right-of-use assets we will record on our balance sheet, however, we anticipate that assets and liabilities will increase materially when our leases are recorded under the new standard. |
Accounts Receivable, Net (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Accounts Receivable | The components of accounts receivable, net are as follows (in thousands):
|
Inventory (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Inventory | The components of inventory are as follows (in thousands):
|
Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consideration Paid to SecurityTrax and Estimated Fair Value of Tangible and Intangible Net Assets Acquired | The table below sets forth the purchase consideration and the preliminary allocation to estimated fair value of the tangible and intangible net assets acquired (in thousands):
The table below sets forth the purchase consideration and the preliminary allocation to estimated fair value of the tangible and intangible net assets acquired (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition, Pro Forma Information | The following table presents the revenue and earnings of the business combinations in the year of acquisition as reported within the consolidated financial statements for the three months ended March 31, 2017 (in thousands):
The pro forma adjustments were based on available information and upon assumptions that we believe are reasonable to reflect the impact of these acquisitions on our historical financial information on a supplemental pro forma basis, as follows (in thousands):
|
Goodwill and Intangible Assets, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The changes in goodwill by reportable segment are outlined below (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | The following table reflects changes in the net carrying amount of the components of intangible assets (in thousands):
The following tables reflect the weighted average remaining life and carrying value of finite-lived intangible assets (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Estimated Amortization Expense | The following table reflects the future estimated amortization expense for intangible assets (in thousands):
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents our assets and liabilities measured at fair value on a recurring basis (in thousands):
|
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Summary of Fair Value of Level 3 Liability | The following table summarizes the change in fair value of the Level 3 liabilities for subsidiary unit awards and contingent consideration liability from acquisition (in thousands):
|
Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable. Accrued Expenses and Other Current Liabilities | The components of accounts payable, accrued expenses and other current liabilities are as follows (in thousands):
The components of other liabilities are as follows (in thousands):
|
Stock-Based Compensation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense is included in the following line items in the accompanying condensed consolidated statements of operations (in thousands):
The following table summarizes the components of non-cash stock-based compensation expense (in thousands):
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Summary of Assumptions Used for Estimating Fair Value of Stock Options Granted | The following table summarizes the assumptions used for estimating the fair value of stock options assumed from the Connect business unit of Icontrol:
The following table summarizes the assumptions used for estimating the fair value of stock options granted :
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Summary of Stock Option Activity | The following table summarizes stock option activity for the three months ended March 31, 2017:
The following table summarizes assumed stock option activity for the three months ended March 31, 2017:
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Summary of Restricted Stock Unit Activity | The following table summarizes activity for the RSUs for the three months ended March 31, 2017:
|
Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Basic and Diluted EPS | The components of basic and diluted earnings per share, or EPS, are as follows (in thousands, except share and per share amounts):
|
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Schedule of Securities Excluded from Calculation of Diluted Weighted Average Common Shares Outstanding Due to Anti-dilutive Effect | The following securities have been excluded from the calculation of diluted weighted average common shares outstanding because the effect is anti-dilutive:
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reportable Segment Operational Data | The reportable segment operational data is presented in the table below (in thousands):
|
Organization (Details) service_provider in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
service_provider
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of trusted service providers (over 6000) | 6 |
Basis of Presentation Narrative (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
source
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Property, Plant and Equipment [Line Items] | |||
Number of primary revenue sources | source | 3 | ||
Service provider contract term | 1 year | ||
Service provider contract renewal term | 1 year | ||
Sales returns period | 1 year | ||
Reclassification to deferred income taxes | $ 12,969 | $ 7,286 | |
Increase to accumulated deficit | (113,965) | $ (117,909) | |
Increase to additional paid-in capital | $ 311,909 | 308,697 | |
Software Development | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 3 years | ||
Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Subscriber contract term | 3 years | ||
Reserve for sales returns, percentage | 2.00% | ||
Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Subscriber contract term | 5 years | ||
Reserve for sales returns, percentage | 5.00% | ||
Activation Fees | |||
Property, Plant and Equipment [Line Items] | |||
Deferred revenue | $ 11,000 | 11,200 | |
Activation Fees | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Period of revenue recognition | 12 months | ||
Activation Fees | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Period of revenue recognition | 10 years | ||
Accounting Standards Update 2016-09, Statutory Tax Withholding Component [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Reclassification to deferred income taxes | $ 366 | ||
Accounting Standards Update 2016-09 | |||
Property, Plant and Equipment [Line Items] | |||
Increase to accumulated deficit | 19 | ||
Increase to additional paid-in capital | 31 | ||
Increase to deferred tax assets | $ 12 | ||
10 Largest Service Providers | Service Provider Concentration Risk | Revenue | |||
Property, Plant and Equipment [Line Items] | |||
Concentration risk percentage | 60.00% | 60.00% |
Accounts Receivable, Net - Schedule of Components of Accounts Receivable (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Receivables [Abstract] | ||
Accounts receivable | $ 42,601 | $ 33,406 |
Allowance for doubtful accounts | (1,385) | (1,282) |
Allowance for product returns | (2,327) | (2,314) |
Accounts receivable, net | $ 38,889 | $ 29,810 |
Accounts Receivable, Net - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Provision for doubtful accounts | $ 128 | $ 155 |
Reserve for product returns | 554 | 473 |
Hardware and Other Revenue | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Reserve for product returns | $ 600 | $ 500 |
Inventory (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,984 | $ 4,313 |
Finished goods | 3,305 | 6,230 |
Total inventory | $ 7,289 | $ 10,543 |
Acquisitions - Connect and Piper Business Units from Icontrol Networks $ in Thousands |
1 Months Ended | 3 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Mar. 08, 2017
USD ($)
|
Mar. 07, 2017
USD ($)
|
Feb. 22, 2017
business_unit
|
Mar. 31, 2017
USD ($)
shares
|
Mar. 31, 2017
USD ($)
shares
|
Jun. 30, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Business Acquisition [Line Items] | ||||||||
Assumed options from business acquisition | $ 1,375 | $ 0 | ||||||
Goodwill | $ 64,102 | $ 64,102 | $ 24,723 | |||||
Connect And Piper | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of business units | business_unit | 2 | |||||||
Consideration | $ 149,875 | $ 148,500 | ||||||
Escrow deposit | 14,500 | |||||||
Cash on hand paid to acquire business | 81,500 | |||||||
Proceeds from line of credit | 67,000 | $ 67,000 | ||||||
Assumed options from business acquisition | 1,375 | |||||||
Goodwill | 36,721 | |||||||
Connect | ||||||||
Business Acquisition [Line Items] | ||||||||
Unvested employee options converted (in shares) | shares | 2,001,387 | |||||||
Assumed (in shares) | shares | 70,406 | |||||||
Fair value of unvested stock options | 1,700 | |||||||
Assumed options from business acquisition | 1,400 | |||||||
Compensation cost not yet recognized on nonvested awards | $ 300 | $ 300 | ||||||
Piper | ||||||||
Business Acquisition [Line Items] | ||||||||
Deferred tax asset | 4,100 | |||||||
Developed Technology | Connect And Piper | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | 4,770 | |||||||
Developed Technology | Connect | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 4,400 | |||||||
Weighted-average estimated useful life of intangible assets acquired | 3 years | |||||||
Developed Technology | Piper | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 300 | |||||||
Customer Relationships Group 1 | Connect | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 92,500 | |||||||
Weighted-average estimated useful life of intangible assets acquired | 12 years | |||||||
Customer Relationships Group 2 | Connect | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 700 | |||||||
Weighted-average estimated useful life of intangible assets acquired | 4 years | |||||||
Trade Name | Connect And Piper | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 170 | |||||||
Trade Name | Piper | ||||||||
Business Acquisition [Line Items] | ||||||||
Weighted-average estimated useful life of intangible assets acquired | 3 years | |||||||
Options to be recognized over future vesting periods | Connect | ||||||||
Business Acquisition [Line Items] | ||||||||
Compensation cost not yet recognized on nonvested awards | $ 300 |
Acquisitions - Schedule of Consideration Paid to Icontrol and Estimated Fair Value of Tangible and Intangible Net Assets Acquired (Details) - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 08, 2017 |
Mar. 31, 2017 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Calculation of Purchase Consideration: | |||||
Assumed options from business acquisition | $ 1,375 | $ 0 | |||
Estimated Tangible and Intangible Net Assets: | |||||
Goodwill | $ 64,102 | $ 24,723 | |||
Connect And Piper | |||||
Calculation of Purchase Consideration: | |||||
Cash paid, net of working capital adjustment | $ 148,500 | ||||
Assumed options from business acquisition | 1,375 | ||||
Total consideration | 149,875 | $ 148,500 | |||
Estimated Tangible and Intangible Net Assets: | |||||
Cash | 211 | ||||
Accounts receivable | 11,342 | ||||
Current assets | 823 | ||||
Long-term assets | 4,446 | ||||
Current liabilities | (1,605) | ||||
Long-term liabilities | 253 | ||||
Goodwill | 36,721 | ||||
Total estimated tangible and intangible net assets | 149,875 | ||||
Connect And Piper | Customer Relationships | |||||
Estimated Tangible and Intangible Net Assets: | |||||
Intangible assets acquired | 93,250 | ||||
Connect And Piper | Developed Technology | |||||
Estimated Tangible and Intangible Net Assets: | |||||
Intangible assets acquired | 4,770 | ||||
Connect And Piper | Trade Name | |||||
Estimated Tangible and Intangible Net Assets: | |||||
Intangible assets acquired | $ 170 |
Acquisitions Acquisitions - ObjectVideo Acquisition (Details) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 64,102 | $ 24,723 | |
ObjectVideo | |||
Business Acquisition [Line Items] | |||
Cash on hand paid to acquire business | $ 6,000 | ||
Goodwill | 2,658 | ||
Developed Technology | ObjectVideo | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired | $ 3,400 | ||
Weighted-average estimated useful life of intangible assets acquired | 2 years |
Acquisitions Acquisitions - Schedule of Consideration Paid to ObjectVideo and Estimated Fair Value of Tangible and Intangible Net Assets Acquired (Details) - USD ($) $ in Thousands |
Jan. 01, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Estimated Tangible and Intangible Net Assets: | |||
Goodwill | $ 64,102 | $ 24,723 | |
ObjectVideo | |||
Calculation of Purchase Consideration: | |||
Cash paid, net of working capital adjustment | $ 6,000 | ||
Estimated Tangible and Intangible Net Assets: | |||
Current liabilities | (58) | ||
Goodwill | 2,658 | ||
Total estimated tangible and intangible net assets | 6,000 | ||
Developed Technology | ObjectVideo | |||
Estimated Tangible and Intangible Net Assets: | |||
Developed technology | $ 3,400 |
Acquisitions Acquisitions - Unaudited Pro Forma Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Business Combinations [Abstract] | ||
Pro forma revenue | $ 85,264 | $ 73,643 |
Pro forma net income | $ 6,433 | $ (8,380) |
Acquisitions Acquisitions - Business Combinations in Operations (Details) - Connect and Piper, and ObjectVideo $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Business Acquisition [Line Items] | |
Revenue | $ 2,557 |
Net loss | $ (885) |
Goodwill and Intangible Assets, Net - Schedule of Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 24,723 |
Goodwill acquired | 39,379 |
Ending balance | 64,102 |
Alarm.com | |
Goodwill [Roll Forward] | |
Beginning balance | 24,723 |
Goodwill acquired | 39,379 |
Ending balance | 64,102 |
Other | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Goodwill acquired | 0 |
Ending balance | $ 0 |
Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($) |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Mar. 08, 2017 |
Jan. 31, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Business Acquisition [Line Items] | ||||
Goodwill acquired | $ 39,379,000 | |||
Goodwill impairment | 0 | $ 0 | ||
Amortization | 1,493,000 | 500,000 | ||
Impairment of long-lived assets | 0 | $ 0 | ||
Alarm.com | ||||
Business Acquisition [Line Items] | ||||
Goodwill acquired | $ 39,379,000 | |||
Alarm.com | ObjectVideo | ||||
Business Acquisition [Line Items] | ||||
Goodwill acquired | $ 2,700,000 | |||
Alarm.com | Connect And Piper | ||||
Business Acquisition [Line Items] | ||||
Goodwill acquired | $ 36,700,000 |
Goodwill and Intangible Assets, Net - Schedule of Net Carrying Amount of Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Finite-lived Intangible Assets [Roll Forward] | ||
Beginning balance | $ 4,568 | |
Intangible assets acquired | 101,589 | |
Amortization | (1,493) | $ (500) |
Ending balance | 104,664 | |
Customer Relationships | ||
Finite-lived Intangible Assets [Roll Forward] | ||
Beginning balance | 3,363 | |
Intangible assets acquired | 93,250 | |
Amortization | (833) | |
Ending balance | 95,780 | |
Developed Technology | ||
Finite-lived Intangible Assets [Roll Forward] | ||
Beginning balance | 1,048 | |
Intangible assets acquired | 8,169 | |
Amortization | (646) | |
Ending balance | 8,571 | |
Trade Name | ||
Finite-lived Intangible Assets [Roll Forward] | ||
Beginning balance | 157 | |
Intangible assets acquired | 170 | |
Amortization | (14) | |
Ending balance | $ 313 |
Goodwill and Intangible Assets, Net - Schedule of Weighted Average Remaining Life and Carrying Value of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 118,793 | $ 17,204 |
Accumulated Amortization | (14,129) | (12,636) |
Net Carrying Value | 104,664 | 4,568 |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 103,916 | 10,666 |
Accumulated Amortization | (8,136) | (7,303) |
Net Carrying Value | $ 95,780 | $ 3,363 |
Customer Relationships | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted- average Remaining Life | 11 years 6 months | 3 years 9 months 19 days |
Developed Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 13,559 | $ 5,390 |
Accumulated Amortization | (4,988) | (4,342) |
Net Carrying Value | $ 8,571 | $ 1,048 |
Developed Technology | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted- average Remaining Life | 2 years 8 months 12 days | 4 years 1 month 20 days |
Trade Name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,084 | $ 914 |
Accumulated Amortization | (771) | (757) |
Net Carrying Value | $ 313 | $ 157 |
Trade Name | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted- average Remaining Life | 3 years 10 months 24 days | 4 years 3 months |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 234 | $ 234 |
Accumulated Amortization | (234) | (234) |
Net Carrying Value | $ 0 | $ 0 |
Other | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted- average Remaining Life | 0 days | 0 days |
Goodwill and Intangible Assets, Net - Schedule of Future Estimated Amortization Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2017 | $ 10,551 | |
2018 | 14,981 | |
2019 | 13,692 | |
2020 | 12,208 | |
2021 and thereafter | 53,232 | |
Net Carrying Value | $ 104,664 | $ 4,568 |
Investments in Other Entities - Home Service Provider (Details) - Connected Home Service Provider - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Apr. 20, 2016 |
Apr. 15, 2015 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Other Assets | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Cost method investment | $ 0.6 | $ 0.6 | ||
Variable Interest Entity, Not Primary Beneficiary | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Ownership interest in cost method investment | 14.30% | 12.60% | 12.40% | |
Cost method investment | $ 0.4 | |||
Variable Interest Entity, Not Primary Beneficiary | Series A Convertible Preferred Membership Units | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Cost method investment, shares | 20,000 | |||
Variable Interest Entity, Not Primary Beneficiary | Series B Convertible Preferred Membership Units | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Cost method investment, shares | 2,667 | |||
Variable Interest Entity, Not Primary Beneficiary | Series B-1 Convertible Preferred Membership Units | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Cost method investment, shares | 6,904 | 2,333 | ||
Cost method investment, share price | $ 20.19 | $ 23.31 | ||
Cost method investment, original cost | $ 0.1 | $ 0.1 |
Investments in Other Entities - Installation Partner (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 11, 2015 |
Sep. 30, 2014 |
|
Schedule of Equity Method Investments [Line Items] | ||||||
Gain/(loss) from equity method investment | $ 5 | $ (12) | ||||
Installation Partner | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity method investment, shares | 48,190 | 9,290 | ||||
Ownership percentage in equity method investment | 48.20% | |||||
Equity method investment, cost | $ 1,000 | $ 200 | ||||
Installation Partner | Other (expense) / income, net | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Gain/(loss) from equity method investment | 5 | $ (12) | ||||
Installation Partner | Other Assets | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity method investment, cost | 1,200 | |||||
Equity method investment | 40 | $ 35 | ||||
Installation Partner | Equity Method Investee | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Percent of net losses recorded | 100.00% | |||||
Gain/(loss) from equity method investment | $ (200) | |||||
Installation Partner | Equity Method Investee | Secured Promissory Note | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Related party notes receivable, face amount | $ 300 | |||||
Notes receivable, interest rate | 8.00% | |||||
Installation Partner | Equity Method Investee | Secured Promissory Note | Other Assets | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Related party notes receivable, face amount | $ 300 | |||||
Note receivable, noncurrent | $ 100 | |||||
Installation Partner | Equity Method Investee | Secured Promissory Note | Other Current Assets | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Note receivable, current | $ 100 |
Investments in Other Entities - Platform Partner (Details) - Platform Partner - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2014 |
Dec. 31, 2013 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Other Assets | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Cost method investment | $ 1.0 | $ 1.0 | ||
Variable Interest Entity, Not Primary Beneficiary | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Return on investment | $ 2.5 | |||
Variable Interest Entity, Not Primary Beneficiary | Series A Convertible Preferred Shares | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Cost method investment, original cost | $ 3.5 | |||
Cost method investment, shares | 3,548,820 | |||
Ownership interest in cost method investment | 18.70% | |||
Cost method investment | $ 0.2 | |||
Impairment losses | $ 0.3 | |||
Variable Interest Entity, Not Primary Beneficiary | Common Stock | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Ownership interest in cost method investment | 8.60% | |||
Shares converted | 3,548,820 | |||
2013 Secured Convertible Note | Variable Interest Entity, Not Primary Beneficiary | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Related party notes receivable, face amount | $ 2.0 | |||
Conversion rate | 12.50% | |||
Notes receivable | $ 1.9 | |||
Interest receivable | $ 0.2 | |||
2013 Secured Convertible Note | Variable Interest Entity, Not Primary Beneficiary | Automatic Conversion Feature | ||||
Schedule of Cost-method Investments [Line Items] | ||||
Related party notes receivable, face amount | $ 0.1 |
Other Assets - Patent Licenses (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross | $ 118,793 | $ 17,204 | |
Finite-lived, intangible assets, net | 104,664 | 4,568 | |
Amortization for patents and tooling | 247 | $ 134 | |
Patent Licenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross | 4,900 | ||
Finite-lived, intangible assets, net | 3,000 | $ 3,200 | |
Patent Licenses | Cost of SaaS and License Revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization for patents and tooling | $ 200 | $ 100 | |
Patent Licenses | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible asset, useful life | 3 years | ||
Patent Licenses | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible asset, useful life | 11 years |
Other Assets - Loan to a Distribution Partner (Details) |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
advance_period
renewal_option
|
Mar. 31, 2017
USD ($)
|
Mar. 31, 2016
USD ($)
|
May 10, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Issuances of notes receivable | $ 1,000,000 | $ 73,000 | |||
Notes Receivable | Distribution Partner | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Notes receivable, maximum available | $ 4,000,000.0 | ||||
Number of loan advance periods per year | advance_period | 2 | ||||
Notes receivable, interest rate | 6.00% | 6.00% | |||
Number of renewal options | renewal_option | 2 | ||||
Renewal term | 1 year | ||||
Issuances of notes receivable | $ 1,000,000 | ||||
Loan receivable | $ 4,000,000 | $ 3,000,000 | |||
Notes Receivable | Distribution Partner | London Interbank Offered Rate (LIBOR) | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Variable interest rate | 4.00% | ||||
Subsequent Event | Notes Receivable | Distribution Partner | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Notes receivable, maximum available | $ 3,000,000.0 | ||||
Notes receivable, interest rate | 8.50% |
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets: | ||
Total | $ 50,484 | $ 135,204 |
Liabilities: | ||
Subsidiary unit awards | 2,978 | 2,768 |
Contingent consideration liability from acquisition | 0 | 0 |
Total | 2,978 | 2,768 |
Money market account | ||
Assets: | ||
Money market account | 50,484 | 135,204 |
Level 1 | ||
Assets: | ||
Total | 50,484 | 135,204 |
Liabilities: | ||
Subsidiary unit awards | 0 | 0 |
Contingent consideration liability from acquisition | 0 | 0 |
Total | 0 | 0 |
Level 1 | Money market account | ||
Assets: | ||
Money market account | 50,484 | 135,204 |
Level 2 | ||
Assets: | ||
Total | 0 | 0 |
Liabilities: | ||
Subsidiary unit awards | 0 | 0 |
Contingent consideration liability from acquisition | 0 | 0 |
Total | 0 | 0 |
Level 2 | Money market account | ||
Assets: | ||
Money market account | 0 | 0 |
Level 3 | ||
Assets: | ||
Total | 0 | 0 |
Liabilities: | ||
Subsidiary unit awards | 2,978 | 2,768 |
Contingent consideration liability from acquisition | 0 | 0 |
Total | 2,978 | 2,768 |
Level 3 | Money market account | ||
Assets: | ||
Money market account | $ 0 | $ 0 |
Fair Value Measurements - Summary of Fair Value of Level 3 Subsidiary Unit Awards and Contingent Consideration (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Subsidiary unit awards | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 2,768 | $ 532 |
Total (gains) losses included in earnings | 210 | 18 |
Ending balance | 2,978 | 550 |
Contingent consideration liability from acquisition | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 0 | 230 |
Total (gains) losses included in earnings | 0 | (60) |
Ending balance | $ 0 | $ 170 |
Fair Value Measurements - Narrative (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
employee
award
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Other-than-temporary impairments | $ | $ 0 | $ 0 | |
Contingent Consideration, Earn Out Program | SecurityTrax | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Maximum amount of contingent consideration liability to be paid | $ | $ 2,000,000.0 | ||
Repurchase of Subsidiary Units, February 2011 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Number of employees to be granted awards | employee | 2 | ||
Number of awards in subsidiary unit agreement | award | 2 | ||
Number of awards subject to continued employment | award | 1 |
Liabilities - Components of Accounts Payable, Accrued Expenses, and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 20,051 | $ 18,289 |
Accrued expenses | 4,853 | 5,298 |
Subsidiary unit awards | 2,711 | 2,506 |
Other current liabilities | 4,214 | 2,207 |
Accounts payable, accrued expenses and other current liabilities | $ 31,829 | $ 28,300 |
Liabilities - Other Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Deferred rent | $ 11,152 | $ 11,056 |
Other liabilities | 1,339 | 2,501 |
Other liabilities | $ 12,491 | $ 13,557 |
Debt, Commitments and Contingencies - Debt (Details) |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 08, 2017
USD ($)
|
Mar. 07, 2017
USD ($)
|
Mar. 31, 2017
USD ($)
|
Mar. 31, 2016 |
Dec. 31, 2016
USD ($)
|
|
Revolving Credit Facility | Line of Credit | 2014 Facility | |||||
Debt Instrument [Line Items] | |||||
Current borrowing capacity | $ 75,000,000.0 | ||||
Maximum borrowing capacity | $ 125,000,000 | ||||
Effective interest rate (percent) | 3.13% | 2.46% | |||
Consolidated leverage ratio covenant (not to exceed) | 3.00 | ||||
Consolidated fixed charge coverage ratio covenant (at least) | 1.25 | ||||
Revolving Credit Facility | Line of Credit | 2014 Facility | Noncurrent Liabilities | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | $ 73,700,000 | $ 6,700,000 | |||
Revolving Credit Facility | Line of Credit | 2014 Facility | Minimum | |||||
Debt Instrument [Line Items] | |||||
Unused line commitment fee (percentage) | 0.20% | ||||
Revolving Credit Facility | Line of Credit | 2014 Facility | Maximum | |||||
Debt Instrument [Line Items] | |||||
Unused line commitment fee (percentage) | 0.25% | ||||
Revolving Credit Facility | Line of Credit | 2014 Facility | Federal Funds Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 0.50% | ||||
Revolving Credit Facility | Line of Credit | 2014 Facility | London Interbank Offered Rate (LIBOR) | Less than 1.00 | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 2.00% | ||||
Revolving Credit Facility | Line of Credit | 2014 Facility | London Interbank Offered Rate (LIBOR) | Less than 1.00 | Noncurrent Liabilities | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 2.00% | ||||
Revolving Credit Facility | Line of Credit | 2014 Facility | London Interbank Offered Rate (LIBOR) | Greater than or equal to 1.00 but less than 2.00 | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 2.25% | 2.25% | |||
Revolving Credit Facility | Line of Credit | 2014 Facility | London Interbank Offered Rate (LIBOR) | Greater than or equal to 2.00 | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (percent) | 2.50% | 2.50% | |||
Scenario One, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2014 Facility | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Interest rate terms, leverage ratio | 1.00 | ||||
Scenario Two, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2014 Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||||
Debt Instrument [Line Items] | |||||
Interest rate terms, leverage ratio | 1.00 | ||||
Scenario Two, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2014 Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||||
Debt Instrument [Line Items] | |||||
Interest rate terms, leverage ratio | 2.00 | ||||
Scenario Three, Leverage Ratio | Revolving Credit Facility | Line of Credit | 2014 Facility | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Interest rate terms, leverage ratio | 2.00 | ||||
Connect And Piper | |||||
Debt Instrument [Line Items] | |||||
Proceeds from line of credit | $ 67,000,000 | $ 67,000,000 |
Debt, Commitments and Contingencies - Repurchase of Subsidiary Units (Details) - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Founder and President | Other Current Liabilities | Repurchase of Subsidiary Units, February 2011 | ||
Related Party Transaction [Line Items] | ||
Due to related parties, noncurrent | $ 2,500,000 | |
Due to related parties, current | $ 2,700,000 | |
Founder and President | Other Liabilities | Repurchase of Subsidiary Units, February 2011 | ||
Related Party Transaction [Line Items] | ||
Due to related parties, noncurrent | 300,000 | |
Due to related parties, current | 300,000 | |
Founder and President | Repurchase of Subsidiary Units, September 2012 | ||
Related Party Transaction [Line Items] | ||
Fair value of commitment | 0 | 0 |
Founder and President | Other Liabilities | Repurchase of Subsidiary Units, September 2012 | ||
Related Party Transaction [Line Items] | ||
Due to related parties, noncurrent | $ 0 | $ 0 |
Debt, Commitments and Contingencies - Leases (Details) $ in Millions |
1 Months Ended | 3 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Aug. 31, 2014
USD ($)
|
Mar. 31, 2017
USD ($)
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
ft²
|
|
Leases, Operating [Abstract] | ||||
Lease renewal term | 5 years | |||
Available leasehold improvement allowance | $ 8.0 | $ 9.7 | ||
Square footage of additional office space | ft² | 30,662 | |||
Additional leasehold improvement allowance | $ 1.7 | |||
Available leasehold improvement allowance utilized | 7.9 | |||
Rent expense | $ 1.4 | $ 1.3 |
Debt, Commitments and Contingencies - Letters of Credit (Details) - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Line of Credit | Letter of Credit | 2014 Facility | ||
Line of Credit Facility [Line Items] | ||
Outstanding letters of credit | $ 0 | $ 0 |
Debt, Commitments and Contingencies Debt, Commitments and Contingencies - Commitments for Long-Lead Time Parts (Details) - USD ($) |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Piper | ||
Business Acquisition [Line Items] | ||
Deferred revenue | $ 600,000 | |
Repurchase of Subsidiary Units, September 2012 | Founder and President | Other Liabilities | ||
Business Acquisition [Line Items] | ||
Due to related parties, noncurrent | $ 0 | $ 0 |
Debt, Commitments and Contingencies - Legal Proceedings (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | |||||
---|---|---|---|---|---|---|---|
Apr. 25, 2017
claim
|
Mar. 08, 2017 |
Feb. 22, 2017
business_unit
|
Feb. 09, 2016
USD ($)
service_provider
|
Jun. 02, 2015
patent
claim
element
|
Sep. 30, 2015
patent
|
Mar. 31, 2017
service_provider
|
|
Loss Contingencies [Line Items] | |||||||
Number of service providers sued | service_provider | 6,000 | ||||||
Pending Litigation | |||||||
Loss Contingencies [Line Items] | |||||||
Number of service providers sued | service_provider | 1 | ||||||
Compensatory damages sought | $ | $ 7,000 | ||||||
Punitive damages sought | $ | $ 350 | ||||||
Number of patents instituted in suit | 1 | ||||||
Number of patents appealed | 1 | ||||||
Pending Litigation | Vivint, Inc. vs. Alarm.com Holdings, Inc | |||||||
Loss Contingencies [Line Items] | |||||||
Number of patents allegedly infringed upon by the company | 6 | ||||||
Pending application for inter partes review | claim | 1 | ||||||
Number of elements of a solution in a patent, potentially infringed (or more) | element | 1 | ||||||
Number of patents allegedly infringed by elements in solution | 1 | ||||||
Connect And Piper | |||||||
Loss Contingencies [Line Items] | |||||||
Number of business units | business_unit | 2 | ||||||
Period of stay | 60 days | ||||||
Subsequent Event | Pending Litigation | Alarm.com and ICN Acquisition, LLC vs. Protect America,Inc. and SecureNet Technologies, LLC | |||||||
Loss Contingencies [Line Items] | |||||||
Number of company's patents allegedly infringed | claim | 1 |
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | $ 1,313 | $ 852 |
Tax benefit from stock-based awards | 1,217 | 294 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | 983 | 833 |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | 288 | 0 |
Restricted stock awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | 19 | 0 |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | 23 | 19 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | 113 | 141 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | 569 | 227 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Stock-based compensation expense | $ 631 | $ 484 |
Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Jun. 30, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 56,150 | 456,550 | ||
Weighted average grant date fair value for stock options (in dollars per share) | $ 13.92 | $ 7.47 | ||
Fair value of stock options vested during period | $ 1,100 | $ 300 | ||
Aggregate intrinsic value of stock options exercised during period | $ 3,310 | $ 1,000 | ||
Dividend rate | 0.00% | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation cost not yet recognized on nonvested awards | $ 4,500 | |||
Compensation cost not yet recognized, period for recognition | 2 years 2 months 12 days | |||
Dividend rate | 0.00% | 0.00% | ||
2015 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common shares reserved for issuance | 4,700,000 | |||
Common shares reserved for issuance, annual increase period (not more than) | 10 years | |||
Common shares reserved for issuance, percentage of annual increase | 5.00% | |||
Shares available to be issued | 8,495,384 | |||
2009 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available to be issued | 0 | |||
2009 and 2015 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unvested shares of common stock outstanding | 25,793 | 29,835 | ||
2009 and 2015 Plan | Accounts Payable, Accrued Expenses and Other Current Liabilities | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Liability from proceeds of early exercise of stock options | $ 100 | $ 200 | ||
2009 and 2015 Plan | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 5 years | |||
Award expiration period | 10 years | |||
2009 and 2015 Plan | Stock options | Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Repurchase of unvested shares | 0 | 0 |
Stock-Based Compensation - Summary of Assumptions Used for Estimating Fair Value of Stock Options Granted (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend rate | 0.00% | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility | 50.50% | |
Volatility, minimum | 46.70% | |
Volatility, maximum | 47.20% | |
Expected term | 6 years 3 months 18 days | 6 years 3 months 18 days |
Risk-free interest rate | 1.40% | |
Risk-free interest rate, minimum | 2.10% | |
Risk-free interest rate, maximum | 2.20% | |
Dividend rate | 0.00% | 0.00% |
Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Number of Options | |||
Outstanding, beginning balance (in shares) | 3,547,528 | ||
Granted (in shares) | 56,150 | 456,550 | |
Exercised (in shares) | (122,926) | ||
Forfeited (in shares) | (32,607) | ||
Expired (in shares) | (414) | ||
Outstanding, ending balance (in shares) | 3,447,731 | 3,547,528 | |
Vested and expected to vest (in shares) | 3,473,524 | ||
Exercisable (in shares) | 2,224,394 | ||
Weighted Average Exercise Price per Share | |||
Outstanding, beginning balance, weighted average exercise price per share (in dollars per share) | $ 6.91 | ||
Granted, weighted average exercise price per share (in dollars per share) | 28.90 | ||
Exercised, weighted average exercise price per share (in dollars per share) | 0.94 | ||
Forfeited, weighted average exercise price per share (in dollars per share) | 11.59 | ||
Expired, weighted average exercise price per share (in dollars per share) | 8.70 | ||
Outstanding, ending balance, weighted average exercise price per share (in dollars per share) | 7.44 | $ 6.91 | |
Vested and expected to vest, weighted average exercise price per share (in dollars per share) | 7.42 | ||
Exercisable, weighted average exercise price per share (in dollars per share) | $ 4.14 | ||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||
Outstanding, weighted average remaining contractual life | 6 years 4 months 24 days | 6 years 4 months 24 days | |
Granted, weighted average remaining contractual life | 13 years 10 months 24 days | ||
Vested and expected to vest, weighted average remaining contractual life | 6 years 4 months 24 days | ||
Exercisable, weighted average remaining contractual life | 5 years 4 months 24 days | ||
Outstanding, aggregate intrinsic value | $ 80,355 | $ 74,267 | |
Exercised, aggregate intrinsic value | 3,310 | $ 1,000 | |
Vested and expected to vest, aggregate intrinsic value | 81,016 | ||
Exercisable, aggregate intrinsic value | $ 59,170 |
Stock-Based Compensation Stock-Based Compensation - Assumed Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Mar. 08, 2017 |
Mar. 31, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Dividend rate | 0.00% | ||||
Number of Options | |||||
Outstanding, beginning balance (in shares) | 3,547,528 | ||||
Vested and expected to vest (in shares) | 3,473,524 | 3,473,524 | |||
Exercisable (in shares) | 2,224,394 | 2,224,394 | |||
Outstanding, ending balance (in shares) | 3,447,731 | 3,447,731 | 3,547,528 | ||
Weighted Average Exercise Price per Share | |||||
Outstanding, beginning balance, weighted average exercise price per share (in dollars per share) | $ 6.91 | ||||
Vested and expected to vest, weighted average exercise price per share (in dollars per share) | $ 7.42 | 7.42 | |||
Exercisable, weighted average exercise price per share (in dollars per share) | 4.14 | 4.14 | |||
Outstanding, ending balance, weighted average exercise price per share (in dollars per share) | $ 7.44 | $ 7.44 | $ 6.91 | ||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||||
Outstanding, weighted average remaining contractual life | 6 years 4 months 24 days | 6 years 4 months 24 days | |||
Vested and expected to vest, weighted average remaining contractual life | 6 years 4 months 24 days | ||||
Exercisable, weighted average remaining contractual life | 5 years 4 months 24 days | ||||
Outstanding, aggregate intrinsic value | $ 80,355 | $ 80,355 | $ 74,267 | ||
Vested and expected to vest, aggregate intrinsic value | 81,016 | 81,016 | |||
Exercisable, aggregate intrinsic value | 59,170 | 59,170 | |||
Assumed options from business acquisition | $ 1,375 | $ 0 | |||
Weighted average grant date fair value for stock options (in dollars per share) | $ 13.92 | $ 7.47 | |||
Fair value of stock options vested during period | $ 1,100 | $ 300 | |||
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Volatility, minimum | 46.70% | ||||
Volatility, maximum | 47.20% | ||||
Expected term | 6 years 3 months 18 days | 6 years 3 months 18 days | |||
Risk-free interest rate, minimum | 2.10% | ||||
Risk-free interest rate, maximum | 2.20% | ||||
Dividend rate | 0.00% | 0.00% | |||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||||
Compensation cost not yet recognized on nonvested awards | $ 4,500 | $ 4,500 | |||
Compensation cost not yet recognized, period for recognition | 2 years 2 months 12 days | ||||
Connect | |||||
Number of Options | |||||
Outstanding, beginning balance (in shares) | 0 | ||||
Assumed (in shares) | 70,406 | ||||
Vested and expected to vest (in shares) | 70,406 | 70,406 | |||
Exercisable (in shares) | 1,775 | 1,775 | |||
Outstanding, ending balance (in shares) | 70,406 | 70,406 | 0 | ||
Weighted Average Exercise Price per Share | |||||
Outstanding, beginning balance, weighted average exercise price per share (in dollars per share) | $ 0.00 | ||||
Assumed, weighted average exercise price per share (in dollars per share) | 5.48 | ||||
Vested and expected to vest, weighted average exercise price per share (in dollars per share) | $ 5.48 | 5.48 | |||
Exercisable, weighted average exercise price per share (in dollars per share) | 4.39 | 4.39 | |||
Outstanding, ending balance, weighted average exercise price per share (in dollars per share) | $ 5.48 | $ 5.48 | $ 0.00 | ||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||||
Outstanding, weighted average remaining contractual life | 8 years | ||||
Vested and expected to vest, weighted average remaining contractual life | 8 years | ||||
Exercisable, weighted average remaining contractual life | 7 years 2 months 12 days | ||||
Outstanding, aggregate intrinsic value | $ 1,778 | $ 1,778 | $ 0 | ||
Vested and expected to vest, aggregate intrinsic value | 1,778 | 1,778 | |||
Exercisable, aggregate intrinsic value | $ 46 | 46 | |||
Unvested employee options converted (in shares) | 2,001,387 | ||||
Fair value of unvested stock options | $ 1,700 | ||||
Assumed options from business acquisition | $ 1,400 | ||||
Compensation cost not yet recognized on nonvested awards | $ 300 | $ 300 | |||
Weighted average grant date fair value for stock options (in dollars per share) | $ 4.78 | ||||
Fair value of stock options vested during period | $ 100 | ||||
Compensation cost not yet recognized, period for recognition | 1 year 10 months 24 days | ||||
Connect | Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Volatility, minimum | 42.70% | ||||
Volatility, maximum | 44.40% | ||||
Risk-free interest rate, minimum | 1.40% | ||||
Risk-free interest rate, maximum | 2.00% | ||||
Connect | Minimum | Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected term | 2 years 6 months | ||||
Connect | Maximum | Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected term | 5 years | ||||
2015 Plan | |||||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||||
Additional shares of common stock (in shares) | 2,308,615 | ||||
Two Thousand Fifteen Employee Stock Purchase Plan [Member] [Member] | |||||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||||
Additional shares of common stock (in shares) | 461,723 | ||||
Options to be recognized over future vesting periods | Connect | |||||
Weighted Average Remaining Contractual Life and Aggregate Intrinsic Value | |||||
Compensation cost not yet recognized on nonvested awards | $ 300 |
Stock-Based Compensation - Restricted Stock Units (Details) - Restricted stock units - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 5 years | ||
Compensation cost not yet recognized | $ 4,600 | ||
Compensation cost not yet recognized, period for recognition | 3 years 2 months 12 days | ||
Number of RSU's | |||
Outstanding as of December 31, 2015 (in shares) | 61,482 | ||
Granted (in shares) | 108,850 | 0 | |
Vested (in shares) | 0 | ||
Forfeited (in shares) | (60) | ||
Outstanding as of September 30, 2016 (in shares) | 170,272 | ||
Vested and expected to vest after September 30, 2016 (in shares) | 170,272 | ||
Weighted Average Grant Date Fair Value | |||
Outstanding as of December 31, 2015 (in dollars per share) | $ 30.00 | ||
Granted (in dollars per share) | 29.19 | ||
Vested (in dollars per share) | 0.00 | ||
Forfeited (in dollars per share) | 32.93 | ||
Outstanding as of September 30, 2016 (in dollars per share) | 29.48 | ||
Vested and expected to vest after September 30, 2016 (in dollars per share) | $ 29.48 | ||
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 5,234 | $ 1,711 | |
Granted | 3,177 | ||
Vested | 0 | ||
Forfeited | 0 | ||
Vested and expected to vest after September 30, 2016 | $ 5,234 |
Stock-Based Compensation Stock-Based Compensation - Restricted Stock Awards (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 1,313 | $ 852 | |
Restricted stock awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 19 | $ 0 | |
Award vesting period | 2 years | ||
Connect And Piper | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Assumed (in shares) | 1,622 |
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense (less than .1 million in 2016) | $ 1,313,000 | $ 852,000 |
Employee stock purchase plan | Employee Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares reserved for future grant | 1,616,342 | |
Shares reserved for grant, annual increase period | 9 years | |
Annual automatic increase in shares available, percentage of each class of common stock outstanding | 1.00% | |
Annual automatic increase in shares available, shares | 1,500,000 | |
Purchase price of shares as a percentage of fair market value | 90.00% | |
Maximum number of shares participant may purchase, fair market value (not to exceed) | $ 15,000 | |
Maximum number of shares participant may purchase as a percentage of base compensation (not to exceed) | 10.00% | |
Shares purchased by employees | 13,584 | 18,705 |
Stock-based compensation expense (less than .1 million in 2016) | $ 100,000 | $ 100,000 |
Employee stock purchase plan | Employee Stock | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Discount of the market value on the date of purchase (not to exceed) (percentage) | 10.00% |
Stock-Based Compensation Stock-Based Compensation - Repurchase of Subsidiary Units (Details) - Founder and President - Repurchase of Subsidiary Units, February 2011 - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Officers' Compensation | $ 0.2 | $ 0.2 | |
Other Current Liabilities | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Due to related parties, current | 2.7 | ||
Due to related parties, noncurrent | $ 2.5 | ||
Other Liabilities | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Due to related parties, current | $ 0.3 | ||
Due to related parties, noncurrent | $ 0.3 |
Stock-Based Compensation - Warrants (Details) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 30, 2015
employee
shares
|
Mar. 31, 2017
USD ($)
$ / shares
shares
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
shares
|
|
Performance Based Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Number of exercisable warrants (in shares) | 0 | 0 | ||
Expense associated with warrants | $ | $ 0.1 | $ 0.1 | ||
Common Stock | 2015 Performance Based Warrant | ||||
Class of Warrant or Right [Line Items] | ||||
Number of employees who were issued warrants | employee | 2 | |||
Common Stock | Employee | 2015 Performance Based Warrant | ||||
Class of Warrant or Right [Line Items] | ||||
Number of shares exercisable when warrants exercise (up to / not to exceed) | 54,694 | |||
Common Stock | Employee | 2015 Performance Based Warrant, Two | ||||
Class of Warrant or Right [Line Items] | ||||
Number of shares exercisable when warrants exercise (up to / not to exceed) | 27,347 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 10.97 |
Stock-Based Compensation Stock-Based Compensation - Fair Value of Stock Options Assumed from the Connect Business Unit (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend rate | 0.00% |
Earnings Per Share - Components of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 3,963 | $ 2,738 |
Less: income allocated to participating securities | (2) | (5) |
Net income attributable to common stockholders | $ 3,961 | $ 2,733 |
Weighted average common shares outstanding - basic (in shares) | 46,225,473 | 45,526,058 |
Dilutive effect of stock options (in shares) | 2,533,301 | 1,777,838 |
Weighted average common shares outstanding - diluted (in shares) | 48,758,774 | 47,303,896 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.09 | $ 0.06 |
Diluted (in dollars per share) | $ 0.08 | $ 0.06 |
Earnings Per Share - Schedule of Securities Excluded from Calculation of Diluted Weighted Average Common Shares Outstanding Due to Anti-dilutive Effect (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of diluted weighted average common shares outstanding | 133,750 | 514,122 |
Common stock subject to repurchase | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of diluted weighted average common shares outstanding | 25,793 | 77,670 |
Significant Service Providers (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Concentration Risk [Line Items] | |||
Trade accounts receivable | $ 38,889 | $ 29,810 | |
Service Provider Concentration Risk | Revenue | 10 Largest Service Providers | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 60.00% | 60.00% | |
Service Provider Concentration Risk | Revenue | Minimum | Service Provider B | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | ||
Service Provider Concentration Risk | Revenue | Maximum | Service Provider B | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 15.00% | ||
Service Provider Concentration Risk | Trade Accounts Receivable | Service Provider A | |||
Concentration Risk [Line Items] | |||
Trade accounts receivable | $ 8,600 |
Income Taxes (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Effective income tax rate (percent) | 12.10% | 36.80% | |
Valuation allowance | $ 0 | $ 0 | |
Unrecognized tax benefits related to research and development tax credits | 100,000 | ||
Total interest related to unrecognized tax benefits | 26,000 | 21,000 | |
Liability for uncertain tax positions | $ 700,000 | $ 700,000 |
Segment Information (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
segment
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Segment Reporting [Abstract] | |||
Number of reportable segments | segment | 2 | ||
Segment Reporting Information [Line Items] | |||
Revenue | $ 74,194 | $ 59,043 | |
Operating income | 4,485 | 4,261 | |
Total Assets | 335,640 | $ 261,245 | |
Operating Segments | Alarm.com | |||
Segment Reporting Information [Line Items] | |||
Revenue | 70,512 | 56,010 | |
Operating income | 6,584 | 6,867 | |
Total Assets | 316,924 | 246,798 | |
Operating Segments | Other | |||
Segment Reporting Information [Line Items] | |||
Revenue | 4,452 | 3,847 | |
Operating income | (2,213) | (2,683) | |
Total Assets | 18,716 | 14,447 | |
Intersegment Eliminations | Alarm.com | |||
Segment Reporting Information [Line Items] | |||
Revenue | (649) | (586) | |
Operating income | (22) | (47) | |
Total Assets | 0 | 0 | |
Intersegment Eliminations | Other | |||
Segment Reporting Information [Line Items] | |||
Revenue | (121) | (228) | |
Operating income | 136 | $ 124 | |
Total Assets | $ 0 | $ 0 | |
Segment Concentration Risk | Revenue | Alarm.com | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 94.00% | 94.00% |
Related Party Transactions (Details) |
1 Months Ended | 3 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
advance_period
renewal_option
|
Mar. 31, 2017
USD ($)
shares
|
Mar. 31, 2016
USD ($)
|
May 10, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Dec. 11, 2015
USD ($)
shares
|
Sep. 30, 2014
USD ($)
|
|
Related Party Transaction [Line Items] | |||||||
Issuances of notes receivable | $ 1,000,000 | $ 73,000 | |||||
Installation Partner | |||||||
Related Party Transaction [Line Items] | |||||||
Ownership percentage in equity method investment | 48.20% | ||||||
Equity method investment, shares | shares | 48,190 | 9,290 | |||||
Equity method investment, cost | $ 1,000,000 | $ 200,000 | |||||
Installation Partner | Equity Method Investee | |||||||
Related Party Transaction [Line Items] | |||||||
Interest income from related party | 6,300 | 6,000 | |||||
Accounts payable to related party | 100,000 | $ 100,000 | |||||
Installation Partner | Equity Method Investee | Secured Promissory Note | |||||||
Related Party Transaction [Line Items] | |||||||
Notes receivable, interest rate | 8.00% | ||||||
Related party notes receivable, face amount | $ 300,000 | ||||||
Installation Partner | Equity Method Investee | Cost of Hardware and Other Revenue | |||||||
Related Party Transaction [Line Items] | |||||||
Expenses incurred from related party | $ 300,000 | 400,000 | |||||
Notes Receivable | Distribution Partner | |||||||
Related Party Transaction [Line Items] | |||||||
Notes receivable, maximum available | $ 4,000,000.0 | ||||||
Number of loan advance periods per year | advance_period | 2 | ||||||
Notes receivable, interest rate | 6.00% | 6.00% | |||||
Number of renewal options | renewal_option | 2 | ||||||
Renewal term | 1 year | ||||||
Issuances of notes receivable | $ 1,000,000 | ||||||
Loan receivable | 4,000,000 | 3,000,000 | |||||
Revenues | 200,000 | 0 | |||||
Accounts receivable balance | 100,000 | $ 100,000 | |||||
Notes Receivable | Distribution Partner | Equity Method Investee | |||||||
Related Party Transaction [Line Items] | |||||||
Interest income from related party | $ 100,000 | ||||||
Notes Receivable | Distribution Partner | Equity Method Investee | |||||||
Related Party Transaction [Line Items] | |||||||
Interest income from related party | $ 0 | ||||||
London Interbank Offered Rate (LIBOR) | Notes Receivable | Distribution Partner | |||||||
Related Party Transaction [Line Items] | |||||||
Variable interest rate | 4.00% | ||||||
Subsequent Event | Notes Receivable | Distribution Partner | |||||||
Related Party Transaction [Line Items] | |||||||
Notes receivable, maximum available | $ 3,000,000.0 | ||||||
Notes receivable, interest rate | 8.50% |
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