Q2 2021 Vivint Smart Home Inc Earnings Call
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[music].
Good evening. Thank you for attending the Vivian Smart home second quarter 2021 earnings call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end I would now like to pass the conference over to your host Nate Stubbs VP of Investor Relations with BB&T.
Smart home. Thank you you May proceed Mr <unk>.
Good afternoon, everyone. Thank you for joining us this afternoon to discuss the results of doesn't smart home for the 3 and 6 month periods ended June 32021.
Joining me on the conference call. This afternoon are David Bywater different smart home's, Chief Executive Officer, and Dale R. Gerard <unk> CFO.
I would like to begin by reminding everyone that the discussion today may contain forward looking statements.
<unk> with regard to the company's future performance and prospects.
Forward looking statements are inherently subject to risks and uncertainties that could cause actual outcomes or results to differ materially from those indicated in any such statements.
We describe some of these risks and uncertainties in the risk factors section in our annual report on form 10-K, a for our fiscal year 2020 and in other filings, we make with the SEC from time to time.
The company undertakes no obligation to update or revise publicly any forward looking statements whether as a result of new information future events or otherwise in todays remarks, we will also refer to certain non-GAAP financial measures.
Reconciliation of these non-GAAP financial measures for the most comparable measures calculated and presented in accordance with GAAP to the extent available without unreasonable effort are available in the earnings release and accompanying presentation.
Which are available on the Investor Relations section of our website.
I will now turn the call over to David.
Thank you Nate and good afternoon, everyone I appreciate your interest in our company.
Given that this is my first earnings call as the CEO of <unk>.
On to focus my comments on 4 topics first I'll provide my background and outline my deep relationship with tenant.
I will then outline why I'm, so bullish on the company and what I've rediscovered about dividend after being gone for the last 5 years.
Next I'll out on my preliminary thoughts on where I believe it needs to focus over the next few years and why I believe that will position us to be an attractive differentiated investment for.
Finally, I'll touch upon a few key highlights for the quarter before turning the time over to Dale to take you through the details of the second quarter and our outlook for the full year.
I know <unk> very.
Very well I joined the company in the summer of 2013, as the Chief operating Officer and spent 3 years, helping the company during those pivotal years of transforming from being a security company to a fully integrated smart home platform company.
As a result, I was intimately involved in scaling company operationalized, our service and product offerings scaling and maturing our supply chain capabilities.
<unk> closely with our direct to home and national inside sales leadership to expand and grow.
Entire many of the leaders that are still with the company and improving our install service and customer care operations.
It was an incredible time of innovation and maturation of the company in May of 2016, I was asked to be the CEO of <unk> solar are publicly traded former sister company <unk>.
During my 5 years at <unk> solar we rebuilt that company comps across almost every sector.
Key achievements, including expanding our go to market strategy to be omni channel.
Our operational model to reduce costs and material input quality, establishing a customer centric focus on delighting our customers.
And reigniting growth, while ensuring that our growth rate was accretive to shareholders by taking share in the most attractive solar markets.
We sold it in solar to Sunrun in October of 2020.
Making the combined company to clear and dominant leader in the residential solar market.
As a result, the market capital debt and solar 1 from around $300 million in May of 2016 to over $5.4 billion on the last day of trading prior to closing the deal with Sunrun.
Following the transaction and remain on the board as Sunrun and advise the combined companies' until rejoining <unk> Smart home this past June.
Prior to my time with Vivek I spent 10 years running many of the largest service companies within Xerox, which were also tech enabled and data driven.
Hence I feel right at home at the event and in this role as the new CEO.
I pride myself on being a straight shooter as a person who enables good companies to become great companies I also pride myself on doing what I say, we'll do and working to delight, our customers employees partners and shareholders.
I demand the very best from our employees and we will work tirelessly to ensure that they help build a great company the right way and create value, while we protect our company our reputation our customers and our shareholders.
As I have rejoined driven it has been incredible to rediscover how maintenance company news I was familiar with some of the advancements during my absence, but upon my return I have been very pleased just how much progress has been made on <unk>.
So many fronts.
The transition from being a company that uses cash too on that generates cash through the consumer financing agreements, we have with our banking partners.
As a game changer.
Team has achieved that while simultaneously improving our underwriting requirements and sales processes, all while delivering consistent revenue growth.
An incredible achievement.
The team has streamlined cost and redirecting that spend to fund innovation and growth.
The technology has gotten so much better as well and we believe the product and service offerings, we provide for the market are incredible.
I am more convinced now than ever that it's illogical for any consumer to trust the protection of their largest financial asset their home to inferior products that are often incorrectly scoped in property installed and other incorrectly or not monitored and maintained by DIY or <unk>.
Solutions are fully integrated solution is intended to align every person within the dividend to ensure that the solutions meet or exceed customer needs that they are sold installed and service correctly, resulting in an average contract term of over 8 years.
And what we believe to be among the lowest customer attrition rates in the industry.
I have also rediscovered and incredible core asset we own with an average of 15 devices per home, we own a data rich environment that helps us not only protect our customers, but also improve the efficiency of their homes and elevate the peace of mind.
This proprietary solution that we design engineered deploy and manage provides a platform upon which we believe we can continue to integrate and leverage additional solutions that logically link to our smartphone platforms. We believe this will lead to new solutions that will create deeper value and savings for our <unk>.
Customers.
Finally, it has been a delight to reunite with so many employees and leaders that I had previously worked with they are professionals, who share my deep conviction to delight, our customers to bring innovative solutions for the market that create more value for our customers to work on a respectful and professional environment that celebrates each other and diversity.
And to do the right thing in every situation every time.
<unk> isn't a perfect company like every company out there it has room for improvement, but it is a company that learns and improves 1 that has an incredible culture and DNA to win and win the right way, we will continue to learn from mistakes and get better every day I am so delighted to innovate forward with this company and with.
This team.
Going forward, we will aim to deepen our competitive advantage within our core smart home platform and business. We expect to continue to introduce industry, leading smart home products that our customers Trust and value. We believe that these products and solutions will further entrench us in homes for our customers and allow us to create more value than our peers.
We will continue to work to strengthen our balance sheet deliver smart growth and invest intelligently defend and expand our market position.
An example of this smart growth is the recent announcement of our strategic partnership with Freedom Forever, 1 of the nation's largest and fastest growing solar installers. This partnership will expand upon our smart home solution to includes clean energy and will allow us to continue our exclusive arrangement with sunrun for solar Ppas.
The partnership will work to bundle a vivid smart home solution with each new solar cell. We believe this is 1 of the most desired bundled solutions for solar customers and it allows a home to truly be smart by producing smart energy and consuming energy more intelligently through our integrated suite.
1 on platform.
Our goal is to enable consumers to make better decisions regarding their energy consumption is a better understand what is happening in their homes.
We're just beginning to introduce the solution.
Select markets.
But given my experience and background in both smart home and solar I'm confident this will be another game changer.
More details will be forthcoming on future calls.
Another example of smart growth because our insurance pilot, we are working with a variety of large insurance companies to develop solutions for our customers that will leverage the data we have on their homes.
We collect data around occupancy and other usage patterns derived from our smart home devices that will allow insurance carriers to underwrite home insurance policies more intelligently, we believe a consumer that has our solution.
Which includes significant home occupancy data and properly where consensus that reduce the risk of fire flood or theft catastrophes should pay less than a consumer without our solution.
Our customers should save money on their home insurance because of our solutions.
This is another logical growth opportunity for us to leverage our core smart home solutions and expand the value we bring to our customers more details will follow as we work to bring these solutions to market in a controlled and effective manner.
Finally, wrapping up we delivered a strong second quarter across all key metrics revenue adjusted EBITDA and cash and we expect to deliver on our full year guidance the.
The debt refinancing on our recently completed underscores the strength of our business model and the confidence of the capital markets have on our team and path forward.
I appreciate the incredible teamwork across our company to deliver that result.
Let me from the time over to delve in to take you through the details on the second quarter on the guidance for the full year Bill.
Thanks, David and welcome back.
This afternoon, I will provide an overview of our second quarter and year to date results as well as our updated thoughts on guidance for the full year.
We will open the call for Q&A after my prepared remarks.
I've already referenced on slides from our second quarter earnings presentation that was posted to our Investor Relations website prior to this call.
Turning to slide 6 we highlight a few of our key subscriber portfolio metrics.
Total subscribers as of June 32021 for $1.7 million to $8 million up 10, 6% from June 32020.
Average monthly recurring revenue per user for AAM or argue for the quarter increased by 2.6% versus the prior year period, driven by customers purchasing more smart home and security products at the point of sale.
The combination of growth and total subscribers and growth in am argue lifted total monthly recurring revenue by 13, 8% year over year to $114.8 million.
Moving to slide 7 we highlight our revenue for the second quarter and 6 month period ended June 32021.
For the second quarter of 2021 revenue was $355.2 million, an increase from the prior period of 16, 9% for $51.3 million.
The primary drivers other revenue growth for $34.5 million from the increase in total subscribers and $5.6 million from the increase in average monthly reoccurring revenue per user.
Our sales pilot initiatives also contributed $9.5 million to the year over year revenue growth.
The 16, 9% revenue growth in the second quarter of 2021 was more than double the growth rate for the same period in 2020.
Revenue for the 6 months ended June 32021 was $698.5 million an increase of 15, 1% from the 6 month period in the prior year.
Like the second quarter growth in total subscribers.
M R U and sales pilots for the primary drivers of the revenue growth during the 6 month period in 2021.
On slide 8 adjusted EBITDA was up 3.6% in the second quarter of 2021 versus the year ago period.
The adjusted EBITDA growth in the second quarter was in line with our expectations.
As we have stated on previous calls we plan to make investments in brand innovation and information technology. During 2021 with a large portion of the spin hitting in the second and third quarters.
The investment spending for the 3 aforementioned items in the second quarter was roughly $11 million.
The other year over year anomaly when comparing adjusted EBITDA growth is the impact that the COVID-19 pandemic had on our second quarter 2020 results.
As a reminder, we paused our entire direct to home sales program for 6 weeks, which delayed the normal start of the summer selling season.
Due to the noise in the second quarter of 2020 related to the pandemic. We believe it is appropriate to look at the comparison of adjusted EBITDA growth in the second quarter of 2021 versus the second quarter of 2019.
Adjusted EBITDA in the second quarter of 2021 grew by 76, 7% as compared to the same period in 2019.
And our adjusted EBITDA margin expanded from 31, 4% in the second quarter of 2019 to 43, 9% in 2021.
Adjusted EBITDA for the 6 month period ended June 32021.
Was $318.1 million up 11, 4% compared to the same period in 2020.
And up 62, 6% compared to 2019.
Adjusted EBITDA margins for the 6 months period in 2021 remained strong at 45, 5%.
Now moving to slide 9 we highlight new subscriber originations during the second quarter of 2021.
Led by 22, 4% year over year growth in our national inside sales channel, we installed 121599, new subscribers during the quarter.
We continue to focus on underwriting high quality profitable customers.
For the second quarter of 2021 more than 99% on new subscribers either paid in full or financed the purchase of their equipment.
For the 6 month period ended June 32021, the company added 181726, new subscribers up 15% from the same period in 2020.
Turning to slide 10, I will cover net service cost per subscriber and net subscriber acquisition cost per new subscriber.
Net service cost per subscriber for the second quarter of 2021 was essentially flat versus the second quarter of.
2020 at $10 <unk>.
Our net service margin in the second quarter of 2021 remained robust at 79%.
While we have seen customer interactions and our call centers and in home service business rebound from the abnormally low levels during the height of the pandemic in the second quarter of last year I am pleased that our teams have been able to provide exceptional service to our customers, while managing debt service cost per subscriber to be essentially flat.
<unk> versus the same period last year.
I would note that given the seasonality of how we generally but on new subscribers, particularly in this summer we tend to see an increase in service costs during the third and fourth quarter of the year.
On the right side of Slide 10, we highlight the significant reduction in net subscriber acquisition costs over the past 3 years.
Net subscriber acquisition cost per new subscriber for the period ended June 32021 decreased to $70 and 88, 9% or $560 reduction from the prior year period, while the average proceeds collected at the point of sale increased to 2.
$144.
For the period ended June 30.
2021, we are seeing the full impact of the changes we made in the upfront product and installation pricing in April 2020, the reduction of risks to approximately 1%.
And the impact of discontinuing direct to home sales in Canada.
Moving to slide 11.
Our last 12 month attrition rate was 11, 6% for the period ended June 32021.
210 basis points lower than the same period last year, and a 12 quarter low for customer attrition.
We are very pleased with the resilience of our subscriber portfolio and we continue to see favorable trends in key leading indicators.
In terms of cash from operating activities.
<unk> had another strong quarter generating over $78 million.
I would note that our cash flow from operations in the quarter includes the impact of the change in timing of payments associated with the new citizens agreement.
The investments in brand innovation and <unk>.
As well as cash costs associated with changes in executive management.
We finished the second quarter with over $345 million of cash on hand, and a solid liquidity position of approximately $661 million in.
In July we completed a global refinancing of our existing debt structure, which decreased our total debt outstanding by approximately $90 million lowered our average cost of debt and increased our revolving credit facility from $334 million for $370 million.
We expect the refinancing to save the company approximately $50 million in annualized interest expense.
Finally <unk>.
In terms of guidance for the full year on slide 12.
Top of the slide reiterate several other attractive fundamental characteristics of our financial model, including monthly reoccurring revenue from long term subscriptions, a highly predictable business model.
And the ability to thrive in all economic environments, which we believe has been proven out during the past year.
As we have reviewed on this call our second quarter results were strong across the board.
We believe there is a lot of positive momentum on our business and we remain optimistic about the rest of the year. Despite a few of the following headwinds.
Recent flare ups of Covid variance across the U S continued disruption in the global supply chain and manufacturing environment.
And inflationary pressures and hiring constraints.
While any or all of the above mentioned factors could affect our performance during the second half of the year, we still expect to achieve the guidance. We previously provided for 2021.
As such we are reaffirming our original guidance for the full year as follows.
Total subscribers in the range of 1.8 to $1.85 million.
Total revenue in the range of $1.38 to 1 for $2 billion and adjusted EBITDA between 640 and $655 million.
This concludes our prepared remarks, operator, please open the call for Q&A.
Certainly.
We will now begin for question and answer questions. If you would like to ask a question. Please press star followed by 1 on your touch.
Touched on key pad it for.
Any reason you the luxury move that question. Please press star followed by Kim again.
A question. Please press star 1 as a reminder, if youre using a speakerphone. Please remember to pick up your handset before asking your question, we will pause briefly to allow questions to generate income.
The first question from the line of Rod Hall with Goldman Sachs You may have.
<unk>.
Hi, This is RK on behalf of Rod Thanks for taking my question and thank.
Thanks Yourself, David could you talk about what are the areas that you think that resonates to ensure the most.
Sure. Thanks for the question on the interest in the company.
I think for us for the company there's still.
A lot of there as we can.
Improve upon.
On the <unk> for our customers. So it's from 1 of the key.
Great job on.
It is.
Nutrition.
For the value that we're bringing the cost per round the number of devices in the home.
Yes.
With the pace that solution.
Interest is how.
How do we bring more value for them. So when you think about the current growth opportunities for all.
Focus on helping consumers save more money.
Having this out in more solutions.
How would it be more centers they are.
On the Mr joined the home being safe for the mall.
More efficient and to me that all will be drawn upon this core assets that we have.
<unk> pushed the smart.
Which is proprietary to us we own in on on this technology, we own install we owned the certainty.
The current package.
No.
I'm really excited about the stuff that we've already got going.
Pilots on insurance very logical.
It can really help our customers.
Book value.
That's.
By leveraging more.
This pilot with this partnership we have with <unk> is another extension for smart home smart.
And I think we will also bring additional savings for so.
Getting pushed on that Avenue.
We'll provide the customers on it.
Really pleased.
With how the technology suite.
Thoughts on quality as it really starts to manifest itself with the customers.
<unk> talked about what our servicing costs are in Q2.
And for that truly incredible speed flat for last year.
With that debt call volumes are up.
For.
Costs are back from the system to service those customers.
For the manifestation of that low cost per month per subscriber equally incredible because theres a lot of things that have come to fruition around the technology stack that much more effectively on a number.
A number of calls that were being from consumers is much less than we guided for.
We're around all day.
Even though we've increased more cameras on the home.
The just the operational and technical.
Sophistication CT solutions improved we still see room for improvement.
The way, we install our solution day 1.
The reduction in number of issues to be resolved gone down there's always room for improvement.
And then for us to build articulate the value that we can share to our customers on a truck.
We expanded our relationship with them.
And so on.
We're also looking for additional ways to meet the customer on how they want to engage with us. So we love our direct to home team's phenomenal. It is the right answer for so many customers.
For our inside sales team.
Moving customers are always looking at other partnerships and other ways for customers. So a lot of other improvement but.
I'm really pleased with what on the charity.
<unk> already accomplished literally up.
I appreciate all that color David.
Seeing any difference in the spending environment.
<unk> actually integrity opening.
On what we monetization with customer sure.
Elaborate a bit on them.
Yes.
Yes, just for either the demand environment in terms of yes.
Fiber adds on attrition.
On that in your customer base is there any team Jasmine point of reopening.
We're seeing for customers.
On purchasing Cumulus so.
It's interesting there's definitely been a shifts more and more.
That adoption with our customers and so the number of devices. We have in home that's been going up not down.
So that's been very very positive.
And then you.
See more and more painful.
For an inside sales.
Jim.
Our people enough for each of their home.
This day.
So we've seen some stronger demand.
Sales from strong 20% growth.
It's a very favorable day once again, we're trying to be customer centric.
Dennis solution and meet them, where they want us to be.
So it is very positive.
Our attrition you've seen our trends they are actually doing the right direction.
No.
I think for modeling Inc.
For us.
But for the pandemic has been very robust during the pandemic.
As we emerge from the pandemic is very robust so I think.
This is a validation there.
But what we're doing.
For me like I said before on these effectively on that.
All other stack both the.
Backend on solution stack and the installed service debt.
In refining we're delighting customers more at every point of interaction.
Debt.
Customers are more pleased which bodes.
Bodes well for us around deferrals.
Trust us so.
We see positive trends I'm not seeing any interest in team.
Other trends.
Great and last question from me value supply constrained in the quarter on how much cost inflation rising.
Thanks.
Licensing revenue.
Our political mix is like 97% for 95% of all other global Fortune 500 are having some strength.
Were we impacted for the award.
But the team did an incredible job of moving through it so.
And on us maintain our full year guidance so.
Slowly impacted yes, the team work hard with our partners to find solutions.
Where we enable.
Coughing directly to navigate through the year, we are reiterating our guidance for full year, but it has been a challenge.
A shout out to our entire team who has worked tirelessly to make that happen.
For our partners, we really pushed our partners' debt.
Outside of those on us and helped us support from the process, but I think it was a bump.
Planning I think deep relationships.
And also to some more cash.
<unk> written by our team to find solutions and so we have navigated through it so far and feel very confident for the balance of the year or so.
Impact, but that is true and Thats, what you guys pay us to do now for the team delivered on them.
I'll answer that.
Cost per term the additional shipping cost and all of those.
For full year guidance, so that doesn't change.
Sales for full year.
Great. Thanks, guys.
Thank you Doug.
Thank you Mr. Han.
The next question is from the line of Ed <unk> with Morgan Stanley You May proceed.
Thank you David very nice to meet you over the phone here looking for to working with you into the future.
If I wanted if I started just at the top here. So over the last few years, you've generated about 48 percentage of our annual revenue on the first half of the year.
Now based on your annual guidance, you're trending at about 50%, so a little bit more front end loaded over a year is that how we should think about it at the front half of the year being more front end loaded or would you say.
Your guidance for the full year is a bit conservative and you think you can achieve that and if so what are the major constraints in the back half of the year, if any and then I have a follow up thanks.
We look forward to meeting in person and they have been.
Working with you.
Yeah.
48% not a big difference.
<unk>.
I think key among debt instead.
Sales of the year round.
So that strong growth, we see in inside sales and price be a bit on that flattening because.
We're working the demand for our solutions is it just the seasonal demand as a year round demand so I think with.
With the growth there is inside sales.
That's not surprising.
On your question a bit more of a flat.
To the first half for the second year, but Delek veterans.
Yes.
Yes.
<unk>.
Yes, yes.
Alright, David Thank.
Thank you Eric and we said we got this volume.
Term subscription business for our current revenue. So we commented for the full year and each year, we know GAAP <unk> 85 per server revenue for.
For that year.
As David said, because we're seeing more kind of a ratable volume early subscribers Cal because of that as that sales channel.
It is a bit low ship, but again.
2% self funded by the way is also related to Covid.
Sales pilots and in previous years, our sales pilots, we're kind of really insignificant in terms of the dollars.
We called out the sales pilots for the first half of the year were about $15 million.
Year over year increase in some of these pilots that David talked about earlier around insurance solar continues to grow and we continue to look at other initiatives on adjacencies.
Side from what I call the core smartphone.
Revenue mix may change a little bit in terms of whether that growth for the first half of the year versus second half.
The final field.
As for.
As Bill mentioned a bit on the adjusted EBITDA, we didn't have a bit of a day late last year in our correct on that.
<unk> got a director on Super important to us supervised channel.
But it was a bit delayed last year for this year it went out on schedule.
So you probably saw a bit more.
That many other shoppers book, but I think will evolve over time, yes. It will.
But.
It's all good evolution we're on.
All of our channels will grow in.
For that.
Okay that color is really helpful. Thank you very much for both of you guys.
Maybe my follow up will just be some other RK just in terms of thinking about component constraints on supply the supply chain. So your inventory balance came down fairly considerably this quarter, if we look back.
Back at the last few years, it's come up.
Is there.
Maybe I'd add to that you see other companies trying to build inventory ahead of what could be costs further cost inflation or further constraints. So just any thoughts there on how you expect your inventory on the balance sheet to trend over time are there any issues or when it comes to issues.
For carrying components are they acute acute in any certain products or.
Okay I agree.
Okay.
No that's great and then maybe just.
Just a quick 1 to end. It there is tell you you know you were talking about servicing costs and how you guys have been able to.
Basically serve the higher call volumes.
And maintain your higher service margins. So just curious do you think higher.
70% is more sustainable now versus kind of mid seventies before or it was the mid seventy's still how we should think about that the more kind of run rate net service margins and thats. It for me. Thank you guys.
Yes.
I mean, I'm still weigh on wasn't different way on the loans on I think are on Bruce.
Because it's really currently on this integrated platform all working together to make sure we're providing the best experience.
And the best products for the customers.
We can on.
And in terms of how I think about it we're probably in that mid to maybe.
Maybe it's 76 or 77%.
Our service margin, but I'm still thinking for your model, how I've been thinking about is still kind of debt.
70 branch.
Perfect. Thanks, guys.
And congrats thank you.
Thanks.
Thank you Mr work for you.
The next question is from the law.
The line of Brian Bird with Imperial capital you May proceed.
Yes.
Great. Thank you guys very much for taking my call a couple of quick questions first of all.
David Welcome and.
Just have a couple of questions for you then.
Maybe some questions.
That you may want upon off but you mentioned attacking some issues facing the company as you step into this new role.
Can you talk about maybe selling practices.
Devon has had in the past in terms of current and past lawsuits and other things like that and how you plan to address that and then I have a follow up.
Sure.
So.
I mentioned in my comments.
Perfect.
Sure.
For the time from low sponsors for improvements for the scenario.
The improvement.
<unk> actually addressed a lot of issues.
Working for the past.
Several quarters, so there'll be proactive on credit close smoothed those.
Good day that they had in total.
Good job on that work closely with the government agencies to prove that close those gaps.
And we have an ongoing compliance that we've invested heavily to do that.
So there is a business.
For any routine and stress.
Where we have the team from Cornell.
Hang on.
Others, working with US and also work with diesel for internal audit team.
On that are very very attentive to making sure. We address identified gaps you keep those gaps closed on.
Well as to keep all of our processes moving toward for so I think the level of investment there is to retire debt I'm very pleased with the results. So I would see for Bolivar on it I appreciate all the folks involved.
And I also think it's really important.
The company does.
On a really good people unfortunately.
Net assets.
In the <unk>.
To be sure that that happen.
For this.
Our knowledge of the company.
You have to be diligent in making sure that we will always be testing, we adjusted because.
On those.
Question for this company per company.
People are great. So I think we've done a really good job addressing those issues, we will keep it very diligently.
On.
You just hired a chief compliance officer, we can and shortly moving.
Excited about that on the resonate with.
Total breeds for their argument.
Sure.
On top for reports growth to our audit Committee and also to meet.
So very excited for this person.
Non.
Continue to elevate.
And for leaner on us.
That's great. Thank you Brian.
As for your question.
I think this is very serious Brian so if anyone ever average pushed above that talked to me personally. This is a very very important matters on I know that resonates for my entire leadership team.
Your line.
No that's great. Thank you.
Maybe an easier question.
Our harder whatever way you want to look at it is attrition.
Right now you are at a record low of 11.6.
Where can that go Ken it can it hold fast here can you can.
Can you get below 11 can you get into the 10 what is realistic.
Over the next couple of quarters next year.
I don't know.
We'll do this most more I'm actually really pleased where it's at.
I was COO of the company, even choose adult books on attrition debt.
Janet.
I think for the companies right now.
What they've done.
And so on.
Also due to some volume to key E liquids for this 1.
And.
I'll remind you there's always trade offs, so low attrition.
Obviously, I appreciate you've been investing but we compare to our peers.
Non comparable to watch.
Some of our DIY competitors.
Reported.
So.
Compared to our peers.
Doing really well so.
Exhibit low 11% in December.
Fantastic.
Costs are so I don't have a very good answer for you right now.
But we'll try to always make the right decision on the record losses.
He will add to that.
Great. Thank you so much.
Brian look forward to getting to know you. Thank you.
Thank you.
Thank you Mr Breidenbach.
Again to ask a question. Please press star for the price 1 on your Touchtone keypad.
The next question is from them.
Line of Michael Please share with Evercore you May proceed.
Alright, Thanks for taking my question 1 day.
A little more detail around the Sunrun deal.
Specifically looking at the go to market strategy, there or is this going to be more.
Sunrun sales force selling <unk> equipment, or the other way around or a bit of a mix.
While the government Michael look forward a bit from these wells and David.
So the other.
Sure.
We've always had looked for last few years in selling solar and certain assets.
Bundle desire by our customers for Ebola.
And so we've been doing some pilots for them, they're the relationship we have some degree of forever.
Forever that we just announced.
On the large installers for the country a price.
Prior to this relationship recalculated for Sunrun.
Selling some ppas from them. So that relationship will continue the key to our exclusive PTH from settlement and on our company very well they bought my own company and authority.
Very complex.
An important part of the brand.
Also a source of their ppas.
And so it was a very natural extension for us.
With pre owned.
I'm very broad.
Installations with across the country.
And the key for this relationship.
They are also very committed to installing a vivid smart home package for each of their solar installs.
We began the true definition of a smart home smart on cloud.
Smart production of power on the route.
Intelligent consumption.
Power and the home and on our platform is uniquely positioned to do that after the integration that will do for the apps and the information will bring to bear for our customers is really compelling.
So there is this.
<unk> Global partners that are working together on financing.
Which is for southern for the PPA sympathetic for the loans.
We're working with free up forever on the installation for the search.
For the solar piece and of course, we will take all of the smart home for the relationship with this model. So we eat.
We will sell that ourselves and for our dealers that were for free to forever and for someone who can also sell vessels.
It's very compelling to the consumer so for.
We're excited about it we're very measured in how we are investing to make sure. We havent really good integration, we measured in how we roll it out which we're delighted customers are there will be alerting curve along quickly.
Make sure we're delighting customers, but.
It is a very exciting partnership with <unk>.
For the right partners, we know that.
Yes.
It is going to address current.
Hi, bundling desire for our sales.
It will go back to our key thesis with it.
Customer demand for value for customers, so in our mind sort of total losses.
In order to it.
Alright, great. Thanks for color on it and then the other thing I wanted to dig into a little bit what the non.
<unk> marketing campaign, I think it's been going on 6.7 months now and I was just curious maybe reflect on it a little bit do you think it's been successful so far and how are you thinking about your marketing spend going forward.
Yeah, I'll take that 1 as well.
Bill just shy from different degrees on the question So operating model.
We're pleased so far we're pleased so far with the results.
And early data.
Marketing and branding has a long gestation cycle on a long payback period, but we've seen we've seen it's really interesting in the market that we over index on on a low national marketing campaigns.
<unk> seen an improvement in our average sales per professional sales person.
So we're still collecting.
Collecting all the data we're still working on validating all working.
Revisions to that but because it's early days there have been encouraging, but we're still learning but definitely.
We are encouraged by what we see.
Alright, thanks for taking my questions.
Thank you.
Thank you.
Thank you Mr Fischer.
Again to ask a question. Please press star followed by 1 on your Touchtone keypad.
There are no additional questions waiting at this time I would like to pass the conference back over to.
David.
For any closing remarks.
Great I appreciate that thank you.
We appreciate your interest.
We will continue to grow the company make good decisions.
And for us to create value for our customers and for shareholders.
Our employees as it was.
<unk>.
A solid solid quarter and thinking about growth.
On revenue nearly 70% of subscribers up by 13% excluded from impressive.
Attrition for the 12 quarter low price.
SaaS is now sub $100.70 Bucks.
Amazing began on almost 90% from last year servicing costs are.
At box.
And that is with a fully normalized.
Workload.
As a function of the benefits from our innovation team and our operating capability working together to bring down costs.
Our EBITDA growth on a true apples to apples campaign for 2019 is up considerably so on the cost management.
Perhaps the team on what they've done their credit.
Credit critical.
Cash is positive it's accretive it's pretty amazing.
Moving to non wise.
I think these are blue present level.
Further day level de Levered the company, we're now at $2.92.8.
Insurance debt continue to trend down, which is nice and the refinancing I thought was an incredible Dortmund keep done in the business model and.
And we've also were real.
Permian for your guidance, we've done that while also advancing our strategic initiatives around logical extensions.
The extensions on solutions to our customers that for.
Providing value to them to deepen our relationship so on.
Pretty pleased with all debt, we have 1 on what to do steel.
Thank you Brad has been on and keep driving for it. So thank you for ratings per company.
In terms of option.
That concludes the damn smart homes second quarter 2021 or income.
I hope you all enjoy the rest of your day.