Stealth / UCIT - Remote Video Monitoring Provider Profile

By Sean Patton, Published May 18, 2018, 09:50am EDT

Can 2 remote video monitoring companies, Stealth Monitoring from the US and UCIT from Canada combine to impact the market and compete in a changing landscape that just saw a mega-merger of 4 video monitoring companies?

Inside this note, based on discussions with Stealth and UCIT, we examine their approach, key claimed differentiators and outlook in the marketplace.

Overview ** ******* *** ****

******* ********** *** **** provides ****** ***** ********** services, ******** ** ************ *****, scrap ***** *****, ********* and ****** ****** *****, and *****-******** ******** *** residential *********. **** **** ~18,000 ******* ****** ********* and ~*** "*****-**-********" ******-**-**** audio ******** ** ****** alerts ***** *****.

********* * **** ********** ** ************* (** ********** **** ******* by **** ********, *** below), *** *** ********* have *** **** *********** combined *** **** ******* under *** ******* ********** brand. Stealth reports * ***** ** ~*** ******** employees ****** ** ******* in * *********.

** ******** $** - $40 ******* ****** *******. While *** ******* ******** to ******* ** ****, we **** **** ** a ******* ** ******* ******** ******** ****** 500****** **** ***** *********** afterward **** *******.

Auxo ********** / ********** ****

*** **** ********** ***** is *** ** ******** partners *** ****** [**** no ****** *********] *** **** Mikkelsen [**** ** ****** available], **** **** ********** at *******/****.

****** ********* **** ******** Business ******, ********* **** Ivey ******** ****** ** Ontario, *** ** **** they ********* ****. ****** serves ** *******/****/ ***, Mikkelsen ** ********* *** Chief ******* *******.

Primarily ****** ***** / ******* ******* ********

****** ***-**** ***** *** responsible *** *** ******** of ***** ******** ********. They ********* ******* ********* directly **** ***** *** sales, ********** ***** *** technicians ***** ** * differentiator **** *** **** typical ****** ******* *****. 

**** **** **** ******* a **** ***** ****** of ********* ********** ******** that **** **** ******* and ****** ****, ** specific *********, *** ****** to ******* ** ***-**-*** solution.

Pricing ********

******* ********* ***** ****** are ******** *** ****, based ** *** ****** of ******* *** ******** event ******. * ***** location (*-* *******) ******* built-in ******* ***** ***** cost ~$*** *** *****, and ***** ***** **** included ********* ******* ***** as **** ** $**,*** per *****.

**** ***** ** ******* per ******** ** **-** cameras, ** * **** of $*,*** *** ***** ($50-$60 *** ******). **** is ************* ***** **** many ****** ***** ********** solutions, ***** ********* **** for $**-$*** *** ****** per *****.

********* ***** ****** ** the **** ** *** full-time ******** ***** **** G4S [**** ** ****** available] **** ******* ~$** per **** ** *** US ** $*,*** *** month, *** ***** ** potential *** *********** ******* with *** ********* ** removing / *** ****** a ****** ******** ********.

3 ********** ******** *********

******* **** **** ******** different ********* **** ********* technology ********* *** ****** monitoring:

  • * ****** ********* ********** platform ******* "******"
  • *** ***** *** *******
  • * ******** ******** ************

**** **** *** ******** of ***** ******** *** sold *** ********* ** their *** ********, ***** gives **** **** *********** for ******** ****** ********* and ********* *** *** end-user.

**** **** ******* *** Party ***/*** ********* **** Hikvision, *****, *** ****** when *** ******** *** significant *********** ** ** existing ******, ****** *********** cost *** ****.

*** ******* ***** *******, they target *********** ** ***/**** with ******** ********* *** cameras, *** ** ****** sites ***** ** *** use ** ********'* *********. ******* is ** ******** ****** in ** *** ******, providing ******* *** ******* as **** ** ** installed ******** ***** **** their ********** *********. 

Monitoring ***** ** * *********

*** ****** ******* ******* monitors *** ** ***** accounts ** * *******, Dallas, ******* *** ****** in *** ***********.

******* **** ***** ****** in ****** *** **** important ** ********* **/* monitoring ******* ********* ********** in ***** ******* ** a ****** *** ***** there. **** **** ***** monitoring ***** ***** ****** overnight ********** ** *** US ** ******, *** also **** **** ** also *** ****** ******** retention ** ****** ***** keep ****** ******* *****.

Economies ** ***** ********

******* **** * ****** of ********** *** *****:

  • * ****** ******* ****** company should **** ** ******* top ***** ******
  • ******* ** ********* ***** by ********** **** ********* as ******* *** ******** their ********
  • *** ******* ****** ** the ***********
  • ********* *&* ****** ** impact * ****** ******** base
  • ************** ** ***** ********* (Dedicated ******* *********, ******** Services *****)

R&D ****** *******

*** ********* *** * live ***** ********** ****** to **** *** *********** of ********** ***** *** custom ********, *** ****** in ********* *** ** efficiently ********** ***** ******** alerts, ****** ******** *********. Stealth **** **** **** a ***** ** ** in-house ********** *** ** additional * ********* **** are ********* ******* ** R&D ** **** ** their "******* ****" *****. They **** ** *** 4 ********** ** ***** in-house *********** **** **** the **** **** *** a ****.

*** ********* *** *** business ********** ***** *** software ** *** ******* development, ******* *** ******* costs *** ** ***********. As **** **** *** R&D ****, ******* **** need ** **** *** right ******* ** *** feature *********** ****** ******** cost-saving ******** ********** ********. Their ***** ***** **** be ***** **** ******** to ******** ***** ** account *** *** ********* R&D ********.

Also ******* ***** *****

*******'* **** ***** ***** group ** ********* ********** and ** ******** ********. They *** ******* ** grow *** ***** ** all ****** (******* ********, sales *****, ******/******* ***** reps, ***** ***********).

Competitors ****** ***** **********

** ***** ** *** US, ***** *** *** many ***** ****** ***** monitoring *********. *** * general ****, ********* ***** ********** ********* Directory, ******** ******* *********** ***************/*********.

Expect ******* ******

******* **** **** *** focusing ****** ******** ** organic ******, ******* *** products, ********* ********** *** targeting *** *******. *** example, ******* ********** *** already ********* *** ** Texas *** **** **** this ****** ** ******** them ** ** **** more ********** **** **** expansion.

Company *******

******* **** **** *** not ******** *********** *** investors, *** ********* *********** existing ********** ****** *** further *******. ** **** can ************* ***** ***-**-*** sales ***** ****** ******/******* driven *********, ***** ** room *** ****** *** live ****** ********** ********** as ****** *******, ***** analytics, *** ********* ************ increases.

*******, ******* ***** * *** challenge ** *************** ********** from ******/**** *********** ****** monitoring ***** **** ** ***/********, which ********* ****** **** 20x *** ****** ** accounts *** ** *** number ** ******* *********.

************, *******'* ******** ** ******** on ****** ***** ******* of * ****** ******* may ***** ***** ******, as ******** *** ******* or ********* ******** ********* requires ********** ********** **-***** instead ** ****** ******* ******* in ***** *****.

Comments (3)

Avatar

Robert Baxter

05/24/18 05:45am

Thanks for the report. We are involved in the remote video monitoring segment and were puzzled by the acquisition of Stealth by UCIT, the reasons given in the report I don’t think gets to the heart of the matter. I will be rather blunt, I do not mean to offend, but it is meant more to pierce the veil of secrecy surrounding this market segment where facts (read financial) seem hard to find.

It appears that many of the remote video monitoring companies are owned by PE firms. Have any sold out their investment, how did they do? Or is it too soon? Have any gone public – none I think, which tells me they have a poor financial track record or still too small to try this path to make their exit? The merger of Netwatch/NMC what problem are they solving by merging?

Here is what I am hearing from remote video end users, industry rumors and concerns I have generally about the health of the remote video monitoring industry: (1) It is not profitable and constantly needing new investment money to grow the RMR to offset high attrition and a rising cost to create. Is the Debt to RMR ratio constantly rising? (2) High miss rate and having to indemnify their customer to keep them from cancelling, (3) Customers are cancelling their services and going back to guards, (4) companies are wondering why the market for the service is not growing as fast as they thought it would. Is this a quality issue? (5) the product and service niche created by the founders – Are any finding success in growing their RMR in the existing niche? Those that are growing in the founders niche - What is preventing them from moving the company profitably into new verticals? (6) How should one interpret PE firms that buy a business from a founder that was supposed to be a growth play, now resorting to acquisitions or mergers to grow revenues?

What are the balance sheets like for these companies (pre and post acquisition) and how profitable are they really?

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Robert Cherun

In reply to Robert Baxter | 06/05/18 05:42pm

Some quick thoughts to the question around the financials of firms like mine in the remote video monitoring space.

Since remote video monitoring is still a niche growing technology industry there tends to be more focus on growth as opposed to profitability (not dissimilar to companies like Uber or Amazon). As mentioned, our current strategy is to focus on growing a long-term diversified installed customer base by foregoing short-term profit.

The remote video monitoring industry is still too small to have a public company leader. The merger of companies allows for a much easier way to diversify the millions of dollars of fixed costs in research and development still needed in the space. It also lessens the blow of the upfront costs of the equipment and install of each new individual site.

When reviewing our financials, I focus on key metrics like cost to create & install new accounts, recurring monthly revenue, attrition rates, gross margin, etc.

With relation to the specific questions around investment money and debt, there are a lot of alarm lenders that will lend to our industry in a similar format (e.g., 20x RMR) to help cover the creation costs. As noted, attrition is a key indicator of customer happiness/health, and legal contracts are a must (e.g., indemnity, limited liability, transferability).

I know for myself and our significantly sized competitors (i.e., $1M+ RMR) that we are all experiencing organic growth of 10-30% year over year. Acquisitions are a great way to speed up our economy of scale, but not the tell all strategy. For example, UCIT/Stealth has been growing steadily for the past 10+ years and we have only done one merger.

Hope that helps!

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Undisclosed Integrator #1

05/28/21 06:09pm

Does Stealth sell video monitoring direct to consumer or do they sell to dealers primarily whom then bill their clientele.

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