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Cloud Stocks: Should Follow a PaaS Strategy?

Posted on Friday, May 3rd 2019

According to a Market Watch report, the global connected home market is estimated to grow 14% annually to reach a valuation of more than $138 billion by 2026. Connected homes include the ability to operate and connect various devices and appliances including those that provide security, healthcare, energy management, media, lighting, and kitchen solutions with mobile and internet connected devices. The high growth rate of the market has attracted tech giants like Amazon and Google to enter the space too. One early participant in the market is Virgina-based (NASDAQ: ALRM) that provides security solutions for smart homes and businesses.’s Offerings was founded in 2000 as a business unit within a business intelligence firm MicroStrategy. In the first few years of being set up, the team invented its first interactive home security solution, thus revolutionizing the way people interacted with their homes. In 2009, MicroStrategy sold off all its interests in to a venture capital firm ABS Capital Partners for $27.7 million to form Holdings, Inc.

For the next few years, the team continued to develop innovative home security solutions. They created device integrations to create a Smart Home as a Service offering. They diversified to automating thermostats and controlling locks and lights. They launched video monitoring, image sensors, motion detection, geo-services, and even an emergency wellness solution for seniors.

Today, services are installed in millions of households across the country and its services are monitored through “tens of millions of devices”. Its award-winning suite of tools continues to provide security, energy management and wellness solutions for both homes and businesses.’s Financials

For the first 15 years of being founded, was privately held. It raised $163 million for its operations from investors including TCV, Egis Capital Partners, and ABS Capital Partners at an undisclosed valuation. In 2015, listed on the Nasdaq under the ticker ALRM. It raised $98 million at a valuation of $900 million.

The company recently reported its fourth quarter results that saw revenues grow 25% over the year to $111.4 million. Net income for the period grew to $7.9 million for the quarter compared with a modest $0.3 million recorded a year ago. Adjusted Net Income increased to $14.5 million, or $0.29 per share, compared to $13.0 million, or $0.26 a share, reported a year ago.

By segment, SaaS and license revenue increased 19% to $77.8 million and hardware and other revenues grew 42% to $33.58 million.

It ended the year with revenues of $420.5 million, up 25% and net income of $21.5 million, compared with $29.3 million a year ago.

For the first quarter of this year, the company provided a forecast of SaaS and license revenues of $78.5-$78.8 million. It expects to end the current year with total revenues of $440-$450 million and an EPS of $1.37- $1.41. The market has forecast revenues of $445.88 million with an EPS of $1.39 for the year.’s Expanding Products continues to expand its product and service offerings. Earlier this year, it announced that it had entered into a strategic tie-up with D.R. Horton, America’s largest home builder by volume. As part of the agreement, D.R. Horton will integrate’s services into its new Home is Connected offering to build smart home systems that include smart locks, lights, thermostats, voice control, and doorbell cameras. D.R. Horton will benefit with access to’s nationwide network of service provider partners for hardware installation and long-term support after the sale.

As part of technological advancements, deployed facial recognition technology within the alarm systems. The added capability will analyze pictures taken when the security panel is disarmed to associate a person with a specific user code. It will then be able to offer enhanced security by enabling certain security panels with built-in cameras to proactively monitor for unauthorized sharing or theft of an authorized user’s security system codes.

Within the Wellness segment, introduced Wellness Insights that applies predictive analytics to data generated by a suite of sensors in the home to detect changes that can indicate an emerging health or other quality of life issues. It also launched Wellcam, an enhanced 180-degree field of view video camera that provides caregivers with the ability to check in and communicate through a live two-way audio and wide-angle view. also provides apps that connect smartphones and tablets with the multiple devices that it provides for smart homes and businesses. It has also integrated its products with the Apple Watch, Amazon Alexa, Google Home, Apple TV, and Amazon Fire TV. It offers a partner ecosystem that is used to connect new products to its network. But its platform is closed to third party developers and does not let them build other smart home apps. I think should open its platform to third party developers to build upon. What kind of apps do you think it could add to its platform to help expand the usability of its products and services?

Its stock is trading at $70.23 with a market capitalization of $3.4 billion. It had climbed to a 52-week high of $71.46 earlier this month. It has recovered from the 52-week low of $36.28 that it had fallen to in June last year.

This segment is a part in the series : Cloud Stocks

. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. SaaS Companies NEED PaaS Strategy
. Will GoDaddy Follow the PaaS Route?
. Calling ALL PaaS Leaders
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Follow a PaaS Strategy?
. Six Cloud Stock Picks Based on PaaS Prospects
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
. Partnerships are the Mantra for BlackLine
. SurveyMonkey Counts on Enterprise Segment for Growth
. HubSpot Soars to a New High
. Intuit Pushes AI to Simplify Tax Filing

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