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Alarm.com Holdings Continues to Enjoy Rapid Growth

The Motley Fool Money crew turns its attention to a lesser-known company: Alarm.com Holdings (NASDAQ: ALRM), which is employing video and other technology to win over customers. The company topped earnings estimates with its latest report, but shares have mostly traded flat.

A full transcript follows the video.

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This video was recorded on March 17, 2017.

Chris Hill: Fourth-quarter profits for Alarm.com Holdings rose 36%. Shares of the home-security company up around 45% in the past year. They're kind of on a roll, Seth.

Seth Jayson: Yeah, there wasn't a whole lot of reaction to the news, which I thought, they beat estimates by a long shot --

Hill: All right, but in defense of investors, this isn't Coca-Cola. Alarm.com Holdings, not a household name.

Ron Gross: I'm not sure I've ever heard of it. Probably use it.

Jayson: Yeah. It's an interesting little company we've picked over at Hidden Gems. They sort of provide the cloud service-type backbone for a lot of home security. In other words, you go to the local or regional provider in your area and you have them put in cameras and door locks and all that stuff; there's a good chance that Alarm.com is providing the service, the backbone for all of that, including putting a cell phone-type receiver that keeps you connected all the time. As those folks continue to add customers, those customers, of course, become Alarm.com customers, and Alarm.com is pushing a lot into video. It seems to be really well accepted.

That's good news, because folks who have video and use video on their phone apps and stuff, generally engage more with the systems, are more likely to stick around, they pay more every month, they also generate some hardware sales from this.

So it's a pretty nice, healthy growing business that not a lot of folks have heard of, and they've been around quite a while. The other thing they're doing that is the call option is, they're becoming a hub for all the smart-home devices you might get. They've added Amazon Echo, and they have all sorts of other devices, you can control those all from their system, which makes them a one-stop shop, as opposed to trying to cobble this stuff together as a do-it-yourselfer.

Andy Cross has no position in any stocks mentioned. Chris Hill owns shares of Coca-Cola. Ron Gross owns shares of Coca-Cola. Seth Jayson owns shares of Alarm.com Holdings. The Motley Fool recommends Alarm.com Holdings. The Motley Fool has a disclosure policy.