Q1 2021 Alarm.com Holdings Inc Earnings Call
Thank you for your patience. Please continue to hold your conference call will the game momentarily.
[music].
Good day, and thank you for standing by and welcome to the alarm Dot Com and the first quarter of 2021 earnings conference call and.
At this time, all participants on the list and only mode and.
After the speaker presentations and there will be of question and answer session. The.
The ask a question during the session and you would need to press the star one on your telephone.
Please be advised that today's conference who's being recorded if you require any further assistance. Please first start zero.
Oh and not like the hand of conference over to you for a speaker today to Mister David <unk>, Vice President of of Investor Relations. Thank you. Please go ahead Sir.
Thank you good afternoon, everyone and welcome to alarm Dotcoms first quarter of 2021 earnings conference call and.
As a reminder, this call is being recorded.
Joining us today from alarm dot com or Steve Trundle, President and CEO and Steve Valensuela CFO.
Before we begin of quick reminder, to our listeners.
Management the discussion during the call today will include forward looking statements, which include projected financial performance for the second quarter and full year of 2021 the.
The impact of emerging market dynamics and trends on our business and on anticipated market demand for our offerings, including new product offerings.
The impact of the COVID-19 pandemic on a on a global of supply chain and the global economy, our business strategies plans and objectives for future operations and integration of recent acquisitions.
Continued enhancements to our platform and offerings of.
Opportunities for growth and our current markets and our plans to expand into new markets.
And other forward looking statements.
These forward looking statements are based on current expectations and beliefs and on the information currently available to US statements containing words, such as began the leave continue estimate expect forecast May project trend will and other similar words are intended to identify as such for.
The word looking statements.
And these statements are subject to risks and uncertainties, including those contained and the risk factors section of our most recent annual report on form 10-K.
Filed with the Securities and Exchange Commission on February 25th 2021.
And and subsequent reports of that we filed with the Securities and Exchange Commission for time to time.
Including our quarterly report and formed on queue that we intend to file with the Securities and Exchange Commission shortly after this call and.
It could cause the actual results to differ materially from those contained and the forward looking statements.
Please note that the forward looking statements made during this conference call speak only as of today's date and alarm Dot Com undertakes no obligation to update the statements to reflect subsequent events of circumstances, except to the extent required by law.
Also during this call of management commentary will include non-GAAP financial measures and provide non-GAAP guidance.
Management believes that the use of these non-GAAP financial measures provides an additional tool for investors to use and understanding the company's performance and trends, but notes that the presentation of non-GAAP financial information.
Is not meant to be considered and isolation, whereas the substitute for the directly comparable financial measures prepared in accordance with gap.
Reconciliation between GAAP and non-GAAP metrics for a reported results can be found and the financial statement tables of earnings press release, which we of posted to our Investor Relations website and investors dot alarm dot com.
This conference call is being webcast and is also available on our Investor Relations Web site.
And the webcast of this call will be archived and the telephone replay will also be available on our website.
With these formalities out of the way and now like to turn on the caller to Steve Trundle you.
You may begin.
Thank you David Good afternoon, and welcome to everyone. We are pleased to report solid Q1 results to begin the year are SaaS and the license revenue and the first quarter was 107 $4 million up 16.8% over the last year.
Are adjusted EBITDA and the first quarter was 35 $6 million.
I want to thank our service provider partners and the alarm dot com team for their contributions to our results and for their ongoing performance during these challenging times.
The favourable conditions that we saw on the U S and Canadian residential markets and late 2020.
Carry the end of the first quarter of 2021.
This momentum was driven by new account creation and the growing adoption of advanced services, such as video and video analytics.
Commercial sales of opportunities and the large scale enterprise segment also improved but remained somewhat below free pandemic levels.
Our international business remains more impacted by the pandemic, then R U S and Canadian business.
As we monitor conditions and our international markets. Our team continues to add new service providers to better position for the growth. We expect once more robust recoveries are underway and these markets.
During the quarter, we continued to build on our growth initiatives and invest and new product development programs I want to update you on some of the technology, we released and other key developments over the period.
I'll begin with our residential services and.
Discuss the launch of the alarm Dot Com Tuxtla video doorbell last quarter, and we saw encouraging adoption during the initial rollout and the first quarter nearly 1200 service providers installed the new products and then.
Shows the level of confidence that our service providers have and on our ability to deploy innovative market leading products, but also meet the dependability and performance expectations of.
<unk> with life safety solutions.
To expand our six on our success and the video doorbell category, we are establishing of diverse product line up with the range of price points.
We continue to offer our traditional doorbell products and we saw strong sales across the value of spectrum of our lineup and the U S and Canadian residential markets.
Shifting to our commercial solutions, we recently launched smarter business temperature monitoring for restaurants grocery stores pharmacies, and other commercial commercial verticals with temperature sensitive inventory or areas.
The solution gives us temperature sensors, which are integrated with our supported the security control paddles.
It provides comprehensive monitoring real time alerts historical reporting and Multilocation awareness to ensure health safety and inspection compliance.
Customize the alerts can inform the subscriber if the temperature and a refrigerator or freezer is outside predefined thresholds.
Or if the doors left open for of create determined length of time.
The alarm dot com reporting and gin provides and audit of out of range temperature incidents that includes the incident total time.
We also launched the new enterprise dashboard to provide a single interface for monitoring storage temperatures and trouble conditions across multiple business locations and refrigeration units.
We integrated this new temperature monitoring solution into our higher value of commercial plus service plan.
This is part of our ongoing efforts to develop unique capabilities that are available only through our commercial plus offering where <unk> is more favorable.
As a result of the portion of new commercial subscribers taking of commercial plus the plan has increased by 35% since 2018.
With a strong Roy based value proposition, we expect temperature monitoring to contribute further to these results and generate additional RMR for our service providers.
We also enhanced the enterprise dashboards that we designed to make it easier for multilocation businesses to monitor and manage their properties.
For businesses with multiple cameras installed across multiple sites.
Monitoring the high volume of activity and ensuring that all of the cameras are performing reliably with the traditional video of solution is cumbersome at best.
We believe our enterprise video dashboard offers of smarter and more efficient solution.
The new enhancements include a single screen for viewing video clips of important activity captured by any camera for any location.
We also automated the process of monitoring the operational status of video cameras.
On demand video helped the reports summarized the status and trouble conditions discovered on all video cameras that the business has deployed.
New trouble condition filters can also pinpoint specific issues and specific sites.
We also strengthened the enterprise dashboard to enabled multi site security administrators to manage enterprise credentials across locations more easily.
For example, administrators can assign a single user code to provide employees with customized access to any business location of our region.
Streamlining these workflows and permissions simplifies the process for administrators and employees, while enhancing security and control at every location.
Before I hand things over to Steve balance whaler.
I want to update you on new developments with energy hub.
Energy hub orchestrate and manages distributed energy resources, including thermostats batteries.
Commercial and industrial resources solar Inverters and electric vehicles charters.
Energy hub steady expansion of its industry, leading ecosystem and associated services has opened and new opportunities and growth areas.
A critical of strategic challenge that energy hubs utility customers are actively planning for is how to manage the substantial increase and demand on the grid that electric vehicle charging will create.
Energy hub is investing and comprehensive solutions to help address this.
This past quarter energy hub add another EV charging program to its platform through of partnership with Potomac Edison.
Atomic Edison will use the energy hubs platform to administer a dynamic pricing program for electric vehicles charging.
By managing data from electric vehicle charters and the energy have platform will encourage charging during off peak hours and support customer adoption of connected charging infrastructure.
Energy hub also announced the launch of Mercury edge connect.
This is of standardized framework for integrating distributed energy resources, such as connected EV Chargers and batteries.
With energy hubs platform.
We believe streamlining the integration process for providers of these devices will strengthen the energy hubs position as the single platform for utilities to manage of broad range of customer owned distributed energy resources.
To conclude.
I am pleased with our queue on results and the progress we made to expand our platform during the quarter.
I want to thank our service provider partners and our team for their hard work and our investors for their continued trust and our business.
And with that let me turn things over to Steve Valensuela Steve.
Thanks, Steve I will begin with the review of all of a strong first quarter of 2021 financial results and then discuss guidance before opening and the call for questions.
SaaS and license revenue and the first quarter grew 16.8% from the same quarter of last year for 107 4 million the.
This includes connect software license revenue of approximately eight $7 million for the first quarter down as expected from nine $7 million and the year ago quarter.
Fast and license revenue for our alarm Dot Com segment grew 15, 8% year over year and and.
Other segment of grew 30 for 9% over the same period.
Our SaaS on license revenue visibility remains high with a revenue renewal rate of 95% of the first quarter, which is above our store for range of $92 and 94%.
This slightly higher revenue renewal rate.
We believe is likely the result of the your people moving homes at the start of the pandemic.
And we could see you return to the historic range and the next quarter or two.
Hardware and other revenue and the first quarter was $65.1 million up eight 5% over Q1 and 2020.
We continue to see strong sales of our video cameras driven.
Driven by increased the adoption of our industry, leading video solutions and video analytics capabilities.
Total revenue of $172.5 million for the first quarter grew 13.5% year over year.
Staff and the license gross margin for the first quarter was 85, 9% down approximately 70 basis points from Q1 2020 gross margin mainly due to product mix.
Hardware gross margin was 22 and 3% for the first quarter compared to the 23, 9% for the same quarter of last year, mainly due to product mix and also somewhat due to increased supply chain cough.
As the global supply chain has been more challenging recently.
Total gross margin was 61, 9% for the first quarter up slightly from the same quarter the last year.
Turning to operating expenses R&D expenses, and the first quarter for 42.5 million compared to 39 $7 million for the first quarter of 2020.
We ended the first quarter with 797 employees and R&D of.
Up from 650 employees and the same quarter the last year.
Total headcount increased to 1400, 14 employees and the first quarter compared to 1200, 27 and employs a year ago.
Sales and marketing expenses, and the first quarter, where 19 million or 11% of total revenue compared to $17 1 million for 11, two per cent of revenue and the same quarter last year.
Our G&A expenses and the first quarter were $22.9 million up from $29 million and the same quarter of last year.
G&A expense and the first quarter includes non ordinary of course litigation expense of five $3 million compared to $2.5 million for Q1 2020.
Non ordinary course litigation expenses are part of our adjusted measures and are excluded from our measurement of our non-GAAP financial performance.
Non-GAAP adjusted EBITDA for the first quarter was 35 $6 million up from $29.2 million and Q1 and 2020.
And the first quarter GAAP net income was $14.8 million compared to GAAP net income of eight $8 million for Q1 2020.
Non-GAAP adjusted net income increase the 25 $8 million for 50 per diluted share and the first quarter compared to 29 million or 42 per share for the first quarter of 2020.
Turning to our balance sheet, we ended and the first quarter with $642 $2 million of cash and cash equivalents the.
This includes net proceeds of approximately $484.3 million from the issue and server zero percent convertible bonds, we closed and January of this year.
And reflects the concurrent pay off of our senior revolving debt facility, which had an outstanding principal balance of 110 million.
And the first quarter, we generated the approximately $21.2 million and cash flow from operations compared to $12 $9 million for the first quarter of 2020.
Our free cash flow for the first quarter was $17.2 million up from $9.2 million for the same quarter last year.
And the first quarter R capital equipment purchases whereabout for $1 million up slightly from three $7 million and the first quarter of 2020.
Turning to our financial outlook.
For the second quarter of 2021, we expect SaaS and the license revenue of 108 nine to 109 $1 million.
For the full year of 2021, we expect SaaS and license revenue to be between 445.5 to 446 million.
Up from our prior guidance of $445 million to $441.5 million.
We are projecting total revenue for 2021 of 685 to 691 million increased from of prior guidance of $665 million to $671.5 million, which includes estimated hardware and other revenue of 235 to two.
Hundred and $45 million.
We continue to monitor issues around the global of chip shortage, which did not impact of our revenue and this quarter, but could impact of our revenue this year, depending on how the supply of shortages workout.
We estimate that non-GAAP adjusted EBITDA for 2021 will be between 124 to 130 million compared to our prior guidance of $120 million to $130 million.
We have factored and more travel and Tradeshow expenses and the back half of 2021 is these expenses have been curtailed with the pandemic.
We also anticipate that the bulk of of 2021 headcount additions will be and the third quarter of this year.
Non-GAAP net income for 2021 is projected to be 85 $6 million to $90 million $4 63, $2 72 per diluted share up front of our prior guidance of 80 for to $90 million for $1.61 $2 72 per diluted share.
And.
We currently of project are non-GAAP tax rate for 2021 to remain of 21% under current tax rules.
<unk> based on an estimate of 52.4 million weighted average diluted shares outstanding.
We expect full year 2021 stock based compensation expense of $40 million to $43 million.
In summary, we are pleased how well our service providers and internal of teams continue to perform during these challenging times.
We are focused on executing on our business strategy and investing and of growth opportunities, while continuing to deliberate profitable growth and with that operator. Please open the call for Q&A.
Thank you Sir.
As a reminder to ask a question you would need to press star one on your telephone so which are your question. Please press the pound key.
Please stand by while we compiled the queue and it roster.
I should of our first question comes from the line of Sterling Audi from J P. Morgan. Please go ahead.
Yeah, Thanks, Hi, guys.
So you mentioned the on the international side, the continuing and pandemic I'm just kind of curious with the UK set to kind of open up more fully what's the visibility that you have an improvement that we might see out of the international region and the June and then September quarters.
This is Steve Tuttle speaking so.
I don't expect to see a lot of movement between now and June.
Meaning where.
Running it sort of the level of we probably ran out maybe a little better than Q1.
As we get it I mean, England and obviously is a little ahead of other parts of Europe, and certainly ahead of Latin America, right now and and I would also say, we're seeing a little bit more of of supply chain stress.
Globally or internationally with some of the more.
Esoteric parts and what we see here in North America. So I think when we get probably end of the end of the third quarter and maybe even the fourth we start to see that that clear and we'd be my guess and then but we're trying to do right now is really work and the service providers and position for the.
Those markets to be more robust next year, and and we're thankful that north Americans remain pretty strong.
That makes sense and then maybe one quick follow up you talked about the renewal rates, perhaps returning to historical more and just what of the baked into the guidance for the rest of the year.
Yes, I would think are.
People basically stopped moving this time last year.
So you didn't have.
We didn't we had a higher than expected revenue renewal rate I think of came and at 95% I think what we baked and for the remainder of the year is the the midpoint of our traditional range, which is $92 and 94% that's right.
Alright, that's fair. Thank you so much I really appreciate it thank you.
Thank you on that.
Next question comes from the line of Adam Tyndall from Raymond James. Please go ahead.
Okay. Thanks, good afternoon, and I wanted to start on the assassin license revenue guidance for the full year of 2021. It was raised by a few million more than the Q1 beat and I'm wondering what you're seeing to imply that continued strength and the out of quarters vs. Just raising by the two and 5 million or so that you beat by and and just give the can't.
<unk> I know, it's splitting hairs, a little bit, but we typically do you is conservative on guidance and let's focus on the numbers more on the quality of the qualitative statement and you're making so maybe just unpack the areas you're seeing momentum what that you're comfortable to carry through some additional upside given as you just mentioned and retention rate is expected to come down and I'm not sure what the offsets work.
All right no good question.
And things that gives us confidence are of the chucked of the of the Q1 B came from.
Came from and accelerated creation right and those subscribers, we don't anticipate.
Not all of it but a good chunk, we don't anticipate them.
Go on anywhere so that's a positive.
The.
We don't want to get out of control, though and extrapolate for the entire year that the current creation rates and.
And kind of of sort of slightly above expectation performance will continue forever, we do have some.
Headwinds with regard to activities, which thus far we've managed effectively but and the supply chain.
Of global markets are still somewhat uncertain and we are seeing as I said and my prepared remarks commercial beginning of pick back up so that could give us a nice.
A nice.
<unk> tailwind.
So those are of and then the energy and our businesses is also strong right now as as I noted and my prepared remarks. So there are plenty of things that look look solid at this juncture and the year.
If you have experience with US you know that we're not going to go.
The on raising raising guidance that the the guide we provide is the foundation for our operating budget. So so we absorb some of it and some of the Q1 and then push some of that into the the.
Rest of the year and those are some of the things that we're seeing what I just commented on and I would say to we are seeing good video of video analytics pick up the steep.
And that helps and to of the or for a little bit as well.
Of course, most of it is really coming from new subscribers being added, but and it's nice to see the the strong video and bit of analytics.
Continued attachment rates increasing.
You got it yeah.
Makes sense and just as a follow up on the cash continues to increase your businesses, so predictable and durable, particularly on the SaaS on license side. So Steve the maybe you could touch on your view of optimal capital structure and timing to get to that level and Steve T. If you could follow up of priorities for use of cash as you move to the ultimate.
Capital structure.
Well yeah. Good question until the certainly on the optimal cash we'd like to have cash and we couldn't pass up the the great terms of zero present coupon.
Bonds, we were able to raise 500 million of growth and so we have we of run and run the company on of cash flow of positive basis. If you look at this quarter. We January the very good amount of free cash flow and and more than almost double last year's cash flow. So I think we have quite a bit of dry powder here feel very good about our our balance sheet.
Our cash position I would say that we'd like to run with a net cash position without getting into too many details but.
I think we certainly have a very strong balance sheet. We've continued to have the strong balance sheet over the years and with this with this raise it gives us even more if you will dry powder.
Yeah and in terms of use of the proceeds I think it's.
And what we're looking to do I think we're.
We just wanted a posture for when the right opportunity comes along to the act upon it and we have and active.
Corporate development team that sourcing various option as we also have at.
At least two initiatives internally that we may decide to deploy capital and two we haven't made the decision yet, but we're watching the market right right now we're watching as everyone else valuations pretty carefully and.
And the.
Trying to sort of.
And the way I think hope and some of the Spock activity diminishes, but.
When we see the right thing come along and we're well positioned of opposition for the next two or three years to.
To be smart and judicious about.
<unk> and to build the business through.
The occasional acquisition.
If you had the rank consolidating more core residential opportunities vs expanding and these growth areas like energy hub with one ranked higher than the other.
I think that.
Are internal engine is really strong on the residential side.
Already we're we're scaling R&D there at a level of it no one else's. So I would expect us to consolidate residential activity.
Organically.
And for those smart through time and.
So I think when we look at the.
And we're not going to.
We're not going to say no to any single category the categories. The only one part of the equation management is a big part of the equation the health of of the business and other.
Attributes, but I'd say generally our biases probably to look at act opportunities that.
Or in areas, where we may not be as strong organically.
Makes sense. Thank you both.
Thanks.
Thank you and next question comes from the line of Matt fast on.
William Blair. Please go ahead and.
Hi, guys. Thanks for taking my questions and nice nice job on the results.
Wanted to ask about the better than expected the creation right that you guys have seen over the past.
Several quarters.
How do you expect that to be impacted as the U S. The economy's continue to reopen and and I guess, what I'm wondering is is that sort of of creation rate of factor of people being stuck at home and thus doing home improvement projects or the or some other dynamics there that that's created and that the the creation right.
Yeah of matter.
I don't know that we have crystal ball on that to the to be honest with you we.
We have seen ongoing momentum and the last couple of quarters. We think some of that is actually a positive.
Contribution from COVID-19 people being at home able to take the Appointment's doing projects.
The shift to the suburbs some of those trends are going to be ongoing I know that when we model of things, though we don't at the moment, we're not modeling and that.
Trajectory as of permanent.
Kind of.
Permanent trajectory of permanent level of of momentum so.
Looking at where we were sort of pre COVID-19 trajectories at that point in terms of sales velocity and North America, and anticipating some regression to that.
And what we would call more normal trajectory so.
And that's kind of the way we view it we could be wrong and it may be that were on the.
And that we.
And wouldn't even say that's our our belief that's just how we'd model and it could be that the shift too.
Two more.
The more homeownership and too.
Some shipped out of the urban centers is going to be an ongoing trend for the next five six years and and we're early days and it and we just don't know for sure.
Okay got it that makes sense and just to follow up on the on the retention rate was just sort of wondering how and the increased uptake of of video and and video analytic and I guess Mark home features as well and pack. The retention rate is is there any impact there from customers, perhaps making more investment and.
And the security system and be more engaged yeah. It's a very good question. So I think there definitely is.
We've been at the high side of our of our anticipated range for some time of range that we established 90% to 94% Retracement and pretension that's.
Been been pretty strong for some period of time, I think particularly video analytics and and the first quarter and the attach rate of analytics on.
New video installations was was over 70% so customers are getting a much better experience when they're getting that type of intelligence and there.
And their video of alerts and and what they are viewing if you're having a good experience if you're impressed with the technology, if it's making your life easier I'd I'd like to believe that you are more of your.
More durable as a customer and then I do think your point as well which is.
As customers seem more areas of benefit from the smart home and as they deploy more types of technology, whether it be video of the Smartwater valvar.
Some of the energy management of attributes.
I think there becomes a bit more of a dependency and the likelihood of of.
Customer of not being satisfied with their experience and and therefore potentially of trading estimate of so I do think there is an ongoing sort of.
Slight positive trend there that will help us.
Great. Thanks, guys I appreciate you taking my questions sure. Thank you.
Thank you I Am next question comes from the line of Darren of Tahiti from the Bronx. The capital Partners. Please go ahead and.
Hey, this is still on for Gary and thanks for taking the questions.
He talked a little bit of out commercial starting to take backups. Thank you provide any color on maybe what for sure I heard of that is like that like a new inquiry vs someone who might of.
E spoken to maybe pre COVID-19 and had the past due to just sort of the shutdowns.
Boy.
Off the top of my head I don't know that I have good data on whether the new customers are ones. We had spoken to I guess I could go off of it.
And the anecdotal belief, which is I think it's a mix of both I when I talked to our sales people and especially in the larger enterprise segment.
There were a lot of opportunities that were brewing and then.
Various energies just sort of shut down in terms of access to their facilities during the COVID-19 and.
And.
At least especially the early parts of COVID-19 until of really towards the end of the year and now they are open backups, so I would imagine of.
A decent amount of the uptick is coming from.
Specially on the larger enterprise side coming from places, where we already knew about the opportunity.
On that said the number of sites that we're adding and as example on the open I.
On a side of the business I believe they've added and I remember correctly, probably 9000 and new.
New sites and the last and the last 12 months and that's that's a pretty meaningful jump.
Maybe once more and that I have to look at the data point, but my recollection of as we probably added 30% growth to the number of sites that the better installed. So I think that's coming not just from.
People that were already and discussions with beforehand, but from some smaller enterprises that's on opportunity.
While their business was was potentially closed if it's the restaurant or otherwise.
To make some modifications and act a little bit more like a homeowner do that during COVID-19 and I think that will that that activity should continue.
Okay. Thank you uhm and that was it.
I guess, it's sort of similar but with.
With the residential market and.
And then some of the housing market trends.
Where are you seeing the.
Mix of <unk>.
More like new accounts or sort of people on the use the one dot com for maybe like the.
Try and primary home and adding it to maybe and check your home.
No the <unk>.
Latter is always occurring but it's a much smaller slice of the business.
Then.
Then people that are moving into new homes. So I think the majority of is coming from.
New homes were aided by new home construction and then by people who are.
Getting a verse system.
For their home and doing that during the day.
For the first time so.
A very.
Small fraction I would definitely say less and 10% of of new customer adds are coming and the residential side from.
The people with multiple properties on.
On the commercial side.
If you lockdown of business that has multiple sites and you get a few sites and you do a decent job on those sites and that can become the gift of it keeps on giving and you'll probably see of higher preponderance of of the commercial installs bean.
Follow on work for.
Businesses that are already have used your technology and one location. So there would be a higher percentage, but still not over certainly not over half and my guess would be non over 35%.
Great. Thank you.
Thank you.
Thank you and.
Next question comes from the line of Mike Lattimore from North line capital. Please go ahead and.
Hi, this is other.
On behalf of my collect the modem.
Could you talk about how much did the other SaaS contribute and for Q.
Sure.
Mean, and Q1, when you're saying for Q and Q1 of the other segments of one.
<unk>.
Six $1 million of SaaS revenue for Q1.
Which was up 35% year over year.
Alright, Alright, and do you expect it to continue on at the same rate of all you expect it to accelerate and so we need to a new one.
Well, what we talked about really is with the with the energy of doing very well and with.
With the the programs the longer term certainly is very positive for the other segment will sales central and we have the smartwater about plus meter.
But if you.
If you look at the other segment there are seasonality points there there's timing differences typically queue for the.
Is the stronger quarter for example, and queue for the other segment contributed seven $8 million and sales revenue.
And Q for we do get of benefit from the energy savings and the summer program.
And typically Q1, that's of the seasonally slower quarter.
And so.
But we do see positive trends here with the other segment a lot of new programs there with the energy of with the Smartwater of outlets theater, which is of great product of and it really is.
A lifesaver of some cases for homeowners and businesses, possibly as well theater protect your home from leaks and water breaks and so we see quite a bit of opportunity there and again it is.
There's different quarters and different seasonality points.
Typically Q1 and being the seasonally slower quarter.
Alright, alright, and maybe Ah any estimate on how much open I might contribute for the <unk>.
So we haven't broken out open-eyed and the past.
I would say that we did talk of the last year that open and I.
Was was more impacted by COVID-19 as you would think with the commercial that we did see improvement and the fourth quarter and we saw again improvement and the first quarter. So it's trending quite well. We're also encouraged with the.
The growth of SaaS revenue growth and I would still fairly small, but we have a program now since we're required open-eyed to really grow the SaaS and that will take some time, but it's growing out of very good rate the small number of still.
But we're we're encouraged to see the growth of open on in the difficult environment with commercial and where.
Excited about the future for open I mess things open up and and the first of all businesses go back. So we're seeing good positive trends there.
Alright, alright, thank you.
Thank you. Thank you.
Thank you on next question comes from the line of Bryan Brooks and burst from Imperial capital and please go ahead.
Yes, thank you very much great quarter.
So a couple of quick questions first of all on.
Sure detection.
They're indoor GSL can you talk a little bit about what kind of traction you are seen so far you just acquired them recently.
No you don't break out.
Perfect.
<unk>, but are they on track or the growing with the the total group can you talk about any trends that you're seeing and and that area.
Yeah. So.
With the sugar Detections I think we completed that acquisition and December right in the midst of kind of.
Some of the.
Of the COVID-19 period, I actually didn't get a chance to visit them until the law.
Last the public five six weeks.
And.
The trend lines there are.
We have seen there I think have been a little more exposed to some of the.
Enterprise commercial customers that at the moment I mean, very very large customers entities that have massive office complexes. For example, and that are trying to determine what percentage of the workforce will be coming.
Back to work how much of those facilities to sort of keep that sort of thing. So that's been a bit of of soft point the.
And the positive spin on the institutional side.
There's traction and the pipelines very good I think they've they've signed some marquee names.
That they've added so I would say it's slightly.
Below where where I would ideally like to see of tracking and the first quarter, that's one quarter and but.
But the pipeline of of activity is probably at or above.
And what I would expect and and we think that.
Unfortunately every time, we have one of these.
Horrible instances of violence in society, the pipeline just gets bigger and more people interested and how do I protect my employees and how do I keep my employee safe and what can I do to.
As much as possible mitigate workplace violence so.
And has there been anything at the school level from the federal agencies and all of the stimulus that has gone on.
And that you see adding to that pipeline.
Non.
And.
The answer there is I don't actually not.
And if I've been told and I don't remember, whether the subs and stimulated.
Related that are I think we've discussed and I am aware of and my last discussion with them that.
And their business on the institutional side, a lot of the times of the state approves a technology for adoption by all of the screen.
And or by all of the courts and a given the state. So we are seeing various states.
Moving to approve the technology for use in certain circumstances, whether that'd be schools high schools elementary courts, et cetera, and whether there will be stimulus for that or not and im not positive, but there is activity.
And last question real quick just the timing on the commercial recovery.
Just from your gut do you see it happening in 2020 one.
In terms of that recovery.
Yes.
From my gut gut.
And <unk> would be that we're going to continue to see commercial gained strength throughout this year and.
And.
By the end of the year.
C more than likely commercial performing about where we expected it to be.
That's my gut feel maybe even a little above if there is some pent up demand out there.
Great. Thank you.
Thanks.
Thank you on that.
Question comes from the line of Jack Vander <unk> from Maxim Group. Please go ahead.
Oh, Great Hey, guys Nice nice results. Thanks, Hey, thanks for taking my questions.
Hum.
And maybe a question for either Steve T or Steve B.
Either of you can probably answer this but.
Maybe on the recent trends Youre seeing in terms of recent residential subscriber installations within the United States.
Are there any particular state sort of regional areas that has maybe surprised you whether in terms of outperforming or underperforming relative to what you expected and then also maybe relative to where those states for performing last year.
Hum.
Yeah, I would say generally the it's been less about probably hum.
Any particular state traditionally we've always been and our service providers and the southern parts of the United States have been.
Bigger typically theres, just the higher market penetration and places like.
Florida, Georgia, Tennessee, and Texas.
All of the southern markets. Then there is typically up north and that's not to say you don't have penetration everywhere, what's probably more normal but what we've seen has been less about the state by state, but more about.
Tier two cities versus urban centers, and the level of and installs that are going into suburbs and what some might refer to as tier two cities as we've seen some of the urbanization and so our service providers, who service those markets have been.
The particularly strong and that's been not really unique to any given state but kind of.
Brian and I will say I mean, one example, the just sort of pops up in terms of the state I should say as.
Our service providers and Florida.
You're indicating there.
The way way way too busy.
And then it's really popping and they can't keep up with demand.
And that's one that I know of where they are particularly busy I think there is some migration of Florida right now, but generally it's been more about urban versus suburban of tier two.
Okay, Great that's helpful and then.
Maybe a question for Steve <unk>.
Regarding the other segment.
Revenue growth was strong again I think it was up nearly 35% if I heard that correctly year over year.
Can you talk about maybe the underlying drivers of that business strength in terms of the actual specific businesses of subsidiaries that contribute to that maybe maybe the name a couple of other than just energy hub.
Well certainly energy hub is the big driver and we've talked about central being impacted a little bit more by the COVID-19, although the vacation of rental has picked up a bit but.
We also have the smart of water valve plus meter which is.
A new product.
We think theres a lot of opportunity there as well but.
But within the other segment energy of it's really a main driver of of course of the growth.
Supported by the other businesses as well, but there are the there is the largest I would say the fastest grower and the other segment.
Okay Cool and then maybe as a follow up just sticking to the subsidiaries and then you mentioned point and central.
I saw recently they rolled out this new offering that caters to the short term rental managers with under 25 properties, which is the first I believe for that business.
Can you maybe just talk about what that does is actually on the Tam opportunity for what you guys. Initially anticipated. It was just the always kind of part of the plan, but it was just starting with the.
The larger property managers first and now you're working your way down the ladder.
Well it definitely expense the Tam the <unk>.
Percentage.
I'm not certain up but.
It Hasnt made sense economically from cost of sales standpoint to spend a lot of time up until now on.
The property managers that are managing 10 vacation units.
When you have property managers out there that are managing hundreds of thousands so and partnership with how.
We're going to target some of the smaller ones in terms of the exact impact on Tamara and I really I really don't know I, just would say that vacation of the vacation rental market has been.
Quite central serves multifamily and vacation rental I'd say of vacation rental has been the.
And the stronger segment of the two over the last.
Six months and.
The place, where we had a lot of value and so we're trying to just drive deeper and.
And of that segment with the new with that new partnership.
Okay, great. Thank you that's it for me guys.
Thank you.
Thank you.
This concludes today's Q&A session and the conference call. Thank you for participating you may all disconnect.
Alright. Thank you. Thank you.
[music].