Imperial Capital Security Investor Conference 2018 Review - ADT, Resideo, Alarm.com, Arlo, Eagle Eye, ACRE, More

By John Honovich, Published Dec 14, 2018, 11:25am EST

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Imperial Capital Security Investor Conference is an event matching industry executives with financiers that frequently leads to future funding and acquisitions. Among the 60+ companies presenting this year were ADT, Resideo (i.e., Honeywell Home / ADI), Alarm.com, Arlo, Eagle Eye, ACRE and more.

We bought a ticket and attended. In this note, we examine:

  • How ADT is pitching its commercial (re-)expansion to investors and how it views the Amazon threat
  • What Resideo is most bullish about going forward
  • How Alarm.com is pitching the business market expansion to investors
  • How Arlo plans to compete against the growing number of low-cost wirefree competitors
  • Why Eagle Eye says it has supercharged its growth through the Brivo acquisition
  • How OpenEye did or did not pitch investors and how it contrasted to Eagle Eye
  • How ACRE is expanding again with a new acquisition and why they dislike the camera business
  • What a Columbia University professor advocated to these investors and what he got wrong about the video surveillance business
  • Who was there (and not there) not presenting but notable in the industry (Axis, Avigilon, etc.)

Abnormal ******** ********** - **** ****** *****

**** ***** ** **** different **** ***** ******** people ********* ** ** like *** ****, *****, ASIS. ******** ******* ** most ********* ********** (*** their ******* ********), ****** than *********** ******* *** space *** ********* ** sell ******* ** ********.

******** ******* ** *** broadly ***** *** **** companies *** ****** *** or ** ****** **** need * ****** ** help ****** *** *******, justify *** *********, ******** investors, ***. ******** ** one ** **** * few *** *********** ** this *** *** ******** industry *** **** *** often ****** *** ****** in ******* *****, *.*., the ********* ***********,*******'* ***********,**********'* ***********,***'* ***, ***., ** ***** slide ***** (**** *** red ********) *****:

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***** *** $*** ****** for * ***-*** ***** is ***** *** ******** standards, **** ******* ********* pricing, **** ******** **** money ** **.

*** ****** *** **** and *** ************ ** that **** *********** ************* and ********** ******* *** two ******* ******** ***** to ***** ******** ** that **** ** *** paid **** ***** *** closed.

Few ********, ****** *********** ** *** *********

***** ** ** ** 'investor' **********, *** ********* presenting *** ****** ***** companies, *** **** ********, which ******** *** ***** of ********'* **** ******. It ****** **** **** old ********* **** *** to ***'* **** ****** where *** ******** ** "Wow, **** *** ***** in ********", ** *** excerpt **** ***** ******** below *****:

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Mostly *****, **** ***** *** ******

*** ********** ** ********* centered ****** ***** ********** companies, ***** ** ****** a ********** ** ***** companies ******* **** ********* (since ***** ****** *** based ** ***** **** flow ******** *** *** sales *** ****** ** over *** **** ** the ******** / ********* revenue) *** *** **** of ******** *******'* ******** division, **** **** [**** no ****** *********], ***'* background ** ****** *** Protection1.

Valuations ***** ****

**** *****, ** *** video ***** *********, **** valuations *** ***** ****:

ADT ******** ********* **** *******

*** *** ***** ******** pitch **** ***** ******* expanding ********** ******** ****** by *********** ***** *********** (15 *****), **** ***********'* *** ****, ** **** ***** shows:

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***'* *** *** *** Commercial ********, *** **********, made *** ***** *** why *** ********** ********* is * ***** ****. In *** ***** *****, he ***** ***** *** many ** *** ******** companies (*** ******* **** those *********) *** ******** 'friends' ** *** *** that **** *** ** for *** **** **** with ***:

*** **** *** *** is **** ***** '*******' leave, **** ***** **** of ******** **** *** and **** ********* ******* out ** * *** years. ********* ** ****-**** continuity ** ******** ********** in * *******-******** ******** is *********, ** **** tend ** ****** ****** or ***** ** ***** a *** ******* ** sell ** *** **** struggling ****-***********.

ADT **** ********* **** ******

*** ******* ***** ******** pitch ** *** ****** was * ******* ** them, ***********, *.*., **** they **** *** **** professional ******** ** *** upcoming***** *****(****** ****** **** ******'* Ring **** **** **** access ** ***** ***** as ****).

**** **** ***** ***'* SVP ******* *** ******** Relations ***** ***** ***** long-term *********** **** ******, he ********* ** ** a *** ******** ****** that ** ***** ****** the ****** *** ******** and ********** *******, ** the ***** ** *** response ***** *******:

**** ** ********* ****. The ******** *** ********* for *** *** ******* that ********* **** **** or **** ***'* *********** business. ***** *** ****** for ******** ***** ** larger **** **** **** Netflix *** *******, ***** is ******* *********** ******** ****. ***** *** ** unlikely ** **** ***********'* exact ****, *** ******** pressure ** *******, ******* and ********* ***** ** severe.

*******

*** **** ***** *** for *********'* *** ********* / ******** / ********** panel, *****, ** *** video *****, **** ****** the '**** **** ******** product ** *** *******'* history', ****** *** ******* is ~* ***** *** (joking *****, ** *** not ******* *** ********** they **** ********* **** products *********).

******* ****** *** ***** would ** ****** *** dealers ** *******, *** even ******** ***-***** ** upgrade ********** ** ********* 'cartridge' ******* **** *** base ******* ******* ********* technician '*********' ******* *****. They **** ********* *** new ****** **** ******* 'interchangeable **********' *** ******* like *******, ** ********* basic ************ ********** ***** for ************ ** ******** without ******** ** *************** of *** ******.

*** ******* **** ***** are ** ***** ** discontinue ********* ***** ***** panels *** ****-**** *********** would ****** ** *** next ~* *****.

************, ******* ********* *** return / ****-********** ** Videofied, ** *** ***** below:

*** *** ****** ******** video ****** ***** ****** detector ******** '* ** 5 ****' ******* **** that ********** **** * next-generation ***** ******. *** sensor's ***** ***** **** be ******** ** * cloud ****** *** *** base ******* *** **** be ********* ** **** indoor *** ******* ***** models.

********* ******** *** / Videofied** **** *** $*** million.

* **** ***, **************** *********'* ******** ********* offering*** **** ************** *** ******** **** a ************ *******. ** **** ***** the *** ******* ** detail ** ** ** released.

*****.***

**** * ***** ****** in *********** ******** (**** $300+ ******* ****** ******* and *** ** *** highest ************* ******* ** the ********), *****.*** ********* in**** *** ********* **** the ********** / *** market.

***** ***** **** ** Chief ******** ******* ******* Bedell [**** ** ****** available] *** ******** ********* side ** **** **** their ******** *********** ****:

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*************, ** ********* *** commercial ****** ** '**********' and ******* '**** ** competition' ** ****** ******* to ****. **** *** perspective ** *** ************ competitors, **** ** ********* true, ****** *** ********** market ** ****** ********** with ************ ***** ************ systems.

*** *** *** ***** business ********* ** ******** 'a ******* ********'. ***** 'unified' *** ****** * popular ***** ***** ****** scale ****** ********* **** Genetec *** **, *****.*** centered **** ** *** their ********* **** *** business ******:

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*****.*** ******* ******* ********** rules *** ** ******** vision ******* - *.*., the ****** ********* ******* a *** ***** **** the ******** **** ** the ******, ** *** video ***** ******:

****

****'* *** ********* ********** that *** ******* ********* goal *** **** *** to ******** *** ******** rate ** ************ ********. While ****'* ******* ****** has **** ********** (*.*.,**** $*** ******* ** 2017), ******* ** ************** from ******* *****, **** only ~*% ** ********* subscribing *** **** ********. In ****, **** ***** Smart ******** / ** video *********, ********** ** the ************:

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** ****** ****'* ********* in *********** ********* *********** *** * ****** residential ***********, **** ****** well **** ******* ***** alerts.

********, ****'* *** ******* their '***** ********', * ********* ******** to *** *** ******* video ******** ******* ** residential *******. ** *** video *****, ** ****** the ******** ** ********** the ****** **** *** IoT ******** *** ***** work ** ******* ***** quality:

** **** *** ****** Arlo's ***** ******** *** may ** *** ******.

Eagle ***

*** **** *********** **** of ***** ***'* ************ was ********* *** ******* explanation ***** ********'* ****** ** ***** for $** ******************* ***** ***'* ******. The ***/*** ** **** while ***** *** *** challenged ** ***** **** larger ******* **** ***, once ***** ****** **-**** old *****, **** ***** Eagle *** ** *** Brivo ***** **** *** circumvented *** ******* *** vendor ******* ******* **** is * ******* *** most ******** **** ***** Eye. ** *** ***** below, ******* ******** **:

***** *** *** *** give *** ******** ******* numbers ** **** ********* accepted ****** ******* ****** they *** ******* **** slide **** *** *** interpret ** *** ****:

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***** ** ** ***** they *** ******* ******* but *** **** ** that ** *** ** the ***** *********** ****** ************* ************* *** *****, *** is ***** ***** ******* level.

***** *** *** ********* how **** *** ***** well *** *****-**** ****** (lots ** *********, *** cameras *** ****), ***** we ******* *** *** as * **** *** for * ***** ******* service. ** *** ***** below, ******* ******* * question ***** ********* ** the ********** ******** ** that *****-**** ******:

** ***** ** ************ 'enterprise' (*.*., ********, ******* HQs, ******, ***.),*** **** ***** *** testing***** *** ******* ***** has *********** ************ ** incumbents **** ******* ******** Center, ********* ********, ***.

*******

*******'* *** **** ******** presented ** *** **********, noting $** ******* ****** revenue *** ******* **% growth ** ***** ****** 'direct *******' ******** **** year ** ***** *****:

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*******'* *** **** ****** his '****** *****' **** gave * ******* **** his *********** *** ********:

**** ********** *** ** investor's **********, ** ***** that ******* *** ***** received *** ******** **********. The **** **** ** was ********** **** ***** that **** *** **** to **. ** ***** they **** **** ** to ******* **** ****-****** companies **** ***** *** (above) *** *** ***** charge ***** ****** ** strategic *****.

****

*** ********, ******** *** least ******** ************ ** sat ** *** ********'**** *** ****** [**** no ****** *********]. *** company, ** *** ***** history, *** ******* **** quite **** ****** *** then******* *** ********** * *********** ******, as ** ********* ** the ***** *****:

****** **** ********* **********, ACRE **** **** ** a ******* ******* *** growing ** ********* ******** businesses, ********* ***** **** are **** *****.

******** *********** ******* ********:

  • ********* ******* ****** ****** 'really **** *******' *** very ********** ******.
  • *** *********** ** ******* Security ******** ***** * 'real ***** *****' **** 'had **** ****** * lot ** *****'. **** noted **** **** **** been ******* **** ******.

*** ******* ********* ** 2019 ******* ** $*** million, ** *** ***** below *****:

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Grillo ********* ****** ********

****'* *** ********** ********** the ***** ************ ****** business ** * **** business *** ** *** race ** *** ******, price ********, ***. ** the ****** **** "**'* not *****". ** ** think *** ****** ******** future ********* *** **** better ******* **** *** Chinese '********' *** ********* and *** ****** ** AI *** ***** ** a ************** **** ** not ** **** ** commodify.

ACRE ******** ***********

**** **** ** ********** an *********** ** ** access ******* ******* ** Monday, *** ****. ** agreed ** *** ******** the **** ***** ** is ********* ** ********** communicating **** *** ******** company's ****.

Columbia ********* ** ************

*** **** ******** ************ of *** *** *** from ******** ******* ******** Professor **** ********** *** provided * **** ***** overview ** ** *** investors ** ***** ** distinguished ******* '******' *** 'weak' **, *********** **** while '******' ** ** science ******* **** '****' AI *** ******* *********** financial ********, ** **** slide *****:

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*** ******* ** **** most ***** ************ ** applications **** **** * 'medium' ********. **** *** not ** ********** ** building * ********** ***** but **** *** *** more *********** **** ****** OCR ************ ********* *****. Facial *********** ** ****** detection ** * ***** example. ****** ***** ** 'weak', ** *** *************** but ******** ***** ********* to *** ***** ***** out ** * ******* is, ** *** '******' AI, ********* *** ****.

**** '******' ********** ************ is * ****** ****.

*** ********* **** *********** 'some ********' ****** *** underestimates *** **** ** a ******** ******* **** is *** ********* ******** paying *** ****, ** he ********* ** *** clip *****:

*************, ** ****** * marketing **** **** ***** face-recognition ******* ********* ********* this '************ *********** **********'.

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***, ** ********, **** marketing ** ** ********* is ** '************ ***********' element *** ********** ** to **** ** **** operational ********* ** ***. And ***** **** *******, unless *** ******* ********** wants ** ******** ** subsidize ****-******* ******* (*****, in ********, **** ** for *****, *** ****** for **** ********** **** be *****.

*** ******** ***** *** when ** ****** *** valuation ******* *** ** companies ***** ********:

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** ******, ****'* *** the **** / *** space, *** ******** ******** companies *** ***** *** millions *** ********.

********

*******, ******* ** ****, *** ****** * niche ******** ** ********** for **** *** ********, like ********* *** *****. It ** ***** ******* many ***** **** ***** own ********* ******** ********** (e.g., ********* *****,******* ***********, ***.) *** ** the ***-***, ******* ********** are ******* ** *** for ***** **** ***** costs).

*******'* ******* ********* ** the ***** ***, ** the ***** *****, ********* their ***** ******* *** search *** *** **** raising ** ****:

*** ******* *********** ** * *** CEO, **** ********* [**** no ****** *********], **** outside *** ******** **** month (******** ****).

IHS ****** **** *********

*** *** *** ** the ******** ** *** event, ********** ***** ****** size *********.

***** ***** ************ ***** are ******* **** ** the ******** ******** ********* market, *** ********* **** is ***** ***** $** billion, *** **** ******* over *** **** *** years, ** *** **** to *** ****** ****** that **** ****** ******** from ********* **** ******:

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** *** **** ****, the ****** ** ******* being ******* *** **********, over *** ******* *** year ********* ** ***:

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* **** ******** **: Who ** ***** *** these ************ *******? ******: mostly *****. *** ********* that ***** ** **** than ***** *** **** of *** ** ******:

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***** *** ********* ***** claim ******** ***** ******* of ~$* *******. *** since *** ******* ******* prices ** ******* ****** of ***** ** **** than ** *** **, it ***** **** ** a **** *****, ***** is ******** ********* ~*** more ******* ******** **** the ** *** **** than *** **** ** the ***** ********.

Who *** ***** *** *** *****

** *** **** *****, Hikvision, ****, *********, *******, etc *** ****. ********'* CEO *** ********* ******.***** *******, ****** **** Arecont * **** ***, *** *** *** chairman, *** ** ****** a ************ *********, *** also *****.

*******, ***********'* *** *** there. ****** *** ******* did *** *******, ** was ** ******** ****** the #* **** ******* focused ******* ** *** event.

Comments (7)

Note: Arlo and Eagle Eye are not added yet but will be in 1 hour (by 12:30 pm ET). Since its Friday and this is a long post, I wanted to get it out and will fill in those last 2 sections shortly.

Agree
Disagree
Informative
Unhelpful
Funny

Arlo and Eagle Eye is added.

Let me know what questions you have. There was a significant amount I did not cover due to time and space limitations. 

Agree
Disagree
Informative
Unhelpful
Funny

And since the average selling prices of cameras inside of China is less than in the US, it means that on a unit basis, China is probably deploying ~10x more cameras annually than the US...

The Chinese price is arguably less than the U.S., but is it 4x less?

Agree
Disagree
Informative
Unhelpful
Funny

I don't know for sure but it's a factor of:

(a) the price for a given product in the 2 counties

(b) the mix of products sold in the 2 countries

I think (b) is probably a big factor, i.e., in the US a much higher percentage of much higher cost cameras are sold, i.e., $500 varifocal cameras, $1,500 multi-imagers, $3,000 PTZs, etc. whereas in China, the skew is to more basic fixed focal cameras that can see for $20, etc.

Agree
Disagree
Informative
Unhelpful
Funny

That makes sense.

But coming from a different angle altogether, wouldn’t you expect that the cheapest aliexpress price to be somewhat close to the in-china price, since it only additionally contains the last markup?  

 

Agree
Disagree
Informative
Unhelpful
Funny

What does the cheapest aliexpress price have to do with the US market? As a percentage of cameras sold in the US, alixpress to US sales are tiny.

Agree
Disagree
Informative
Unhelpful
Funny

I’m not making a point about aliexpress in particular, you could use any grey market source.  I’m thinking that the cheapest grey market price of a particular Chinese camera is possibly a  way to estimate the in-China price of the camera.  

Of course, it would still have the additional markup of the seller.

And I do agree that the u.s. sales mix contains more high-end product, which may fully justify your 10x estimate.

Before you mentioned the mix factor, it seemed high to me.

 

Agree
Disagree
Informative
Unhelpful
Funny
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