Resideo’s Security, Home-Automation IPO: Comparing REZI, CTRL, ALRM

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Resideo’s Security, Home-Automation IPO: Comparing REZI, CTRL, ALRM

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Alarm.com (ALRM) and Control4 (CTRL) used to be the only pure-play, pro-centric security and home-automation companies on the U.S. stock market. Now comes a third publicly traded competitor, Resideo (NYSE: REZI), the Honeywell spinoff that went public on Monday, Oct. 29.

A trio probably qualifies as a critical mass of companies dedicated to professionally installed and monitored smart-home and security systems. With the onslaught of DIY systems that were "so easy your grandmother could do it," the home-tech "channel" was supposedly dead when Control4 launched a successful IPO in 2013.

Alarm.com, the SHaaS (smart home as a service) provider whose dealers charge $25 to $75 per month for monitored security and remote smart-home management, was a dinasour: "Everyone monitors their own systems for free," they all said when Alarm.com went public in 2015.

RELATED: How Much is Alarm.com Worth? Establishing IPO Valuation

Investors rewarded both companies then, and continue to do so today -- not without some dips along the way.

Resideo didn't fare quite as well as Control4 and Alarm.com on REZI's first day of trading Monday, but at least the home-technology industry will for the first time have a good gauge of market sentiment with a trio of like-minded public companies.

From an opening price of $28, REZI hit the market Monday at $27.85 and ended the IPO day at $25.83, down $2.03 or $7.29%, with some 30.4 million shares traded.

The stock fell further after hours to $25.05, on volume of 11.5 million.

REZI vs. CTRL vs. ALRM

Was it just a bad day for the stock market in general? Technology stocks? Pure-play home automation stocks?

Not really. True, most major indicators were down on Monday, but not by 7.3% (to be sure, an unfair comparison for an IPO stock).

Control4 dropped 0.76% Monday. Alarm.com fell 1.78%.

Performance of all three stocks in aggregate will indicate Wall Street's sentiment towards professionally installed, integrated, monitored, and supported home-technology systems.

Both competitors are very similar to Resideo, offering residential security and home-automation products and services primarily to professional installers, and in some cases the DIY sector.

RELATED: Control4 Up 25% on First Day of IPO; How Did They Get There?

All three companies -- now that Resideo has split from the diversified Honeywell -- are mainly focused on the residential/consumer sector, with little focus on, or penetration in, the commercial/industrial sectors.

Performance of all three stocks in aggregate will indicate Wall Street's sentiment towards professionally installed, integrated, monitored, and supported home-technology systems.

As such, we will refer to these three public companies going forward as the CEPro Home-Tech CORE in our stock-market tracking. 25-year-old CE Pro, an Emerald Expositions company, is the leading media company for home-technology professionals, including system designers, installers, specifiers and service providers.

The other stocks tracked by CE Pro touch on many elements of the CORE group, but diverge in various ways: Their residential security and home-automation business might be overshadowed by commercial/industrial interests (as with Honeywell, REZI's former parent); they may sell through the same market channels, but don't focus on security and home automation; or they may focus on security and home-automation, but largely bypass the professional installation market and sell direct to consumers.

Here's how Monday looked for smart-home and related U.S. stocks, as well as the stock market in general.

Comparing Public Security, Smart-Home, CE Companies

Closest REZI equivalents - security and smart home products and services, sold primarily through professional installers and service providers (CEPro Home-Tech CORE)

HONEYWELL has spent the past several years upping its DIY security and smart-home game, and Resideo will continue the efforts, even using the Honeywell Home brand.

ALARM.COM has never seemed too interested in the Piper (bottom image) DIY business it inherited from Icontrol.

CONTROL4 swears it will never stray from its pro-channel roots - not as long as CEO Martin Plaehn is at the helm.

  • Channels - primarily high-volume security and smart-home dealers and installers, with some DIY, but always with an eye towards selling professional monitoring
  • Some light-commercial business as well
  • Hardware: security, home-automation and related hardware
  • Services: professional alarm monitoring services, cellular networks
  • Platform: Total Connect SHaaS (smart home as a service), integrating home automation and professionally monitored security systems - competitive with Alarm.com
  • Also includes ADI, the massive distributor of residential and commercial security, A/V, networking, controls, and all manner of low-voltage gear.
  • IPO 10/29/18 - Down 7.3% on IPO day
  • Channels - almost exclusively high-volume security and smart-home dealers, with some (reluctant) DIY play since it inherited Icontrol's Piper unit
  • Starting to enter various commercial sectors
  • Platform: focus on SHaaS platform, competitive with Resideo
  • Hardware: growing security and smart-home hardware business
  • IPO 6/26/2015 - Up 5% on IPO day
  • Channels – mid-market to high-end home-technology integrators and specialty A/V shops, with zero direct-to-consumer sales
  • Hardware: mainstream and higher-end home-automation, audio, video, lighting controls, access controls, networking (Pakedge) and related gear
  • Platforms: Ihiji for remote network monitoring and diagnostics (primarily for service providers); 4Sight for remote smart-home access and configuration (end-user tool)
  • Does not sell traditional alarm systems, but integrates with third-party systems
  • IPO 8/5/2013 – Up 7.8% on IPO day

Strong REZI competitors in pro-centric security and home-automation, but contributions diluted by corporation’s other interests

  • ADT (NYSE: ADT) – Corp. focus on pro-oriented security (including cyber) and building controls, with strong business in residential security/smart-home installation, monitoring, and SHaaS via Alarm.com: -1.62% Monday
  • Napco (Nasdaq: NSSC) – Corp. focus on pro-oriented security and building controls, with strong business in residential security and home automation hardware, along with iBridge SHaaS platform: +0.44% Monday
  • United Technologies Corp. (NYSE: UTX) - Interlogix brand is one of REZI's top competitors, with a strong portfolio of security and home automation offerings includings its own SHaaS; however, it’s just a blip in the UTX financials: -1.74% Monday
  • Johnson Controls (NYSE: JCI) – Building/industrial-controls giant picked up two strong REZI competitors, Qolsys and DSC, when it acquired Tyco in 2016, but like Interlogix the brands shrink under the conglomerate umbrella: -0.13% Monday

Related to REZI – smart-home solutions catering to DIY, but with a strong following among installation pros

  • Sonos (Nasdaq: SONO) – Whole-house music systems that integrate with home-automation systems, and are gathering built-in intelligence of their own; ostensibly sold through DIY channels, but also very popular among professional home-technology integrators. -0.41% Monday
  • Logitech (Nasdaq: LOGI) – Lots of DIY computer peripherals and some commercial-oriented solutions, including video collaboration. Strong smart-home portfolio including home-automation hubs and remote controls under the Harmony brand, often sold and installed by professional integrators. +0.023% Monday
  • Arlo Technologies (NYSE: ARLO) – Recently spun out of Netgear, and formerly “just a smart camera company,” Arlo is growing its smart-home portfolio, starting with a video doorbell and security light. +3.15% Monday
  • Ascent Capital Group (Nasdaq: ASCMA), owner of Brinks Home Security (formerly MONI and Monitronics) - Primarily a central monitoring station and dealer program for mass-market security and smart-home pros. DIY unit (formerly LiveWatch) provides third-party security and automation systems (Qolsys hardware, Alarm.com SHaaS) for self-installation and professional monitoring. -7.52% Monday
  • Universal Electronics Inc. (Nasdaq: UEIC) – OEM remote-control provider for most major A/V-device brands, with back-end services for device discovery, voice control and smart-home integration; building home-automation portfolio with acquisition of Ecolink (security devices) and RCS (smart thermostats and energy management). -2.10% Monday

Stock-Market Indices on REZI IPO Day

  • Dow Jones Industrial Average: -0.99%
  • S&P 500: -0.29%
  • Nasdaq 100 Technology Sector: -1.39%
  • Dow Jones US Consumer Electronics Index: -2.34%
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