Despite its recent partnership with Best Buy (more on that below), No. 1 CE Pro 100 integrator Vivint has reported first-quarter adjusted EBITDA grew by 12.3 percent to $115.4 million on a net loss of $82.6 million, compared to $102.8 million on a net loss of $45.1 million for the first quarter of 2016.
The company reported total revenues of $205.4 million, an increase of 17.8 percent as compared to the same period the year prior. The increase in total revenues of $31.1 million was primarily driven through an increase in recurring and other revenue of $29.5 million.
Vivint added approximately 133,000 total subscribers year-over-year, resulting in an increase of recurring and other revenue of $21.4 million. A higher average revenue per user (ARPU) drove an increase of $7.1 million of recurring and other revenue versus the same period in 2016.
The company added 39,292 net new smart home subscribers during the first quarter ended March 31. Vivint’s inside sales channel increased originations by 9.1 percent to 24,498 net new smart home subscribers during the quarter as compared to the same period in 2016. ARPU for the quarter increased by $5.98, from $62.01 to $67.99, compared to the same period in 2016.
Related: Vivint, Best Buy, ADT Top CE Pro 100 List of Integrators of 2017
Subscriber account attrition stood at 12 percent for the first quarter, compared to 12.6 percent for the previous quarter ending Dec. 31, 2016.
“We had a two-fold focus during the first quarter of 2017,” says APX Group CFO Mark Davies. “First, drive improvements in our operating metrics, which we did with strong revenue growth, in particular through our inside sales channel, a reduction in our subscriber acquisition cost multiple, a significant year-over-year increase in average revenue per new user and an improvement in customer attrition. Second, execute on our IT and infrastructure improvements related to an SAP enterprise resource planning system implementation, and the process changes and system buildouts to facilitate the launch of Vivint Flex Pay, both of which had successful initial rollouts.”
Operating expenses for the first quarter increased by 23.1 percent, from $58 million in the first quarter of 2016 to $71.4 million. The $13.4 million increase included approximately $1.8 million of equipment cost related to the upgrading of customers’ cellular radios from 2G to 3G, among other updates to their systems to support the change in technology.
Vivint Strikes Strategic Partnership With Best Buy
On May 4 the company announced it entered into a strategic partnership agreement with Best Buy. Under the terms of the agreement, Best Buy will offer certain Vivint smart home products and services in approximately 400 of its retail stores on or before the first anniversary date of the agreement. The rollout will continue thereafter to additional Best Buy stores.
Best Buy is expected to begin offering Vivint’s wares throughout its stores in the second or third quarter. Vivint said it would devote significant management attention as well as significant capital and other resources to the partnership over the course of the agreement. Vivint started with seven stores in San Antonio, Texas, and now in 15 Detroit-area locations. CE Pro has learned the plan is to move into Utah and Arizona next.
Related: Inside the Vivint Smart Home Stores at Best Buy
“Historically, we have primarily originated subscribers through our direct-to-home and inside sales channels. There is no assurance that our retail partnership with Best Buy or other third-party distribution arrangements will become a significant source of subscriber originations or revenue for us,” the company states.
The company also reported it completed a $300 million aggregate principal amount bond offering during the quarter.
