As the third most populous nation in the world, and with high crime rates, the United States has proven an ideal market for security tech company Scout Security (ASX: SCT), who are nearing cash flow breakeven thanks to the many Americans paying $6 per month for a tiny bit more peace of mind.
Rising sales in the US have Scout on track to negate their cash burn with the Company seeing strong results from their white labelled telco home security solution.
As manufacturer of the hardware and developers of the software, Scout has been partnering with telecommunications providers that are bundling the security devices with other household products. Once installed, the divide can provide residents with alarms and alerts when security measures are triggered such as a door or window being opened in the middle of the night, or during the day when no one is expected to be at home.
By partnering with telcos, Scout has found this to be a much faster way to penetrate the US market without having to expend capital on their own salesforce.
In total, their Prosecur Security divide has now been installed in more than 500,000 homes around the world, many of which pay an accompanying monthly subscription fee from ~AUD$8 (USD$6+) per month for the security service.
As of the end of February, Scout has more than $200k in annualised recurring revenue from this channel with sales being accelerated as evidenced by a 59% increase in month-on-month sales between January and February 2022.
With the increased subscriptions, Scout is set to reach cash flow positivity in the months ahead which will start to offset the expenses incurred developing the tech and launching it in the US.
For the half year ended 31 December 2021, Scout reported $2.4 million in revenue which represented a 174% increase from the previous corresponding period. With the rising sales, Scout improved their net loss after tax by 13% to $1.9m.
The current DIY Home Security market is currently valued at USD $3.3 billion per annum but GMD Research estimates that it will reach over $US11 billion by 2027.
Scout is an official partner of Amazon Alexa and Google’s Assistant. Scout is also an Amazon Alexa Fund portfolio company.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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