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Home security and automation software provider Alarm.com (NASDAQ:ALRM) reported results in line with analysts' expectations in Q4 FY2023, with revenue up 8.7% year on year to $226.2 million. The company's outlook for the full year was also close to analysts' estimates with revenue guided to $923 million at the midpoint. It made a GAAP profit of $0.58 per share, improving from its profit of $0.52 per share in the same quarter last year.
Is now the time to buy Alarm.com? Find out by reading the original article on StockStory.
Alarm.com (ALRM) Q4 FY2023 Highlights:
- Revenue: $226.2 million vs analyst estimates of $224.9 million (small beat)
- EPS: $0.58 vs analyst estimates of $0.21 (173% beat)
- Management's revenue guidance for the upcoming financial year 2024 is $923 million at the midpoint, in line with analyst expectations and implying 4.7% growth (vs 4.7% in FY2023)
- Management's adjusted EBITDA guidance for the upcoming financial year 2024 is $162 million at the midpoint, above analyst expectations of $151 million
- Free Cash Flow of $37.7 million, down 38.1% from the previous quarter
- Gross Margin (GAAP): 64.1%, up from 61.8% in the same quarter last year
- Market Capitalization: $3.45 billion
Founded in 2000 as a business unit within MicroStrategy, Alarm.com (NASDAQ:ALRM) is a software-as-a-service platform that enables users to control their security systems and smart home appliances from a single app.
Vertical Software Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.
Sales GrowthAs you can see below, Alarm.com's revenue growth has been unremarkable over the last two years, growing from $195.3 million in Q4 FY2021 to $226.2 million this quarter.
Alarm.com's quarterly revenue was only up 8.7% year on year, which might disappoint some shareholders. However, its revenue increased $4.38 million quarter on quarter, a strong improvement from the $2.02 million decrease in Q3 2023. This is a sign of acceleration of growth and very nice to see indeed.
For the upcoming financial year, management expects revenue to be $923 million at the midpoint, growing 4.7% year on year compared to the 4.6% increase in FY2023.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Alarm.com's free cash flow came in at $37.7 million in Q4, up 11.3% year on year.
Alarm.com has generated $128.4 million in free cash flow over the last 12 months, a decent 14.6% of revenue. This FCF margin stems from its asset-lite business model and gives it a decent amount of cash to reinvest in its business.
Key Takeaways from Alarm.com's Q4 Results This was a solid quarter, with revenue and profits beating expectations. Looking forward, while revenue for next quarter is in line with expectations, adjusted EBITDA guidance was better. Zooming out, we think that the company is staying on target. The stock is up 3.3% after reporting and currently trades at $72.1 per share.
