Alarm.com Holdings, Inc.

Good day, and thank you for standing by. Welcome to the Alarm.com Q2 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, David Trone, Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Alarm.com's second quarter 2021 earnings conference call. As a reminder, this call is being recorded. Joining us today from Alarm.com are Steve Trundle, President and CEO, and Steve Valenzuela, CFO. Before we begin, a quick reminder to our listeners. Management discussion during the call today will include forward-looking statements, which include projected financial performance for the third quarter and full year 2021, 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 pandemic on our global 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, opportunities for growth in our current markets and our plans to expand into new markets, and other forward-looking statements. These forward-looking statements are based on our current expectations and beliefs and on information currently available to us. Statements containing words such as anticipate, began, believe, continue, could, estimate, expect, forecast, may, plan, project, trend, will, and other similar words are intended to identify such forward-looking statements. These statements are subject to risks and uncertainties, including those contained in the risk factor section of our most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 4, 2021, and in subsequent reports that we filed with the Securities and Exchange Commission from time to time including our quarterly report on Form 10-Q for the quarter ended June 30th, 2021, that we intend to file with the Securities and Exchange Commission shortly after this call that could cause actual results to differ materially from those contained in 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.com undertakes no obligation to update these statements. to reflect subsequent events or circumstances, except to the extent required by law. Also during this call, management's 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 in understanding the company's performance and trends, but notes that the presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in the financial statement tables of our earnings press release, which we have posted to our investor relations website at investors.alarm.com. This conference call is being webcast and is also available on our investor relations website. The webcast of this call will be archived, and a telephone replay will also be available on our website. With these formalities out of the way, I'd now like to turn the call over to Steve Trundle. You may begin.

Thank you, David. Good afternoon and welcome to everyone. We are pleased to report solid Q2 results. Our SAS and license revenue in the second quarter was $113.2 million, up 18.3% over last year. Our adjusted EBITDA in the second quarter was $38 million. I want to thank our service provider partners and the Alarm.com team for their contributions to our results and for their ongoing performance. The residential markets in the U.S. and Canada continue to perform well during the quarter. Demand for smart home security remains strong with many new customers choosing to include our more advanced services such as video and video analytics with their installation. We also saw conditions improve in the small and medium sized business and enterprise commercial markets that we serve. Market activity for larger commercial customers, including sales pipeline opportunities, nearly returned to pre-pandemic levels during the second quarter. Our international business continues to be impacted by the ongoing pandemic. During the quarter, our global team remained focused on developing our businesses, and services so that we can take full advantage of recoveries as they occur. We are actively securing new partnerships with service providers and expanding and refining our offerings across our international markets. My focus for today's call is to provide more color on our service provider partners and to highlight how the Alarm.com platform helps them grow and supports their operations. I'll also update you on a newly released capability that we designed to enhance the monitoring services provided by our security channel partners. Earlier this summer, Alarm.com participated in ISE West, the largest security industry trade conference. I attended and met with a number of our service provider partners. Aside from enjoying the face-to-face interactions, it was also invigorating to hear firsthand how our service provider partners have continued to grow and build their businesses on the alarm.com platform. We continually innovate and expand the alarm.com platform to enable our service provider partners to deliver more valued services to their customers, grow recurring revenue, expand into new markets, and efficiently deploy and support increasingly complex systems. I thought I would spend a few minutes this quarter highlighting one of our longtime service provider partners and how they have leveraged the Alarm.com platform through time to evolve and grow their business. I believe this will provide our investors with some insight into the service provider channel relationships that we cultivate, which have been a significant driver of our success. Titan Alarm is a local dealer with a dedicated focus on the Phoenix market in Arizona. Titan's founders, Mike and Taylor Proudfit, exemplify the entrepreneurial energy and vision that we see across our service provider community. In its formative days, Titan Alarm was exclusively a residential dealer focused primarily on originating and selling new accounts to one of Alarm.com's dealer program partners. Gradually, as they built their balance sheet and borrowing capacity, they began to not only originate new Alarm.com accounts, but to retain and service those accounts so that they could build their company's recurring monthly revenues, referred to in the industry as RMR. In the last five years, Titan has more than doubled its base of RMR and continues to accelerate its growth. The backbone of Titan's growth strategy has been premium connected property services and high-touch professional support. A key selling point to their customers is the value of a single security-centric service that also connects to a wide ecosystem of connected devices. Titan has increasingly deployed our video solutions to create higher RMR accounts. Titan has also deeply integrated alarm.com's backend and servicing tools into all aspects of its installation and customer support processes. Titan's technicians have standardized on alarm.com's tools to help ensure accurate and dependable installations, and all of their new sales technician and support hires attend full training programs at the alarm.com academy. As a result, Titan has been able to efficiently service their growing base of subscriber accounts and provide a premium customer experience that differentiates them in the market. Titan's management team also uses our business intelligence insights to drive the sales, installation, and use of system capabilities that result in highly engaged long-term accounts. As a result, Titan's customers use alarm.com's most engaging and sticky capabilities at higher rates than our average service provider. Along with their attention to customer support and service, this has helped Titan maintain attrition rates that are below industry average. More recently, as alarm.com built out its commercial offering, Titan also expanded in the commercial market and has made full use of our differentiated capabilities. They adopted our integrated access control and commercial video solutions instead of the standalone offerings they previously deployed. Our enterprise dashboards have supported Titan's sales team as they have targeted multi-location businesses. The unique implementation of our auto-arming capability has also served as a key selling point to commercial customers. At the time specified by a business's security manager, our auto-arming feature performs the extra step of monitoring the property for a period of inactivity before it automatically arms the system. We designed this feature to help eliminate a common cause of false alarms and reassure commercial subscribers that their properties are secured each day. We appreciate Titan Alarm for their long-term partnership with us. We often share ideas with their management team as we attack the markets together. They are a great example of the entrepreneurial businesses that make up our service provider partner community. I also want to update you on some of our product development initiatives related to monitoring stations and alarm response events. We're continuing to develop technology that applies AI and adaptive machine learning to define the next generation of smart monitored security. We recently introduced a capability in this area called Ambient Insights for alarm response. This backend capability evaluates an alarm signal and then provides a real-time determination to the monitoring station as to the likelihood that the property owner will cancel the alarm. This will help operators prioritize multiple alarm events so they can dispatch emergency services faster to the highest priority alarms and can also help reduce false alarm dispatches. Coupled with our visual verification service, monitoring stations can provide a broad range of critical information to public safety dispatchers and first responders. For consumers, this is another differentiator of the monitoring services associated with alarm.com powered systems. For monitoring stations, more efficiently responding to alarm events can create operational capacity for extending monitoring services to more devices and systems in homes and businesses. For communities, it reduces the demand placed on first responders and supports them during emergencies while also improving overall public safety. Ambient Insights is built on our AI and adaptive machine learning platform called Insights Engine. The platform evaluates each alarm signal based on a range of data points and trends, including the history of alarm signals from the location, activity levels detected in the property prior to the alarm event, and the time of day. Leveraging the scale of our platform, we will deploy increasingly intelligent alarm signal assessments and insights. This will create more value for our subscribers in concert with our monitoring station partners. In summary, I'm pleased with our Q2 results and with our execution against our plans through the first half of 2021. Our revenue performance has been particularly strong through the pandemic period and despite challenges in the global supply chain. We plan to increase our investment in key growth areas of our business, such as international, commercial, and video. We are entering a seasonally strong recruiting and onboarding period and are commencing more traditional sales and marketing activities. I anticipate that we will be able to execute upon greater investment in those key areas in the second half of the year. Finally, I want to thank our service provider partners and our team for their hard work and our investors for their continued trust in our business. And with that, let me turn things over to Steve Valenzuela to review our financial results and provide guidance. Steve?