What happened
Shares of Alarm.com (ALRM -1.45%) fell 14.5% in August, according to data from S&P Global Market Intelligence. The home security company's stock fell after Alphabet's (GOOG -1.55%) (GOOG -1.55%) Google announced it would be partnering with ADT (ADT -0.14%).
Google announced on Aug. 3 that it would be integrating its Nest smart-home platform with ADT. The tech giant also revealed that it had purchased a 6.6% stake in ADT for $450 million.
Image source: Getty Images.
So what
Comments from Google suggest that the ADT partnership will continue to evolve and that Nest devices will eventually become the cornerstone of ADT's smart-home business. Alarm.com stock saw a bit of recovery after the company published better-than-expected second-quarter results on Aug. 5, but the gains were short-lived, and shares moved lower as the month progressed.
The company's revenue climbed 16.4% year over year in Q2 to reach $141.6 million, and adjusted earnings per share for the period came in at $0.41. The average analyst estimate had targeted adjusted earnings of $0.30 per share on revenue of $128 million.
The business' Q2 sales growth and earnings beat was aided by a 16.2% year-over-year increase for software-as-a-service (SaaS) and license revenue, which reached $95.7 million in the period. Free cash flow rose 49% year over year in the period, to $31.8 million.
Now what
Alarm.com stock has continued to move lower in September's trading. The company's share price is down roughly 6% in the month so far.
Alarm.com is guiding for SaaS and license revenue to be between $96.6 million and $96.8 million in the third quarter. Full-year revenue for the category is expected to be between $382.7 million and $383.1 million. Total full-year sales are projected to come in between $382.7 million and $383.1 million, and management is targeting adjusted per-share earnings between $1.46 and $1.47.
Alarm.com has a market capitalization of roughly $2.9 billion and is valued at roughly 40 times this year's expected earnings and 5.1 times expected sales.
