Earnings Call: Q1 2021

May 4, 2021

Good day and thank you for standing by. Welcome to the alarm.com's First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, to Mr. David Trone, Vice President of Investor Relations. Thank you. Please go ahead, sir. Thank you. Good afternoon, everyone, and welcome to alarm.com's Q1 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's discussion during the call today will include forward looking statements, which include Projected financial performance for the Q2 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 current expectations and beliefs and on information currently available to us. Statements containing words such as began, believe, continue, estimate, expect, forecast, may, 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 Factors section of our most recent annual report on Form 10 ks filed with the Securities and Exchange Commission on February 25, 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 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 Q1 results to begin the year. Our SaaS and license revenue in the Q1 was $107,400,000 up 16.8% over last year. Our adjusted EBITDA in the Q1 was $35,600,000 I want to thank our service provider partners and the alarm.com team for their contributions to our results and for their ongoing performance during these challenging times. The favorable conditions that we saw in the U. S. And Canadian residential markets in late 2020 carried into the Q1 of 2021. This momentum was driven by new account creation and the growing adoption of Advanced services such as video and video analytics. Commercial sales opportunities in the large scale enterprise segment also improved, but remain somewhat below pre pandemic levels. Our international business remains more impacted by the pandemic then our U. S. And Canadian business. As we monitor conditions in our international markets, our team continues to add new service providers To better position for the growth, we expect once more robust recoveries are underway in these markets. During the quarter, we continued to build on our growth initiatives and invest in new product development programs. I want to update you on some of the technology we released and other key developments over the period. I'll begin with our residential services. I discussed the launch of the alarm.com touchless video doorbell last quarter, and we saw encouraging adoption during its initial rollout. In the Q1, nearly 1200 service providers installed the new product. This shows the level of confidence that our service providers have in our ability to deploy innovative, market leading products that also meet the dependability and performance expectations associated with Life Safety Solutions. To expand on our success in the video doorbell category, we are establishing a diverse Product lineup with a range of price points. We continue to offer our traditional doorbell products, and we saw strong sales across the value spectrum of our lineup in the U. S. And Canadian residential markets. Shifting to our commercial solutions. We recently launched with temperature sensitive inventory for areas. The solution uses temperature sensors, which are integrated with our supported security control panels. It provides comprehensive monitoring, real time alerts, historical reporting and multi location awareness to Customized alerts can inform the subscriber if the temperature in a refrigerator or freezer is outside predefined thresholds or if a door is left open for a predetermined length of time. The alarm.com reporting engine provides an audit of out of range temperature incidents that includes the incident's total time. We also launched a new enterprise dashboard to provide a single interface for monitoring storage temperatures and trouble conditions across into our higher value Commercial Plus service plan. This is part of our ongoing effort to develop unique capabilities that are available only through our commercial plus offering where ARPU is more favorable. As a result, A portion of new commercial subscribers taking a commercial plus plan has increased by 35% since 2018. With a strong ROI based value proposition, we expect temperature monitoring to contribute further to these results and generate additional RMR for our service providers. We also enhanced the enterprise dashboards that we designed to make it easier for multi location businesses to monitor and manage their properties. For businesses with multiple cameras Installed across multiple sites, monitoring the high volume of activity and ensuring that all the cameras are offers a smarter and more efficient solution. The new enhancements include a single screen for viewing video clips of important activity captured by any camera from any location. We also automated the process of monitoring the operational status of video cameras. On demand video health reports summarize the status and trouble conditions discovered on all video cameras that the business has deployed. New trouble condition filters can also pinpoint specific issues at specific sites. We also strengthened The enterprise dashboard to enable multisite security administrators to manage enterprise credentials across locations more easily. For example, administrators can assign a single user code to provide employees with customized access to any business location or region. Streamlining these workflows and permissions simplifies the process for administrators and employees while enhancing security and control at every location. Before I hand things over to Steve Valenzuela, I want to update you on new developments with EnergyHub. EnergyHub orchestrates and manages distributed energy resources, including thermostats, batteries, Commercial and Industrial Resources, Solar Inverters and Electric Vehicle chargers. EnergyHub's Steady expansion of its industry leading ecosystem and associated services has opened new opportunities in growth areas. A critical strategic challenge that EnergyHub's utility customers are actively planning for is how to manage The substantial increase in demand on the grid that electric vehicle charging will create. EnergyHub is investing in comprehensive solutions to help address this. This past quarter, EnergyHub added another EV charging program to its platform through a partnership with Potomac Edison. Potomac Edison will use EnergyHub's platform to administer a dynamic pricing program for electric vehicle charging. By managing data from electric vehicle chargers, the EnergyHub platform will encourage charging during off peak hours and support customer adoption of connected charging infrastructure. EnergyHub also announced The launch of Mercury Edge Connect. This is a standardized framework for integrating distributed energy resources, such as connected EV chargers and batteries with EnergyHub's platform. We believe streamlining the integration process For providers of these devices, we'll strengthen EnergyHub's position as the single platform for utilities to manage a broad range of customer owned And with that, let me turn things over to Steve Valenzuela. Steve? Thanks, Steve. I will begin with a review of our strong first quarter And then discuss guidance before opening the call for questions. SaaS and license revenue in the Q1 grew 16.8% from the same quarter last year to $107,400,000 This includes Connect software license revenue of approximately $8,700,000 for the Q1, down as expected from $9,700,000 in the year ago quarter. SaaS and license revenue for our alarm.com segment grew 15.8% year over year And our other segment grew 34.9% over the same period. Our SaaS and license revenue visibility remains high with a revenue renewal rate of 95% in the Q1, which is above our historical range of 92% to 94%. This slightly higher revenue renewal rate, we believe, is likely the result of fewer people moving homes at the start of the pandemic, And we could see a return to the historic range in the next quarter or 2. Hardware and other revenue in the Q1 was 65,100,000 up 8.5% over Q1 2020. We continue to see strong sales of our video cameras, driven by increased adoption of our industry leading video solutions and video analytics capabilities. Total revenue of $172,500,000 for the Q1 grew 13.5% year over year. SaaS and license gross margin for the Q1 was 85.9%, down approximately 70 basis points From Q1 2020 gross margin, mainly due to product mix, hardware gross margin was 22.3% for the Q1 compared to 23.9% for the same quarter last year, mainly due to product mix and also somewhat due to increased supply chain costs as the global supply chain has been more challenging recently. Total gross margin was 61.9% for the Q1, up slightly from the same quarter last year. Turning to operating expenses. R and D expenses in the first quarter were $42,500,000 $39,700,000 for the Q1 of 2020. We ended the Q1 with 7 97 employees in R and D, up from 6 50 employees in the same quarter last year. Total headcount increased to 1414 employees in the Q1 compared to 12 27 employees a year ago. Sales and marketing expenses in the Q1 were $19,000,000 or 11 percent of total revenue compared to $17,100,000 for 11.2 percent of revenue in the same quarter last year. Our G and A expenses in the Q1 were $22,900,000 up from $20,900,000 in the same quarter last year. G and A expense in the Q1 includes non ordinary course litigation expense of $5,300,000 compared to $2,500,000 for Q1 2020. Non ordinary course litigation expenses are part of our adjusted measures and are excluded from our measurement of our non GAAP financial performance. Non GAAP adjusted EBITDA for the Q1 was $35,600,000 up from $29,200,000 in Q1 2020. In the Q1, GAAP net income was $14,800,000 compared to GAAP net income of $8,800,000 for Q1 2020. Non GAAP adjusted net income increased to $25,800,000 or $0.50 per diluted share in the Q1 compared to $20,900,000 or $0.42 per share for the Q1 of 2020. Turning to our balance sheet. We ended the Q1 with $642,200,000 of cash and cash equivalents. This includes net proceeds approximately $484,300,000 from the issuance of our 0% convertible bonds we closed in January of this year and reflects the concurrent payoff of our senior revolving debt facility, which had an outstanding principal balance of 110,000,000 In the Q1, we generated approximately $21,200,000 in cash flow from operations compared to $12,900,000 for the Q1 of 2020. Our free cash flow for the Q1 was 17,200,000 up from $9,200,000 for the same quarter last year. In the Q1, our capital equipment purchases were about $4,100,000 up slightly from $3,700,000 in the Q1 of 2020. Turning to our financial outlook. For the Q2 of 2021, we expect SaaS and license revenue of $108,900,000 to $109,100,000 For the full year of 2021, we expect SaaS and license revenue to be between $445,500,000 to $446,000,000 up from our prior guidance of $440,500,000 to $441,500,000 We are projecting total revenue for 2021 of $680,500,000 to $691,000,000 increased from our prior guidance of $660,500,000 to $671,500,000 which includes estimated hardware and other revenue of $235,000,000 to 245,000,000 We continue to monitor issues around a global chip shortage, which did not impact our revenue in this quarter, but could impact our revenue this year depending on how the supply shortages work out. We estimate that non GAAP adjusted EBITDA for 2021 will be between $124,000,000 to 130,000,000 Compared to our prior guidance of $120,000,000 to $130,000,000 we have factored in more travel and trade show In the back half of twenty twenty one, as these expenses have been curtailed with the pandemic, we also anticipate that the bulk of our 2021 headcount additions will be in the Q3 of this year. Non GAAP net income for 2021 It's projected to be $85,600,000 to $90,000,000 or $1.63 to $1.72 per diluted share, Up from our prior guidance of $84,000,000 to $90,000,000 or $1.61 to $1.72 per diluted share. We currently project our non GAAP tax rate for 2021 to remain at 21% under current tax rules. EPS is based on an estimate of $52,400,000 weighted average diluted shares outstanding. We expect full year 2021 stock based compensation expense of $40,000,000 to 43,000,000 In summary, we are pleased how well our service providers and internal teams continue to perform during these challenging times. We are focused on executing on our business strategy and investing in our growth opportunities, while continuing to deliver profitable growth. And with that, operator, please open the call for Q and A. Thank you, sir. I show our first question comes from the line of Sterling Auty from JPMorgan. Please go ahead. Yes, thanks. Hi, guys. So you mentioned On the international side, the continuing pandemic, I'm just kind of curious with UK set to kind of open up more fully, What's the visibility that you have in improvement that we might see out of the international region in the June and then September quarters? This is Steve Trundle speaking. So I don't expect to see a lot of movement between now and June, meaning we're running at sort of the level we probably ran at, maybe a little better than Q1. As we get it, I mean, England obviously is a little ahead of other parts of Europe Certainly ahead of Latin America right now. And I would also say we're seeing a little bit more of a supply chain stress globally or internationally, with some of the more esoteric parts than what we see here in North America. So I think when we get probably In the Q3, maybe even the 4th, we start to see that clear would be my guess. And then what we're trying to do right now is really work with service providers and position for those markets to be more robust next year. And we're thankful that North America has remained pretty strong. That makes sense. And then maybe one quick follow-up. You talked about the renewal rates perhaps returning to historical norms. Just what have you baked into the guidance for the rest of the year? Yes. I think our People basically stopped moving this time last year. So you didn't have we didn't we had a higher than Revenue renewal rate, I think, came in at 95%. I think what we baked in for the remainder of the year is the mid Point of our traditional range, which is 92% to 94%. That's right. All right. That's fair. Thank you so much. I really appreciate it. Sure. Thank you. Thank you. Our next question comes from the line of Adam Tindle from Raymond James. Please go ahead. Okay, thanks. Good afternoon. I wanted to start on the SaaS and license revenue guidance. For the full year 2021, it was raised by a few million more than the Q1 beat. And I'm wondering what you're seeing to imply that continued strength in the outer quarters versus just raising by the $2,500,000 or so that you beat by. And I'll just give the context. I know it's splitting hairs a little bit, but we typically view you as conservative on guidance. I'm less focused on the numbers more on the qualitative statement you're making. So maybe just unpack the areas you're seeing momentum, But got you comfortable to carry through some additional upside given as you just mentioned retention rate is expected to come down. I'm not sure what the offsets were. Right. Good question. The things that give us confidence are a good chunk of the Q1 beat came from an accelerated creation rate. And those subscribers, we don't anticipate, not all of it, but a good chunk, we don't anticipate them Going anywhere, so that's a positive. We don't want to get out of control though and for the entire year that the current creation rates and kind of sort of slightly above expectation performance will continue forever. We do have some Headwinds with regard to activities, which thus far we've managed effectively, but in the supply chain, global markets are still somewhat uncertain. So those are and then the EnergyHub business is also strong right now, as I noted in my prepared remarks. So there are plenty of things that Looks solid. At this juncture in the year, if you have experience with us, you know that we're not going to go Crazy on raising guidance that the guide we provide is the foundation for our operating budget. So we absorbed some of it, some of the Q1 and then pushed some of that into the rest of the year. And those are some of the things that we're seeing, what I just commented on. I would say, too, we are seeing good video, video analytics pickup, as Steve talked about, and that helps inch up the ARPU a little bit as well. Of course, most of it is really coming from new subscribers being added, but it is nice to see the strong video and video analytics Continued attachment rates increasing. Got it. Yes. That makes sense. And just as a follow-up, I mean cash continues to increase. Your business is so predictable and durable, particularly on the SaaS and license side. So Steve, maybe you could touch on your view of optimal capital And Steve T, if you could follow-up with priorities for use of cash as you move to that optimal capital structure. Well, yes, good question. So certainly on the optimal cash, we like to have cash, and we couldn't pass up The great terms, the 0% coupon bonds, we were able to raise $500,000,000 gross. And so we have run the company on a cash flow positive basis. If you look at this quarter, we generated a very good amount of Free cash flow can more than almost double last year's cash flow. So I think we have quite a bit of dry powder here. I feel very good about Our balance sheet, our cash position, I would say that we'd like to run with a net cash position without getting into too many details. But I think we certainly have a very strong balance sheet. We've continued to have a strong balance sheet over the years. And with this raise, it gives us even more, If you will, dry powder. Yes. In terms of use of the proceeds, I think it's or what we're looking to do, I think we're We just want to be postured for when the right opportunity comes along to act upon it. And we have an active Corporate development team that's sourcing various opportunities. We also have at least 2 initiatives internally that we may decide to deploy capital into. We haven't made that decision yet. But we're watching the market right now. We're watching as everyone valuations pretty carefully and trying to sort of, In a way, I think hope that some of the SPAC activity diminishes, but when we see the right thing come along, we're well positioned The next 2 or 3 years to be smart and judicious about continuing to build the business through the occasional acquisition. If you had to rank consolidating more core residential opportunities versus expanding in these growth areas like EnergyHub, would one Rank higher than the other? I think that our internal engine is really strong on the residential side Already, we're scaling R and D there at a level that no one else is. So I would expect us to consolidate residential activity organically For the most part, through time. And so I think when we look at We're not going to say no to any single category. The category is only one part of the equation. Management is a big part of the equation, The health of the business and other attributes, but I'd say generally our bias is probably to look at opportunities that All in areas where we may not be as strong organically. Makes sense. Thank you both. Thanks. Thank you. Our next question comes from the line of Matt Pfau from William Blair. Please go ahead. Hey guys, thanks for taking my questions and nice job on the results. I wanted to ask about the better than expected accretion rate that you guys have Over the past several quarters, how do you expect that to be impacted as U. S. Economies continue to reopen? And I guess what I'm wondering Is that sort of accretion rate a factor of people being stuck at home and thus doing home improvement projects? Or are there some other dynamics That's creating that creation rate. Yes. Matt, I don't know that we have a crystal ball on To be honest with you, we have seen ongoing momentum in the last couple of quarters. We think some of that is actually a positive Contribution from COVID, people being at home, able to take appointments, doing projects, the shift to the suburbs, some of those I know that when we model things, though, we don't at the moment, we're not modeling in that Trajectory as a permanent kind of permanent trajectory or permanent level of momentum. So we're looking at where we were sort of pre COVID trajectories at that point in terms of sales velocity in North America and anticipating some regression to that, what we call more normal trajectory. So that's kind of the way we view it. We could be wrong, and it may be that we're on the that we I wouldn't even say that's our belief. That's just how we model it. It could be that the shift To more homeownership and to Some shift out of the urban centers is going to be an ongoing trend for the next 5, 6 years, and we're early days in it. We just don't know for sure. Okay. Got it. That makes sense. And just to follow-up on the retention rate, as well impact the retention rate. Is there any impact there from customers perhaps making more investment in their security system and being more engaged? Yes. It's a very good question. So I think there definitely is. We've been at the high side of our anticipated range for some time, a range That we established 92%, 94% retention. That's been pretty strong for some I think particularly video analytics. I mean, in the Q1, the attach rate of analytics on New video installations was over 70%. So customers are getting a much better experience when they're getting that type of intelligence In their video alerts and in what they're viewing, if you're having a good experience, if you're impressed with the technology, if it's making your life easier, I'd like to believe that You're more durable as a customer. And then I do think your point as well, which is, as customers See more areas of benefit from the smart home and as they deploy more types of technology, whether it be video or the smart water valve or some of the energy management attributes. And therefore, potentially a trading is diminished. So I do think there's an ongoing sort of slight positive trend there that will help us. Great. Thanks guys. Appreciate you taking my questions. Sure. Thank you. Thank you. Our next question comes from the line of Darren Aftahi from ROTH Capital Partners. Please go ahead. Hey, this is Dylan on for Darren. Thanks for taking the questions. You talked a little bit about commercial starting to pick back up. Could you provide any color on maybe what percentage of that is like a new inquiry versus someone who might have You've spoken to maybe pre COVID and had the pause due to just sort of the shutdown? I off the top of my head, I don't know that I have good data on whether The new customers are ones we had spoken to. I guess I could go off of an anecdotal belief, which is I think it's a mix of both. When I talk to our salespeople, In the larger enterprise segment, there were a lot of opportunities that were brewing. And Various energies just sort of shut down in terms of access to their facilities during COVID. And At least especially the early parts of COVID until really towards the end of the year. And now they're open back up. So I would imagine A decent amount of the uptick is coming from, especially on the larger enterprise side, coming from places where we already knew about the opportunity. That said, the number of sites that we're adding, as an example, on the OpenEye side of the business, I believe they've added, If I remember correctly, probably 9,000 new sites in the last 12 months, and that's a pretty meaningful jump, Maybe more to more than that. I have to look at the data point. But my recollection is we probably added 30% growth to the number of sites That are installed. So I think that's coming not just from people that we're already in discussions with beforehand, but from Smaller enterprises that saw an opportunity, while their business was potentially closed, if it's a restaurant or otherwise, to make some modifications and act a little bit more like a homeowner do that during COVID. And I think that will that activity should continue. Got it. Thank you. And as a follow-up, I guess this is sort of similar, but with the residential market And then some of the housing market trends. Were you seeing a mix of more like new accounts Or sort of people who've already had used alarm.com for maybe like their primary home and now are adding it to maybe a secondary home? No. The latter is always occurring, but it's a much smaller slice of the business Then people that are moving into new homes. So I think the majority is coming from new homes. We're aided by new home construction and then by people who are getting a first system for their home and Doing that during for the first time. So a very small fraction, I would definitely say less than 10% of new customer ads are coming in the residential side from people with multiple properties. On the commercial side, If you lock down a business that has multiple sites and you get a few sites and you do a decent job on those sites, then that can become the gift And you probably see a higher preponderance of the commercial installs being follow on work for businesses that already have used your technology in one location. So there would be a higher percentage, but still not over Certainly not over half and my guess would be not over 35%. Great. Thank you. Thank you. Thank you. Our next question comes from the line of Mike Latimore from Northland Capital. Please go ahead. Hi. This is Aditya on behalf of Mike Latimore. Could you talk about how much did the other SaaS contribute in 4Q? Sure. Do you mean in Q1 when you're saying 4Q? In Q1, the other segment had $6,100,000 of SaaS revenue for Q1, which was up 35% year over year. All right. All right. And do you expect it to continue at the same rate? Or you expect it to accelerate in 2021? Well, what we talked about really is with the with Energev doing very well and With the EV programs, the longer term certainly is very positive for the other segment. We also have PointCentral, and we have the smartwater valve plus meter. But if you look at the other segment, there are seasonality points there. There's timing differences. Typically, Q4 It is the stronger quarter. For example, in Q4, the other segment contributed $7,800,000 in SaaS revenue because in Q4, we do get a benefit The energy savings in the summer programs and typically Q1, that's seasonally slower quarter. And so it's But we do see positive trends here with the other segment, a lot of new programs there with EnergyHub, with the Smartwater valve plus meter, which is a great product. I mean, it really is a lifesaver in some cases for homeowners and in businesses Possibly as well, you had to protect your home from leaks and water breaks. And so we see quite a bit of opportunity there. And again, it is There's different quarters and different seasonality points there, typically Q1 again being the seasonally slower quarter. All right. And maybe any estimate on how much OpenEye might contribute for this year? So we haven't broken out OpenEye in the past. I would say that we did talk last year that OpenEye It was more impacted by COVID, as you would think with commercial. Now we did see improvement in the 4th And we saw again improvement in the Q1. So it's trending quite well. We're also encouraged with The growth of SaaS revenue for OpenEye, which is still fairly small, but we have a program now since we acquired OpenEye to really grow the SaaS. It will take some time, But it's growing at a very good rate. It's a small number still. But we're encouraged to see the growth of OpenEye in the difficult environment with commercial, and we're Excited about the future for Open Eye as things open up and commercial businesses go back. So we're seeing good positive trends there. All right, all right, fine. Thank you. Thank you. Thank you. Our next question comes from the line of Brian Rothenberg from Imperial Capital. Please go ahead. Yes. Thank you very much. Great quarter. So a couple of quick questions. First of all, on Sugar detection, either indoor or GSL, can you talk a little bit about what kind of traction you're seeing so far? You just acquired them recently. I know you don't break out specific acquisitions, but are they on track? Are they growing with the total group? Can you talk about Any trends that you're seeing in that area? Yes. So with Shooter Detections, I think We completed that acquisition in December, right in the midst of kind of some of I actually didn't get a chance to visit them until the last probably 5, 6 weeks. And the trend lines there are we have seen that there, I think, have been a little more exposed to some of the Enterprise commercial customers that at the moment, I mean very, very large customers, entities that have massive office complexes, for example, and that are trying to determine what percentage of their workforce will be coming back to work, how much of those facilities to sort of Keith, that sort of thing. So that's been a bit of a soft point. The positive has been on the institutional side. There is traction and the pipeline is very good. I think they've signed some marquee names that they've added. So I would say it's Slightly below where I would ideally like to see it tracking in the Q1. That's 1 quarter end. But the pipeline of activity is probably at or above what I would expect. And we think that Unfortunately, every time we have one of these horrible instances of violence in society, their pipeline just gets bigger. There are more people interested in How do I protect my employees and how do I keep my employees safe and what can I do to, as much as possible, mitigate Workplace violence? So we expect over time that, that business will be you have to remember, it's a pretty small business, so we're investing in it Pretty heavily have made some a couple of good hires in the Q1, and we'll really be working, I think, to help them turn the crank on increasing the distributability of the technology they've created. Hey, has there been anything at the school level from the federal agencies and all the stimulus that has gone or that you see adding to that pipeline? I not The answer there is, I don't actually I'm not if I've been told, I don't remember whether the feds have simulated that. I think we've discussed it. I am aware in my last discussion with them that in their business on the institutional side, a lot of the times the state approves Technology for adoption by all of the schools or by all of the courts in a given state. So we are seeing various states to approve the technology for use in certain circumstances, whether that be schools, high schools, elementaries, courts, etcetera. And whether there will be stimulus with that or not, I'm not positive, but there is activity. Great. And last question real quick. Just timing on the commercial recovery. Just from your gut, do you see it happening in 2021 in terms of that recovery? Yes. From my gut feel would be that we're going to continue to see commercial gain strength throughout this year. And by the end of the year, we'd see more than likely commercial performing about where we expected it to be. That's my gut feel, maybe even a little above if there's some pent up demand out there. Great. Thank you. Thank you. Our next question comes from the line of Jack Vander Aarde from Maxim Group. Please go ahead. Great. Hey guys, nice results. Thanks for taking my questions. So maybe a question for either Steve T. Or Steve B. Either of you can probably answer this, but maybe on the recent trends you're seeing in terms of Recent residential subscriber installations within the United States. Are there any particular states So regional areas that have maybe surprised you, whether in terms of outperforming or underperforming relative to what you expected and then also maybe relative to where those states were performing last year? Yes. I would say generally that it's been less about probably any particular state. Traditionally, we've always been And our service providers in the southern parts of the United States have been bigger typically. There's just a higher market penetration In places like Florida, Georgia, Tennessee, Texas, all of the southern markets than there is typically up north. That's not to say you don't have penetration everywhere. What's probably more normal or what we've seen has been less about state by state but more about Tier 2 Cities versus Urban Centers and the level of installs that are going into suburbs and what Some might refer to as Tier 2 Cities as we've seen some deurbanization. So our service providers who service those markets have Particularly strong and that's been not really unique to any given state, but kind of broad. Now I will say, one example that just sort of In terms of the state, I should say, is our service providers in Florida are indicating They're way, way, way too busy that it's really popping, and they can't keep up with demand. So that's one that I know of where they're I think there is some migration to Florida right now, but generally it's been more about urban versus suburban or Tier 2. Okay. Great. That's helpful. And then maybe a question for Steve Valenzuela. Regarding the other segment, Revenue growth was strong again. I think it was up nearly 35%, if I heard that correctly, every year. Can you talk about maybe the underlying drivers of that business strength in terms of the actual specific businesses or subsidiaries that contribute to that? Maybe name a couple other than just EnergyHub? Well, certainly EnergyHub is a big driver, and we've talked about PointCentral being impacted a little bit Or by the COVID, although the vacation rental has picked up a bit. But we also have the Smartwater Valve Plus Meter, which is A new product, we think there's a lot of opportunity there as well. But within the other segment, EnergyHub is really a main driver, of course, of the growth supported by the other businesses as well, but they're the largest, Say the fastest grower in the other segment. Okay, cool. And then maybe as a follow-up, just Sticking to the subsidiaries and you mentioned PointCentral. I saw recently they rolled out this new offering that caters to the short term rental managers with Under 25 properties, which is the first, I believe, for that business. Can you maybe just talk about what that does? Does that The TAM opportunity from what you guys initially anticipated or is this always kind of part of the plan, but it was just starting with the larger property managers first and now you're working your way down the ladder. Well, it definitely expands to TAM. I I'd like to spend a lot of time up until now on property managers that are managing 10 vacation units. When you have property managers out there that are managing 100 or 1000. So in partnership with Helm, We're going to target some of the smaller ones. In terms of the exact impact on TAM, I really don't know. I just would say that vacation the vacation rental market has been White Central serves multifamily and vacation rental. I'd say vacation rental has been The stronger segment of the 2 over the last 6 months and a place where we had a lot of value, so we're trying to just drive deeper Into that segment with that new partnership. Okay, great. Thank you. That's it for me guys. Thanks. Thank you. Thanks. Thank you. This concludes today's Q and A session and the conference call. Thank you for participating. You may all disconnect.