VVNT Vivint Smart Home Inc

Revenue grew by nearly 14% (more than 18% after normalizing for Canadian divestiture), driven by strong growth in total subscribers, an all-time high in average monthly recurring revenue per user, and significant contribution from Smart Energy offering

Operating metrics continue to perform near record levels, with attrition at 11.0% and net service cost per subscriber at $9.43, an all-time low

Raising full-year outlook for total subscribers, revenue, and adjusted EBITDA

Vivint Smart Home, Inc. (NYSE: VVNT), a leading smart home company, today announced results for the third quarter and nine months ended September 30, 2022.

Third Quarter Financial Highlights (vs. prior-year period)

• Revenue increased by $52.7 million to $439.4 million, representing an increase of 13.6% (18.1% ex Canada)
• Net loss improved by $51.7 million to a loss of $41.0 million
• Adjusted EBITDA(a,b) increased by $36.9 million to $195.5 million (using updated definition that no longer includes the add back of consumer financing fees)
• Originated 113,481 new subscribers with significant growth from our indirect go-to-market channel
• Attrition rate improved by 40 basis points to 11.0%, remaining near record low
• Total subscribers grew by 4.2% to 1,921,774 (growth was 9.8% ex Canada)
• Net service margin increased to 79.9% from 76.8% in the prior-year period

“Our strong results for the third quarter showed substantial year-over-year improvements in total subscribers, revenue, and adjusted EBITDA,” said David Bywater, CEO of Vivint Smart Home. “The unit economics underpinning our record performance continued to shine as well, with average monthly recurring revenue per user increasing to an all-time high and net service cost per subscriber dropping to an all-time low. Moreover, we continue to believe our 11.0% attrition rate for the period is the lowest among national smart home companies by a significant margin. Based on our positive momentum through the first three quarters, we are raising our guidance for total subscribers, revenue, and adjusted EBITDA.”

Business Highlights

Leader in Innovation:

• Recently launched the Vivint Spotlight Pro, one of the only lighting solutions in the industry that uses the camera’s technology to activate lighting and dynamically adapt based on what the camera is seeing. When set to Deter Mode, the Spotlight Pro can detect people on the monitored property, shine a spotlight on them, and follow them to let them know they are visible.
  • Together with our Doorbell Camera Pro and Outdoor Camera Pro, Vivint has developed a suite of solutions that doesn’t just inform homeowners about security events that have happened but actually works to prevent crime from happening.
• Launching a solution that will allow customers to view and monitor their home’s solar energy production straight from the Vivint app and Smart Hub display. This integration is expected to roll out in the next month, with even more integration features coming in the future.
• Developing an integrated indoor lighting solution, scheduled for launch in the first half of 2023, that will allow customers to control their lights directly from the Vivint app and Smart Hub display, including setting up custom rules and schedules.

Robust Customer Engagement:

• Vivint’s average smart home customer installs approximately 15 devices in their home, interacts with their smart home system more than 12 times per day, and retains service for approximately 9 years.
• Vivint’s proprietary platform and technology allow for continuous innovation and improved customer experience which leads to increased loyalty, lower attrition, longer customer life, and expanded customer lifetime value.

Continued Expansion in Asset-light Smart Energy Vertical:

• Vivint has installed nearly 70 megawatts of solar through strategic partners through the third quarter, on pace to install more than 100 megawatts for the full year.
• Vivint’s sales force and partners who bundle a smart home system with solar continue to see considerably better sales realization rates than those who are selling solar standalone.
• Making progress towards long-term vision of combining energy production and consumption into an integrated platform that uses artificial intelligence to manage power consumption more intelligently.

Positive Momentum in Indirect Go-to-market Channel:

• Vivint has sold more than 13,000 smart home systems year to date through these partnerships and nearly 6,000 in the third quarter alone.
• Continuing to expand indirect partnerships; building differentiated distribution channel to grow and retain smart home customers.

Full Year 2022 Guidance as of November 8, 2022

• Raising total subscribers to between 1.92 and 1.93 million (between 1.86 and 1.92 million previously)
• Raising total revenue to between $1.65 and $1.67 billion (between $1.60 and $1.63 billion previously)
• Raising adjusted EBITDA(a,b) to between $727 and $742 million (between $667 and $687 million previously on a like-for-like basis). Note that we are no longer adding back approximately $58 million in consumer financing fees to adjusted EBITDA.
• Adjusting free cash flow(a) to between $10 and $30 million (between $35 and $60 million previously)

Reconciliations of net loss to Adjusted EBITDA and net cash from operating activities to Free Cash Flow are not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity, and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations, including net loss and adjustments that could be made for impairment charges, restructuring charges and the timing and magnitude of other amounts included in the reconciliations. For the same reasons, we are unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.

Conference Call Information

Vivint will host a conference call and webcast to discuss its third quarter 2022 results at 5:00 p.m. ET / 3:00 p.m. MT today, November 8, 2022. To join the live webcast and conference call, please visit the Investor Relations section of the Company’s website at https://investors.vivint.com/events-and-presentations/events/default.aspx. To pre-register for the call, please go to the following link: https://www.netroadshow.com/events/login?show=3df2eae1&confId=42986. You will receive your access details via email. A financial results presentation will be available immediately before the call in the Investor Relations section of Vivint’s website at https://investors.vivint.com/events-and-presentations/events/default.aspx, and a replay of the webcast will be available following the completion of the webcast and conference call.

 

Summary of Quarterly Key Financial and Portfolio Metrics

($ in millions, except for subscriber data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sep 30,

 

Dec 31,

 

Mar 31,

 

Jun 30,

 

 

Sep 30,

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

Total Revenues

$

386.7

 

$

396.2

 

$

392.7

 

$

407.3

 

$

439.4

 

Net Loss

$

(92.7

)

$

(53.5

)

$

(27.4

)

$

(3.5

)

$

(41.0

)

Net Loss Margin

 

(24.0

)%

 

(13.5

)%

 

(7.0

)%

 

(0.9

)%

 

(9.3

)%

Common Shares Outstanding

 

208,728,450

 

 

208,734,193

 

 

212,561,154

 

 

212,764,752

 

 

213,382,168

 

Adjusted EBITDA(a,b)

$

158.6

 

$

166.2

 

$

189.4

 

$

175.9

 

$

195.5

 

Adjusted EBITDA Margin(a,b)

 

41.0

%

 

41.9

%

 

48.2

%

 

43.2

%

 

44.5

%

LTM Covenant Adjusted EBITDA(a,b)

$

1,004.1

 

$

1,050.7

 

$

1,106.7

 

$

1,146.8

 

$

1,196.0

 

New Subscribers(c)

 

114,380

 

 

64,403

 

 

66,734

 

 

126,328

 

 

113,481

 

Total Subscribers(c)

 

1,843,744

 

 

1,855,141

 

 

1,870,440

 

 

1,864,966

 

 

1,921,774

 

Total Monthly Service Revenue

$

86.4

 

$

86.7

 

$

87.4

 

$

87.4

 

$

90.0

 

Avg Monthly Svc Revenue per User

$

46.88

 

$

46.71

 

$

46.71

 

$

46.85

 

$

46.81

 

Total Monthly Recurring Revenue

$

121.5

 

$

125.2

 

$

126.5

 

$

128.6

 

$

133.2

 

Avg Monthly Recurring Rev per User

$

66.39

 

$

67.58

 

$

67.87

 

$

68.04

 

$

69.76

 

Attrition Rate(d)

 

11.4

%

 

11.3

%

 

11.2

%

 

10.9

%

 

11.0

%

a)

Beginning with the quarter ended September 30, 2022, we no longer eliminate the reduction to revenue related to the amortization of consumer financing fees incurred under the Vivint Flex Pay program from Adjusted EBITDA. For purposes of comparability, we have revised historical Adjusted EBITDA figures to reflect this approach.

b)

This earnings release includes Adjusted EBITDA, Adjusted EBITDA Margin, Covenant Adjusted EBITDA, and Free Cash Flow metrics that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. (GAAP). Covenant Adjusted EBITDA provides additional information to investors about the calculation of, and compliance with, certain financial covenants contained in the agreements governing the Company’s Notes, and the credit agreement governing the Company’s Revolving Credit Facility and Term Loan. See the Statement Regarding Non-GAAP Financial Measures section at the end of this earnings release for the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, Covenant Adjusted EBITDA, and Free Cash Flow and reconciliations to their most directly comparable financial measure calculated in accordance with GAAP.

c)

Excludes subscribers from sales pilot initiatives.

d)

Attrition Rate is reported on LTM basis for each period end & excludes subscribers from sales pilot initiatives.

About the Company

Vivint is a leading smart home company in the United States. Vivint delivers an integrated smart home system with in-home consultation, professional installation and support delivered by its Smart Home Pros, as well as 24/7 customer care and monitoring. Dedicated to redefining the home experience with intelligent products and services, Vivint serves more than 1.9 million customers throughout the United States. For more information, visit https://www.vivint.com.

Forward-Looking Statements

This earnings release and accompanying conference call include certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including statements regarding, among other things, the Company’s plans, strategies and prospects, both business and financial, including without limitation the information under the heading “Full Year 2022 Guidance” in this press release. These statements are based on the beliefs and assumptions of the Company’s management. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or similar expressions.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, in addition to those discussed in "Risk Factors" and elsewhere in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2021, which was filed on March 1, 2022, as such factors may be updated from time to time in the Company’s periodic filings with the SEC, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

• the duration and scope of the evolving COVID-19 pandemic;
• the impact of the COVID-19 pandemic on our liquidity and capital resources, including the impact of the pandemic on our customers and timing of payments, the sufficiency of credit facilities, and the company's compliance with lender covenants;
• the ineffectiveness of steps we take to reduce operating costs;
• risks of the smart home and security industry, including risks of and publicity surrounding the sales, subscriber origination and retention process;
• the highly competitive nature of the smart home and security industry and product introductions and promotional activity by our competitors;
• litigation, complaints, product liability claims and/or adverse publicity;
• the impact of changes in consumer spending patterns, consumer preferences, local, regional, and national economic conditions, crime, geopolitical tensions, weather, and demographic trends;
• adverse publicity and product liability claims;
• the impact of changes to prevailing economic conditions, including increasing interest rates, rising inflation and the expiration of federal, state and local economic stimulus programs;
• increases and/or decreases in utility and other energy costs, increased costs related to utility or governmental requirements;
• cost increases or shortages in smart home and security technology products or components including disruptions in our supply chains;
• the introduction of unsuccessful new Smart Home Services;
• privacy and data protection laws, privacy or data breaches, or the loss of data;
• the impact to our business, results of operations, financial condition, regulatory compliance and customer experience of the Vivint Flex Pay plan;
• risks related to our exposure to variable rates of interest with respect to our revolving credit facility and term loan facility;
• our inability to maintain effective internal control over financial reporting; and
• our inability to attract and retain employees due to labor shortages.

In addition, the origination and retention of new subscribers will depend on various factors, including, but not limited to, market availability, subscriber interest, the availability of suitable components, the negotiation of acceptable contract terms with subscribers, local permitting, licensing and regulatory compliance, and our ability to manage anticipated expansion and to hire, train and retain personnel, the financial viability of subscribers and general economic conditions.

The Company undertakes no obligations to update or revise publicly any forward-looking statements, whether a result of new information, future events, or otherwise, except as required by law.

Certain Definitions

Total Subscribers - is the aggregate number of active smart home and security subscribers at the end of a given period.

Total Monthly Recurring Revenue - or Total MRR, is the average total monthly recurring revenue recognized during a given period.

Average Monthly Recurring Revenue per User - or AMRRU, is Total MRR divided by average monthly Total Subscribers during a given period.

Total Monthly Service Revenue - or MSR, is the contracted recurring monthly service billings to our smart home and security subscribers, based on the Total Subscribers number as of the end of a given period.

Average Monthly Service Revenue per User - or AMSRU, is Total MSR divided by Total Subscribers at the end of a given period.

Net Loss Margin - is net loss as a percent of revenue.

Attrition Rate - is the aggregate number of canceled smart home and security subscribers during the prior 12-month period divided by the monthly weighted average number of Total Subscribers based on the Total Subscribers at the beginning and end of each month of a given period. Subscribers are considered canceled when they terminate in accordance with the terms of their contract, are terminated by us or if payment from such subscribers is deemed uncollectible (when at least four monthly billings become past due). If a sale of a service contract to third parties occurs, or a subscriber relocates but continues their service, we do not consider this as a cancellation. If a subscriber transfers their service contract to a new subscriber, we do not consider this a cancellation.

Average Subscriber Lifetime - in number of months, is 100% divided by our expected long-term annualized attrition rate multiplied by 12 months.

Net Service Cost per Subscriber - is the average monthly service costs incurred during the period (both period and capitalized service costs), including monitoring, customer service, field service and other service support costs, and equipment and associated financing fees (estimated), less total non-recurring smart home services billings and cellular network maintenance fees for the period, divided by average monthly Total Subscribers for the same period.

Net Service Margin - is the monthly average MSR for the period, less total average net service costs for the period divided by the monthly average MSR for the period.

New Subscribers - is the aggregate number of net new smart home and security subscribers originated during a given period. This metric excludes new subscribers acquired by the transfer of a service contract from one subscriber to another.

Net Subscriber Acquisition Costs per New Subscriber - is the net cash cost to create new smart home subscribers during a given 12-month period divided by New Subscribers for that period. These costs include commissions, equipment and associated financing fees (estimated), installation, marketing, sales support, and other allocations (general and administrative); less upfront payments received from the sale of equipment associated with the initial installation, and installation fees. These costs exclude capitalized contract costs and upfront proceeds associated with contract modifications.

 

VIVINT SMART HOME, INC. and SUBSIDIARIES

Consolidated Statements of Operations

(In thousands; unaudited)

 

 

 

 

Three Months Ended Sep 30,

Nine Months Ended Sep 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

Recurring and other revenue

$

439,370

 

$

386,710

 

$

1,239,400

 

$

1,083,174

 

Costs and expenses:

 

 

 

 

Operating expenses

 

102,318

 

 

99,082

 

 

298,571

 

 

286,353

 

Selling expenses

 

98,389

 

 

96,072

 

 

268,073

 

 

300,480

 

General and administrative expenses

 

61,091

 

 

64,972

 

 

171,575

 

 

189,267

 

Depreciation and amortization

 

156,426

 

 

151,332

 

 

468,445

 

 

447,863

 

Total costs and expenses

 

418,224

 

 

411,458

 

 

1,206,664

 

 

1,223,963

 

Income (Loss) from operations

 

21,146

 

 

(24,748

)

 

32,736

 

 

(140,789

)

Other expenses (income):

 

 

 

 

Interest expense

 

43,510

 

 

47,120

 

 

119,904

 

 

146,981

 

Interest income

 

(175

)

 

(126

)

 

(455

)

 

(280

)

Change in fair value of warrant liabilities

 

7,891

 

 

(15,313

)

 

(10,443

)

 

(50,638

)

Other expense (income), net

 

9,375

 

 

37,329

 

 

(5,134

)

 

14,736

 

Total other expenses

 

60,601

 

 

69,010

 

 

103,872

 

 

110,799

 

Loss before income taxes

 

(39,455

)

 

(93,758

)

 

(71,136

)

 

(251,588

)

Income tax expense (benefit)

 

1,551

 

 

(1,014

)

 

787

 

 

500

 

Net loss

$

(41,006

)

$

(92,744

)

$

(71,923

)

$

(252,088

)

 

VIVINT SMART HOME, INC. and SUBSIDIARIES

Consolidated Balance Sheets

(In thousands; unaudited)

 

 

 

 

 

 

 

Sep 30, 2022

 

Dec 31, 2021

ASSETS

 

 

Current Assets:

 

 

Cash and cash equivalents

$

303,741

 

$

208,509

 

Accounts and notes receivable, net

 

53,441

 

 

63,671

 

Inventories

 

76,921

 

 

51,251

 

Prepaid expenses and other current assets

 

27,658

 

 

19,385

 

Total current assets

 

461,761

 

 

342,816

 

 

 

 

Property, plant and equipment, net

 

60,683

 

 

55,448

 

Capitalized contract costs, net

 

1,530,257

 

 

1,405,442

 

Deferred financing costs, net

 

1,746

 

 

2,088

 

Intangible assets, net

 

10,603

 

 

51,928

 

Goodwill

 

817,502

 

 

837,153

 

Operating lease right-of-use assets

 

39,493

 

 

46,000

 

Long-term notes receivables and other non-current assets, net

 

36,937

 

 

44,753

 

Total assets

$

2,958,982

 

$

2,785,628

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

Current Liabilities:

 

 

Accounts payable

$

121,133

 

$

96,317

 

Accrued payroll and commissions

 

144,813

 

 

83,347

 

Accrued expenses and other current liabilities

 

194,692

 

 

236,250

 

Current portion of notes payable, net

 

13,500

 

 

13,500

 

Deferred revenue

 

500,609

 

 

429,900

 

Current portion of operating lease liabilities

 

12,822

 

 

12,033

 

Current portion of finance lease liabilities

 

2,550

 

 

2,854

 

Total current liabilities

 

990,119

 

 

874,201

 

 

 

 

Notes payable, net

 

2,692,609

 

 

2,698,845

 

Finance lease liabilities, net of current portion

 

5,281

 

 

1,416

 

Operating lease liabilities, net of current portion

 

33,463

 

 

41,713

 

Warrant derivative liabilities

 

14,121

 

 

24,564

 

Deferred revenue, net of current portion

 

884,002

 

 

778,214

 

Other long-term obligations

 

78,783

 

 

106,135

 

Deferred income tax liabilities

 

792

 

 

640

 

Total liabilities

 

4,699,170

 

 

4,525,728

 

Total stockholders’ deficit

 

(1,740,188

)

 

(1,740,100

)

Total liabilities and stockholders’ deficit

$

2,958,982

 

$

2,785,628

 

 

VIVINT SMART HOME, INC. and SUBSIDIARIES

Summary Cash Flow Data

(In thousands; unaudited)

 

 

 

 

 

 

 

Three Months Ended Sep 30,

 

Nine Months Ended Sep 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net cash from operating activities

$

17,203

 

$

77,892

 

$

49,578

 

$

142,130

 

Net cash from investing activities

 

(6,019

)

 

(2,093

)

 

72,668

 

 

(10,037

)

Net cash from financing activities

 

(6,713

)

 

(140,693

)

 

(26,783

)

 

(165,711

)

Effect of exchange rate changes on cash and cash equivalents

 

243

 

 

(135

)

 

(231

)

 

(29

)

Net increase (decrease) in cash & cash equivalents

 

4,714

 

 

(65,029

)

 

95,232

 

 

(33,647

)

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

Beginning of period

 

299,027

 

 

345,181

 

 

208,509

 

 

313,799

 

End of period

$

303,741

 

$

280,152

 

$

303,741

 

$

280,152

 

 

Statement Regarding Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation (or non-cash compensation), changes in the fair value of the derivative liability associated with our public and private warrants and certain other non-recurring expenses or gains.

Adjusted EBITDA margin is defined as Adjusted EBITDA as a percent of revenue.

Adjusted EBITDA is not defined under GAAP and is subject to important limitations. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by the Company may not be comparable to similarly titled amounts used by other companies.

Management believes that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors, and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. In addition, targets based on Adjusted EBITDA are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive plans.

Covenant Adjusted EBITDA

Covenant Adjusted EBITDA is defined as net income (loss) before interest expense (net of interest income), income and franchise taxes and depreciation and amortization (including amortization of capitalized subscriber acquisition costs), further adjusted to exclude the effects of certain contract sales to third parties, non-capitalized subscriber acquisition costs, stock based compensation, changes in the fair value of the derivative liability associated with our public and private warrants and certain unusual, non-cash, non-recurring and other items permitted in certain covenant calculations under the agreements governing our Notes and the Credit Agreement.

We believe that the presentation of Covenant Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of, and compliance with, certain financial covenants contained in the agreements governing the Company’s Notes and the Credit Agreement governing the Revolving Credit Facility and the Term Loan Facility. We caution investors that amounts presented in accordance with our definition of Covenant Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers and analysts calculate Covenant Adjusted EBITDA in the same manner.

Covenant Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity.

Free Cash Flow

Free Cash Flow is defined as net cash (used in) provided by operating activities less capital expenditures.

See the following tables for quantitative reconciliations of Adjusted EBITDA and Covenant Adjusted EBITDA, for historical periods, to Net Loss and Free Cash Flow, for historical periods, to net cash provided by operating activities, which we believe are the most comparable financial measures calculated in accordance with GAAP.

 

VIVINT SMART HOME, INC. and SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures: Adjusted EBITDA (i)

(In millions; unaudited)

 

 

Three Months Ended

 

 

Sep 30,

 

Dec 31,

 

Mar 31,

 

Jun 30,

 

Sep 30,

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

Net loss

$

(92.7

)

$

(53.5

)

$

(27.4

)

$

(3.5

)

$

(41.0

)

Interest expense, net

 

47.0

 

 

37.8

 

 

37.4

 

 

38.7

 

 

43.3

 

Income tax (benefit) expense, net

 

(1.0

)

 

2.0

 

 

0.4

 

 

(1.2

)

 

1.6

 

Depreciation

 

3.9

 

 

4.2

 

 

4.2

 

 

5.8

 

 

3.9

 

Amortization (ii)

 

147.4

 

 

149.5

 

 

150.2

 

 

151.8

 

 

152.5

 

Stock-based compensation (iii)

 

29.0

 

 

22.8

 

 

25.6

 

 

16.0

 

 

17.9

 

CEO transition (iv)

 

3.0

 

 

3.0

 

 

—

 

 

—

 

 

—

 

Change in fair value of warrant derivative liabilities (v)

 

(15.3

)

 

0.5

 

 

(9.3

)

 

(9.0

)

 

7.9

 

Other expense (income), net (vi)

 

37.3

 

 

(0.1

)

 

8.3

 

 

(22.7

)

 

9.4

 

Adjusted EBITDA

$

158.6

 

$

166.2

 

$

189.4

 

$

175.9

 

$

195.5

 

Net loss margin

 

(24

)%

 

(14

)%

 

(7

)%

 

(1

)%

 

(9

)%

Adjusted EBITDA margin

 

41

%

 

42

%

 

48

%

 

43

%

 

44

%

(i)

Beginning with the quarter ended September 30, 2022, we no longer eliminate the reduction to revenue related to the amortization of consumer financing fees incurred under the Vivint Flex Pay program from Adjusted EBITDA. For purposes of comparability, we have revised historical Adjusted EBITDA figures to reflect this approach.

(ii)

Excludes loan amortization costs that are included in interest expense.

(iii)

Reflects stock-based compensation costs related to employee and director stock incentive plans.

(iv)

Hiring and severance expenses associated with CEO transition.

(v)

Reflects the change in fair value of the derivative liability associated with our public and private warrants.

(vi)

Primarily consists of changes in our consumer finance program derivative instrument, foreign currency exchange, and other gains/losses associated with financings and other transactions.

 

VIVINT SMART HOME, INC. and SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures: Covenant Adjusted EBITDA

(In millions; unaudited)

 

 

 

 

 

LTM Period Ended

 

 

Sep 30,

 

Dec 31,

 

Mar 31,

 

Jun 30,

 

Sep 30,

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

Net loss

$

(436.9

)

$

(305.6

)

$

(244.2

)

$

(177.1

)

$

(125.4

)

Interest expense, net

 

196.7

 

 

184.5

 

 

172.1

 

 

160.9

 

 

157.2

 

Other expense (income), net

 

13.9

 

 

14.5

 

 

37.3

 

 

22.6

 

 

(5.4

)

Income tax expense, net

 

1.3

 

 

2.5

 

 

2.7

 

 

0.2

 

 

2.8

 

Depreciation and amortization (i)

 

79.0

 

 

76.5

 

 

75.1

 

 

74.9

 

 

72.5

 

Amortization of capitalized contract costs

 

516.3

 

 

525.0

 

 

533.8

 

 

542.0

 

 

549.6

 

Non-capitalized contract costs (ii)

 

333.7

 

 

343.1

 

 

358.3

 

 

370.7

 

 

382.0

 

Stock-based compensation (iii)

 

224.5

 

 

166.4

 

 

105.0

 

 

93.5

 

 

82.4

 

Change in fair value of warrant derivative liabilities (iv)

 

(21.3

)

 

(50.1

)

 

(30.3

)

 

(33.1

)

 

(9.9

)

Other adjustments (v)

 

96.9

 

 

93.9

 

 

96.9

 

 

92.2

 

 

90.3

 

Covenant Adjusted EBITDA

$

1,004.1

 

$

1,050.7

 

$

1,106.7

 

$

1,146.8

 

$

1,196.1

 

(i)

Excludes loan amortization costs that are included in interest expense.

(ii)

Reflects subscriber acquisition costs that are expensed as incurred because they are not directly related to the acquisition of specific subscribers. Certain other industry participants purchase subscribers through subscriber contract purchases, and as a result, may capitalize the full cost to purchase these subscriber contracts, as compared to our organic generation of new subscribers, which requires us to expense a portion of our subscriber acquisition costs under GAAP.

(iii)

Reflects stock-based compensation costs related to employee and director stock incentive plans.

(iv)

Reflects the change in fair value of the derivative liability associated with our public and private warrants.

(v)

Includes certain items such as consumer financing fees, product development costs, Blackstone monitoring fee, loss contingencies, certain legal and professional fees, expenses associated with retention bonuses, relocation and severance payments, expenses associated with CEO transition, and certain other adjustments.

 

VIVINT SMART HOME, INC. and SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures: Free Cash Flow

(In millions; unaudited)

 

 

 

 

 

 

 

Three Months Ended Sep 30,

 

Nine Months Ended Sep 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net cash from operating activities

$

17.2

 

$

77.9

 

$

49.6

 

$

142.1

 

Capital expenditures

 

(4.3

)

 

(2.2

)

 

(15.3

)

 

(10.2

)

Free Cash Flow

$

12.9

 

$

75.7

 

$

34.3

 

$

131.9

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221108006136/en/

Nate Stubbs VP, Investor Relations 801-221-6724 ir@vivint.com