Scout Security begins 2018 with property-fuelled commercial momentum

The new year has begun with a commercial flourish for Scout Security (ASX: SCT), an ASX-listed home security company that’s offering its services across the United States.

In an update to the market, Scout said that it had booked more than A$130,000 in revenue for the month of January and added a further $18,300 in recurring revenue within the same period.

The annualised recurring component of Scout’s revenue now stands at more than $867,000, having grown by 37% year-on-year.

Scout also reports that it has now “restocked” its Scout Alarm product being sold through Amazon’s search marketing platform, adding that its Amazon website traffic is up by more than 32% over the December quarter, suggesting that consumer interest in Scout’s product is experiencing organic growth amongst consumers.

Despite the start of the year being a “typically slower quarter for home security system sales in the US,” Scout expects to beat its own previous forecasts when it announced fully audited results later this month via an investor conference call with co-founder and CEO, Dan Roberts, on 21 February 2018.

Banking on home security

Today’s early earnings forecast reflects the fact that the US home security market is currently experiencing pent-up demand and could mean significantly higher revenue generation from Scout’s flagship product: the Scout Alarm which was recognised by CNet, a leading online platform for digital technology reviews, as one of the Best Smart Home Devices in 2016.

“Scout is off to a great start in 2018, which bodes well for us ahead of the Spring, which is the prime home moving season in the US,” said Dan Roberts, co-founder and CEO of Scout Security.

“February’s numbers are tracking well against January’s and, even though it is a short month, the traction we are experiencing with new and existing customers continues to positively surprise,” said Mr Roberts.

“We are particularly pleased to see recurring revenue form a growing component of our revenue. This mix shift away from upfront hardware revenue and toward annuity-style service income is integral to promoting sustainable and scalable growth in our business,” he added.

To further substantiate its estimates and forecasts, Scout has created a simple business model for the benefit of shareholders and analysts. In Scout’s model, the company expects to generate around $2 million for every $1 million spent over any given 12-month period. Scout is also confident it can “fully recoup” any initial investment made into bolstering its services, “within 6 months.”

However, Scout does stipulate that its model is a “working example” and remains conceptual in nature at this stage.

Following today’s pre-audited figures, Scout is already keenly anticipating the start of the US home moving season sometime in June.

Given the strong early numbers during a time of historically low home security spending, Scout is confident it can continue overachieving with respect of its sales revenues later this year as the home security market picks up its seasonal pace.

Scout director Anthony Brown putting some skin in the game this week buying A$39k worth of SCT shares on the market.