Vivint’s RMR now at $42.6m

Q3 and nine-month report for 2013 shows 18 percent increase in subscribers; inside sales playing a larger role at door-knocking company; attrition is 13 percent
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Wednesday, November 6, 2013

PROVO, Utah—Vivint posted $42.6 million in RMR at the end of its third quarter, a 23 percent increase over one year ago.

“All of the performance metrics that are of importance to the business are solid and we really think best in class,” Vivint President Alex Dunn said during an APX Group Holdings conference call Nov. 4. Home automation/home security company Vivint is a subsidiary of APX Group. Both are based here.

In the nine-month period through Sept. 30 of this year, the company added 198,595 new customers, an increase of 18 percent over the same period last year. Most of those new subscribers—161,441—resulted from direct-to-home sales. Inside sales accounted for 37,154 of the new subscribers.

“We had a very successful direct-to-home summer selling season, really the best season we’ve had in the history of our company,” Dunn said.

Dunn said the company is “very happy” with the growth of inside sales, which in the past year “has been a real focus of the business, to make sure that we have multiple channels that we’re generating accounts through.”

While Vivint will remain a door-knocking company, inside sales will play a larger role. “Over a longer period of time, we hope to have those channels be more balanced,” he said.

The company now has more than 800,000 subscribers. Average RMR per subscriber is $53 and Dunn said that “really represents an increase in additional service adoptions.”

Dunn said attrition is 13 percent. He said the rate is at that level because of the fact that about 20 percent of Vivint’s accounts are in their initial year of renewal. He expects attrition to drop over the next few years as fewer accounts fall into that category. For example, Dunn said, by 2017, “we would expect about 3 percent of our accounts are going to be in that year of renewal.”

Adjusted EBITDA over the first nine months of this year was $212.5 million, up more than 17 percent from $180.2 million during the same period last year.

Net revenue in the past nine months climbed to $368.2 million, up more than 10 percent over the same period in 2012.

However, Dunn cautioned, “it’s important to note that there’s a little bit of noise still in here from 2GIG … revenue in 2012 had about $16 million of 2GIG revenue.”

When the publicly traded Blackstone Group bought Vivint last year in a deal worth more than $2 billion, the purchase also included 2GIG Technologies, a manufacturer of security and home automation equipment. Then, early this year, Nortek, parent company of Linear, announced it was buying 2GIG Technologies for $135 million.

Dunn told Security Systems News during the conference call that he attributes this year’s outstanding summer season to the “Blackstone partnership. … They gave us the ability to grow as much as we could grow in a sustainable way.”

Vivint also recently was recognized as one of the nation’s top job creators by Inc. Magazine for adding nearly 2,000 jobs. The company now has more than 7,000 employees and the magazine gave it a 2013 Inc. Hire Power Award, ranking it as the “No. 2 top job-creating private company in America.”

David Powell, Vivint VP of human resources, told SSN that the new jobs were added in the past 18 months. About 600 of the jobs were sales, installation and back office staff for Vivint Solar. That division of Vivint just expanded to New York and also sells home solar panels in Hawaii, California, New Jersey and Massachusetts.

Powell also said that about 100 jobs were added when Vivint this summer opened a new inside sales center in Washington state. The center is expected to eventually have 400 employees.

Also, Powell said, each time the company adds new accounts, as it has been doing, it needs new staff. “When the accounts grow, we need x number of people to support them,” he said. The company has added more employees in Vivint’s customer care center, and to technical and installation staff, he said.

Powell predicted the company will do even more hiring in the future as it adds more customers. “We’re hoping to pass the million customer mark in the next 12 to18 months,” he said.