SDM exclusive // SDM 100
Mostly Strong, With A Focus on Video
Focus on Video
Mostly Strong, With A
SVTeam/Creatas Video+ / Getty Images Plus via Getty Images
The top SDM 100 companies reported that the market in 2023 — whether they deemed it average or excellent — was largely defined by a few key factors: inflation, an emphasis on video technology advancements and the continuing workforce shortage.
By Karyn Hodgson, SDM Editor
Looking at this year’s SDM 100 report you might be tempted to think that the majority of the top 100 security dealers had a fantastic, boom year in 2023. And as an aggregate, they did. Numbers were up across the board, with total RMR increasing 7 percentage points over last year, to $714 million, the highest number since 2016. Total annual revenue increased 8 percentage points to its second highest amount in a decade, also behind 2016. Residential and non-residential sales revenues increased by 33 and 10 percentage points, respectively. Profits were also up by 6 percentage points. Even total annual subscribers, which had been slowly declining over the past several years, bumped up by 2 percentage points.
But these numbers, as good as they are, don’t show the whole picture. While a healthy number of those who added comments to their surveys indicated 2023 was strong, many others described it as average, or even declining, particularly in light of higher interest rates and inflation in 2023. Yet, most of these companies posted increased profits and RMR even if they indicated it was a weaker overall year. How did they do it?
On the positive side, the vast majority of those who commented noted that the supply chain issues of 2021 and 2022 have largely resolved, which definitely helped business in 2023.
2024 SDM 100
No. 1 – Source is 2023 Earnings Presentation. Includes Solar Division. ADT divested its commercial business in August 2023. SDM’s 2017 Dealer of the Year. No. 2 – Launched as Securitas Technology in March 2023 after completing its acquisition of STANLEY Security in July 2022. No. 3 – Launched a Virtual Tech Program in January 2023. No. 4 – Acquired by GTCR from ADT and became a standalone organization named Everon in October 2023. Made a number of acquisitions since, including Apex Integrated Security Solutions, Portland Safe and Riverside Integrated Systems. Ranked for the first time on the SDM 100 under its new name. No. 5– Has acquired 20 companies since partnering with Wind Point Partners in June 2020. Notable recent acquisitions include RFI Enterprises; REECE Complete Security Solutions in August 2023; and Integrated Security & Communications in January 2024. No. 6 – SDM’s 2003 and 2015 Dealer of the Year. No. 7 – SDM’s 1998 Dealer of the Year. No. 8 – Pye-Barker grew 17 percent organically and 37 percent through acquisition, acquiring 31 companies in 2023, including former SDM 100-ranked companies Sonitrol of the Carolinas; Acadiana Security Plus; Sonitrol of SW Ohio and Amherst Alarm. No. 9 – Acquired Vintage Security in October 2023. SDM’s 1999 and 2013 Dealer of the Year. No. 10 – SDM’s 2000 and 2019 Dealer of the Year. No. 12 – Acquired Caliber Communications and Syncro Monitoring. Ranked on the SDM 100 for the first time. No. 14 – Acquired Vintage Security in October 2023. No. 15 – Acquired PASS Security in May 2023. Partnered with Independent Alarm in January 2023. No. 16 – Acquired Nightwatch Security in September 2023 and Homeguard Security in March 2023. No. 17 – SDM’s 1984 Dealer of the Year. No. 19 – Secured an increase in funding via a national bank specializing in the security industry. Acquired Malfy Alarm of Cape Cod in January 2023. No. 20 – Integrated a large acquisition completed in December 2022. No. 23 – Acquired AMS Security Plus. SDM’s 1997 Dealer of the Year. No. 29 –SDM’s 2020 Dealer of the Year. No. 30 – Acquired Lanmor Services in March 2024. No. 31 – Ranked on the SDM 100 for the first time. No. 33 – Significant operational and management restructure. No. 34 – Completed rebranding of three branches to Bates Security. SDM’s 2018 Dealer of the Year. No. 37 – SDM’s 2023 Dealer of the Year. No. 39 – Acquired Strategic Security Solutions (S3) in March 2024. Completed a major project at Boston University that won SDM’s 2024 Project of the Year. No. 41 – SDM’s 2004 Dealer of the Year. No. 46 – Completed a large acquisition that increased RMR by 35 percent. No. 54 – Broke all its prior revenue records for installation, service and recurring services. No. 55 – Increased top-line revenue by 25 percent year over year and started the renovation project for its office building in Johnson City, Tenn. No. 57 – Significantly cut expenses and still increased in revenue, and increased profits by almost $1 million. No. 58 – SDM’s 2021 Dealer of the Year. No. 62 – Grew company service agreements and gained more RMR off of video surveillance and access revenue. No. 63 – Ranked on the SDM 100 for the first time. No. 64 – Successfully folded new video services and proactive video monitoring into its line of services and began to push heavily into the video integrated market. No. 67 – SDM’s 1995 and 2022 Dealer of the Year. No. 71 – Ranked on the SDM 100 for the first time. No. 72 – Increased commercial sales and commercial integrated sales. No. 73 – Record revenue and RMR. No. 78 – Landed two very large accounts, one being a national account with dozens of locations throughout the U.S. Ranked on the SDM 100 for the first time. No. 82 – Ranked on the SDM 100 for the first time. No. 83 – Sold over $60,000 in monthly RMR. No. 85 – Ranked on the SDM 100 for the first time. No. 86 – Implemented of a new CRM platform. No. 92 – Continued to significantly grow national division. No. 93 – 53 percent top line growth organically. No. 96 – Completed two multi-million dollar projects simultaneously. Ranked on the SDM 100 for the first time. No. 98 – Ranked on the SDM 100 for the first time. No. 99 – Acquired another company in late Q4 2022 and brought that company into its existing infrastructure in 2023. Ranked on the SDM 100 for the first time. No. 100 – Ranked on the SDM 100 for the first time.
No. 39, Minuteman Security and Life Safety, wrote: “The market in 2023 was very strong. ... Our sales were up across the board. We noticed a particularly strong increase in healthcare and higher education. Supply chain issues were greatly improved from the previous year or two and didn’t have an impact on our business.”
No. 7, Bay Alarm, wrote: “Compared to 2022, the market in 2023 was weak. 2023 saw a significant improvement in supply chain issues over 2021 and 2022.”
No. 19, American Alarm & Communications, noted: “Overall the market was average. … Supply chain issues were not a factor in 2023 but inflation was still an issue, as were higher interest rates.”
But while supply chain issues were notably improved, over and over again, companies brought up another issue that has far from resolved: ongoing labor shortages.
“Overall, the market in 2023 was about the same as 2022,” wrote No. 46, Valley Alarm. “The market was very weak in Q1, but rebounded in Q2 and remained solid for the rest of the year. CCTV and proactive video monitoring were the strongest. Fire was the weakest. There were minimal supply chain issues in 2023. However, technical labor shortages and inflation (particularly labor) hurt revenues and margins.”
No. 63, Guardian Hawk Security, wrote: “The 2023 market was stronger than 2022. As the supply chain issues of post-COVID life eased, we found an uptick in security spending across the board, even through rising inflation. Labor force shortages became the more difficult focus and rising employment costs for talent.”
The table above presents aggregate figures for the SDM 100 group of companies, which are ranked by their recurring monthly revenue (RMR) — an industry standard of valuation of a security installation/monitoring business. Most of the SDM 100 companies are privately held. Submitting RMR is required for ranking; other figures are not required but mostly provided. Most companies — but not all — also reported their total annual revenue, number of subscribers, installation revenues, employees, and acquisition activity. Therefore, one should exercise caution in using this information to extrapolate industry totals or to benchmark. Note that some figures — such as total annual revenue, subscribers, and residential and non-residential sales revenue — fluctuate from year to year due to both acquisitions and inconsistent reporting by the ranked companies. Every effort is made by SDM to maintain consistency in reporting.
// Source: 2024 SDM 100, SDM Magazine, May 2024
SDM 100: 5-Year Snapshot
Recurring monthly revenue (RMR) in 2023 for SDM 100 companies climbed 7 percent to its second highest number in a decade (below only 2016). As was the case last year, 91 percent of companies reported some RMR growth in 2023. Only two out of the top 25 companies reported lower RMR than 2022, including ADT, which likely reflects its divestment of its commercial business, now an independent company (Everon) more than an actual decline. Out of all 100 companies, just 7 reported declines in RMR. Stand-out companies among the top 25 in RMR growth are: ArcEye Property Defense with 132 percent; Pye-Barker Fire & Safety with 64 percent; Securiteam with 64 percent; A+ Technology & Security Solutions with 56 percent; Cook & Boardman with 38 percent; Valley Alarm with 36 percent; Pavion with 34 percent; and Minuteman Security Technologies Inc. with 33 percent. More than one third of companies reported double digit percentage growth over 2022.
// Source: 2024 SDM 100, SDM Magazine, May 2024
SDM 100 RMR UP 7 Percent to $714 Million
Total SDM 100 recurring monthly revenue (based on 12/31 in $ millions)
Some companies that reported a very strong year seemed surprised by it.
“The market in our area was stronger than expected,” wrote No. 66, Moon Security Services Inc. “For the first time in our history, we had two sales staff exceed $2 million in sales, and a third just missed at $1.98 million. Multi-family dwellings led the way, but all lines — fire, access, cameras, video intercom, and security were up across the board.”
No. 55, Fleenor Security Systems, wrote: “Thankfully, we had another fantastic year in 2023. The security market remained strong for the entire year and this was a huge surprise to us all. In 2022 we predicted there would be a slowdown mid-2023 because we thought the economy would finally stall out, but it never did. Historically, when interest rates increase and borrowing money gets expensive, commercial projects slow down; but this did not happen in 2023. We also benefitted on the residential side because of the large influx of people moving to our area and kept a low attrition rate due to locals staying in their homes longer.”
However, even for those who described the market as less than “strong,” this group of successful security dealers — just as they have in past years both good and bad — also made active choices that helped their bottom line numbers.
“The market in 2023 slowed significantly,” wrote No. 57, Titan Alarm Inc. “It took a lot more work to get the jobs we were bidding on because consumers stopped growing and expanding because the economic outlook was uncertain. It bounced back after Q1 a bit, but then tightened up again towards the middle/end of the year. I would still not describe it as a weak market, but I wouldn’t go so far as to describe it as strong. I would say that it was waning. … We significantly cut expenses and still increased in revenue, and increased profits by almost $1 million.”
No. 64, LOUD Security Systems Inc., was another company that reported a slowing trend, writing: “2023 has definitely started showing a much slower trend in security and integration when compared with 2022, although there has been a much higher demand for integrated systems. While overall demand is slowing, demand for systems with integrated video services are on the rise as a percentage of systems sold. … LOUD Security has successfully folded new video services and proactive video monitoring into its line of services and is beginning to push heavily into the video integrated market.”
Thankfully, we had another fantastic year in 2023. The security market remained strong for the entire year and this was a huge surprise to us all. In 2022 we predicted a slowdown mid-2023 because we thought the economy would finally stall out but it never did.
— Fleenor Security Systems
They were hardly alone. No. 53., Owen Security Solutions Inc. summed up succinctly what many commenters wrote about throughout: “The market in 2023 was strong with an emphasis on cameras.”
For many of the companies on the 2024 SDM 100, 2023 was a mixed year of both challenges and opportunities; some roadblocks easing and others coming to take their place. Inflation, high interest rates, and labor shortages were tough obstacles, but they were helped by a increasing level of interest in security technologies — particularly video — rising crime that motivated customers to buy these technologies, and the staving off of the predicted recession.
Read on to hear more of what this year’s top companies had to say about the residential and commercial markets, challenges and opportunities, as well as their predictions for this year.
SDM 100 companies are ranked here by the amount of their sales/installation revenue from non-residential projects. Note that some larger companies and those that are very active in the non-residential market are not ranked because such detailed information was not publicly available or they did not report it to SDM. Companies that reported less than $400,000 in sales/installation revenue are not included in this ranking.
// Source: 2024 SDM 100, SDM Magazine, May 2024
Top Companies Ranked by Non-Residential Sales & Installation Revenue
Seeing Ahead
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The U.S. military and intelligence communities spend huge amounts of effort and money on obtaining and analyzing imagery. The ability to see threats in detail, over time, and in context is invaluable. Satellites and aerial reconnaissance systems have been around for a long time; but it is only with recent advancements in technology and techniques, and their declining costs, that the overall usefulness and demand has surged.
This is true for the use of imagery in the security industry as well. Who doesn’t want high-definition, full motion video, in real time and digitally stored, when evaluating crime or loss related incidents? For most situations, it can provide the most accurate and information dense data for making decisions and taking action.
BARNES
Prior Issues & Recent Developments
The largest obstacles to broad use of imagery (video) based systems have historically been the cost and capability of cameras, communication bandwidth, and information storage. Each of these have been tackled, and are generally much, much faster, better, and cheaper — with more room to go. The largest remaining challenge has been a data sifting issue. Every minute of imagery coming from modern-day cameras is a huge data set, with most of it being irrelevant to matters of security. The problem has been separating out the security-related data, and doing it accurately, very quickly, and inexpensively. Having humans staring at individual cameras 24/7 is cost prohibitive, and not a very accurate or reliable solution.
A highly capable computer-based imagery sifting ability that can separate the desired intelligence from the “noise” is needed. While much like the other previously inhibiting factors, there has been some capability in this area for a fair amount of time, the performance and costs were generally not to the required levels to spur a large surge in demand. It appears this has changed with the recent advancements in AI/Machine Learning.
A Compelling Example
At our annual conference (www.barnesbuchanan.com) we devoted a fair amount of the agenda to this topic. One of the presenters at our event was Elite Interactive Solutions, ranked No. 31 on the SDM 100. They are a specialist in the use of video-based systems for security and have harnessed these new developments. This is shown in a couple of numbers they disclosed.
First, in the year 2023 they had 102 million hours of high-definition video imagery come into their command center from their customer base. Their AI-driven analytics system sifted through 99.946 percent without requiring operator interaction. That is, the command center had to staff only 55,000 hours to handle the critical security related incidents. This is an astounding 1,845:1 technology enabled leverage (i.e. only 1 hour of staffing per 1,845 hours of imagery). Secondly, out of the system selected hours requiring interaction, 73,000 incidents were handled (most fully mitigated), and resulted in over 1,000 arrests. Most importantly, fewer than a handful of incidents were missed (pointing to six sigma level accuracy potential) and zero false alarms. Zero! By any standard, this is impressive.
Lastly, Elite shared what they charged their customers for this 102 million hours of imagery monitoring, analysis, and highly effective processing. Wait for it: $0.14 per hour. That is what they charge, not their costs!
Big Opportunity
These results point to a very big opportunity for the security industry. While a portion of this type of service appears to be replacing manned guards or traditional security alarm systems, often times it is supplementing them. Either way, this level of capability at these cost levels will be good for the industry and good for the end users, and this is just the tip of the iceberg.
Some Caveats
Elite pointed out that their level of effectiveness and cost efficiency is highly dependent on the application, the onsite configuration, and a host of other specific components of the overall package. This is an important note. You can’t assume that this applies to all applications, systems, and services. The consensus among the experts at our conference was that the biggest mistake typically made is committing to doing something without truly understanding the accuracy potential and the associated cost. This points to the industry advancing along defined service offerings and applications, and then broadening over time and extended experimentation. This is generally good in that the industry’s fragmented structure may facilitate this with potentially hundreds or thousands of companies performing some level of experimentation. On the other hand, it requires capability and technological savvy at a level that only a few may possess. Time will tell.
It is also not clear whether the end users will generally seek this capability on a standalone basis, from dedicated experts, or push to have this integrated into traditional offerings. Nor is it well documented yet what level of synergies there are when these offerings are embedded in traditional alarm/integration businesses, or for that matter manned guarding companies. At this point, most of the state-of-the-art is being done by specialists.
Get At It
While it is not yet clear how this unfolds, there is no doubt that it will — and in a big way. You can see it coming. Now is the time to look ahead and formulate your strategy for staying competitive within this new reality.
Michael Barnes is the President of Barnes Associates, Inc. a brokerage, advisory, and consulting firm that specializes in the security alarm industry.
SDM 100 companies are ranked in the table above by the number of their residential subscribers (customers). Note that some of the larger companies such as ADT, Securitas and Brinks Home are not ranked, either because such detailed information is not publicly available or they did not report it to SDM. Companies that reported fewer than 200 residential subscribers are not included in this ranking.
// Source: 2024 SDM 100, SDM Magazine, May 2024
Top Companies Ranked by Residential Subscribers
Residential & Commercial Experiences
Of the top 100 companies, about 62 percent of them sell residential systems, 77 percent commercial, and 60 percent sell both.
No. 9, Guardian Protection, wrote comprehensively about both sides of the market. “The residential field [existing homes] segment had the least amount of new customer growth but drove revenue growth from additional services such as home automation and video devices and services,” wrote April Maloney, vice president of residential sales. “These services are complementary to our core monitored security business and increase our customer engagement. Guardian’s biggest opportunity for growth is in our builder/new construction segment. Although the growth opportunity in the segment has slowed due to higher interest rates, the inventory of existing homes remains low, which has driven buyers to new construction as an alternative. … Given that Guardian Protection’s business model is based upon professional installation and monitoring, the entrance of DIY/do-it-together companies continues to cause disruption in our space. However, we believe professional installation is a differentiator that will continue to be desired by a significant portion of the market.”
On the commercial side, Kevin Santelli, vice president, commercial and national accounts, wrote: “In its Commercial and National Account Business Units, Guardian experienced growth in most verticals in 2023. These employers continue seeking new ways to efficiently manage multi-site locations and overcome labor shortages as evidenced by their ongoing investments into AI and cloud-based systems. Supply chain issues in 2023 had much less of an impact on our day-to-day business than in 2022.”
SDM 100 companies are re-ranked in the table above by their 2023 total annual gross revenue, as reported to or estimated by SDM. Five companies — ADT, Securitas Technology, Everon, Cook & Boardman, and Pye-Barker exceeded $1 billion in revenue, while the remainder are in the millions, spanning from $758 million to over $2 million.
// Source: 2024 SDM 100, SDM Magazine, May 2024
Rank by Total Annual Revenue
On the residential side, No. 72, Dehart Alarm Systems LLC, noted funding was off a little, due to inflation and interest costs reducing discretionary funds.
Others echoed this sentiment.
“The depressed housing market caused a reduction in new opportunities,” wrote No. 95, JM Resources Holdings LLC.
Although No. 89, Atlantic Security & Fire, did note that its residential security sales actually increased due to excessive residential auto and home break-ins in their state.
On the commercial side, many companies noted the rise in demand for integration, particularly utilizing camera AI, analytics, video and cloud.
Dehart Alarm Systems LLC, wrote of its commercial business: “We saw an increase of commercial integrated projects in the 4th quarter of 2023. Security systems remained the same year over year. The camera and access systems markets were stronger in the commercial market and remained the same in 2023. … We moved our monitoring database to a hosted environment which has allowed us to recognize greater business continuity, redundancy, disaster preparedness and a host of services we could not offer our customers before. We increased our commercial sales and commercial integrated sales and look forward to an increase in the commercial market in 2024.”
No. 98, 2 Krew Security & Surveillance, wrote: “Integrated systems sales in our market increased substantially over 2023. We saw a lot of growth in the manufacturing and education verticals. There is an increase expectation for multisystem integrations that allow for an easier end-user experience. The demand for this single pane of glass is anticipated to only increase in the future.”
SDM 100 Alphabetical Index
Challenges & Opportunities
Top security dealers faced their share of challenges in 2023. High interest rates and inflation were definitely pain points, but some companies turned it into an opportunity, raising rates and increasing revenue as a result.
“Inflation had a big impact in 2023,” wrote No. 75, Security Alarm Corporation. “We saw significant increases in both equipment costs and labor costs. For the past three years we have averaged a 15 percent per year increase in labor costs. This has resulted in increases in our RMR, installation rates and service rates.”
No. 37, Peak Alarm Co. Inc., SDM’s 2023 Dealer of the Year, wrote: “Inflation worked in our favor as we increased our prices for install and monitoring at or above inflation levels.”
But far and away the greatest challenge mentioned by a large majority of commenters was the issue of the labor shortage — both as a challenge in 2023 and a concern for 2024.
“Our biggest challenge to grow will continue to be finding, attracting, and developing skilled labor to install and service our systems,” wrote No. 15, Zeus Fire and Security LLC. “We’re pursuing all available avenues to recruit and partnering with organizations that promote careers in the trades to help build the pipeline for the future.”
Total annual revenue for the SDM 100 companies once again increased — by 8 percentage points after a 32 percent increase in 2022, reaching the second highest level in a decade, behind 2016. This year, Vivint again elected not to report, but both ADT and its spun-off commercial division, Everon, are ranked in the top 10 this year. Of the top 25 companies, Stealth Monitoring is reporting for the first time, adding to the numbers.
// Source: 2024 SDM 100, SDM Magazine, May 2024
Total Annual Revenue: $16.3 Billion
Total SDM 100 Annual Revenue ($ billions)
SDM 100 dealer optimism declined slightly, with 78 percent predicting revenues will be up in 2024 versus 82 percent last year. Slightly more than last year predict they will be the same (19 percent versus 17 percent, and 2 percent predict they will go down. Of those who predict and increase, the average anticipated increase is 12 percent, up 1 percent from last year.
// Source: 2024 SDM 100, SDM Magazine, May 2024
Majority of Dealers Say 2024 Revenue Will Be Up
No. 99, Northeast Security Solutions Inc., wrote: “We experienced strong demand for our services in 2023. Access to qualified sales and technical staff members limited our ability to respond to that demand more than any product disruptions. Technical labor costs grew to ensure existing staff wasn’t enticed by competitor recruiting efforts.”
No. 47, Beacon Protection, echoed that sentiment: “The ability to continue to hire new talent for our sales and installation teams has been a major challenge to our organization.”
No. 16, Per Mar Security Services, noted: “Our success will continue to be dictated by our ability to find and retain great people.”
The integration and video themes were also brought up over many comments, mostly about the commercial side of the market, but also some residential.
The market in 2023 was strong with an emphasis on cameras.
— Owen Security Solutions Inc.
No. 67, Custom Alarm, wrote: “In regards to opportunities, video monitoring is the biggest opportunity for us as more and more businesses and even homeowners are better understanding the value and benefit of video and video monitoring. Not only are insurance companies requiring it on some construction sites, but there is more adoption to this type of video and it truly solves a problem both in a business and around it. It is a great revenue stream and provides for ongoing interaction with our customers creating stickier customers as they trust us on their home and business security needs.”
Zeus added: “Buyers in most commercial verticals are willing to pay a premium for systems that are well designed to meet their needs. We saw the fastest growth in video surveillance and access control systems. Advancements in video technology and monitoring center capabilities are allowing us to serve more facility types and use cases than in the past. Customers are also demanding more fully integrated systems which has led to strong growth in access control across our network. Intrusion alarm systems were our slowest growing segment as many of our target customers move to video-based or more integrated systems and as the technology becomes more commoditized.”
For more comments on these technologies and their impact see the sidebar, “Video, Remote Monitoring & AI Top the Tech Trends.”
Video, Remote Monitoring & AI Top the Tech Trends
This year’s top security dealers had a lot to say about new technology — particularly related to video, remote video monitoring and AI. Here are a few of their comments:
No. 9, Guardian Protection: AI and machine learning will continue to revolutionize the security industry, enhancing capabilities in surveillance, threat detection, and response. AI can improve the efficiency and accuracy of security systems but also raises ethical and privacy concerns that businesses must address.
No. 12, Stealth Monitoring: Artificial intelligence and machine learning are driving new camera adoption to adopt new technologies that will enable a better monitoring performance. The need and desire to save operational expenses by replacing guards with lower-cost alternatives as companies look to become more cost-effective within the current economic conditions.
No. 15, Zeus Fire and Security LLC: We continue to invest in use cases for advanced analytics and artificial intelligence, particularly related to video systems. Many of our customers are seeking support for operational challenges where insights from live video can improve efficiency or enhance controls. We expect this will unlock new markets, way of engaging with our customers, and future revenue streams.
No. 46, Valley Alarm: Proactive video monitoring will continue to be a big growth sector driven by improved analytics and AI.
No. 64, LOUD Security Systems Inc.: Moving into 2024, we predict that video will continue to play an even larger role in security system sales, and will become not just a desire, but a demanded and necessary component. AI will also begin to take a more consumer-facing position in video and detection, hopefully allowing for greater accuracy of alarms, which will be more trusted by both consumers and first responders.
No. 67, Custom Alarm: [Another] thing we think is making the biggest impact is AI — how to leverage it and when to use it and when not to use and how to learn how to optimize it and incorporate it into our work both in the office and out on job sites. We are in the early stages of learning about it and have a steep learning curve [for] how we can educate our staff on it as well as where are areas that we can leverage AI in place of some human functions creating more efficiencies in our business.
No. 69, Frase Protection: I think crime will continue to rise. We will push deeper into verified video services for our customers.
No. 98, 2 Krew Security & Surveillance: We believe AI will become more of a dominate player in the video and access control markets to enable better real time processing of information. Considering the current world events, we believe generally speaking most commercial facilities will show an increase in need for security to protect property and assets. With crime increasing, the need for security will continue to be in demand.
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What’s Coming This Year?
So what issues are on the minds of the top 100 security dealers for 2024? Mostly that ongoing labor problem, the economy and the coming election.
Inflation is expected to improve, but no one knows at what rate.
Peak Alarm Co. Inc. wrote: “We feel 2024 is going to be determined by inflation, or to be more specific the Federal Reserve’s actions towards inflation. If interest rates hold steady or better yet start to come down we will see an increase in capital and a corresponding increase in sales. If inflation is stubborn and we see interest rate hikes, the economy will slow to a crawl and companies will be reluctant to spend on capital expenses.”
Writing on the economy in 2024, Guardian Protection noted: “The decline in new home buying (both existing and new construction) due to low inventory, high interest rates, and skyrocketing prices will have an impact on the number of opportunities we have to sell our residential products and services. An uncertain economy can also affect client budgets within the commercial sector, potentially impacting discretionary spending for security projects.”
The upcoming election is also creating some uncertainty.
No. 36, Custom Security Systems Inc., wrote: “Presidential election years sometimes create a general uneasiness that can reduce consumer spending for the short term.”
No. 33, Sonitrol of Sacramento & Orange County, Cybex Security Solutions, elaborated more on this concern: “As we come into an election year in 2024 we feel the economy and the political climate could cause companies to delay spending.”
The percentage of SDM 100 companies reporting increased profits rose another 6 percentage points, with 58 percent of security dealers reporting an increase in profit margins in 2023, compared to 52 percent in 2022 and 46 percent in 2021. Among businesses that improved, their average profit margin increase was 13 percent.
// Source: 2024 SDM 100, SDM Magazine, May 2024
Of the SDM 100 companies who reported their actual net profit margins, responses ranged from -19 percent to 74 percent, with the average net profit in 2023 of 13 percent — down 1 percentage point from 2022, when it was 14 percent. In 2021 the average was 16 percent.
// 2024 SDM 100, SDM Magazine, May 2024
Profits Increased In 2023
SDM 100 companies were asked, “Did your company’s net profit margin increase, decrease or stay about the same in 2023 compared with 2022?”
SDM 100 Average Net Profit Margin
SDM 100 companies were asked, “What was your company’s net profit margin in 2023?”
*average percentage, based on 70 responses
13%*
When it comes to the labor issues, that in some ways is the biggest concern for many companies.
No. 99, Northeast Security Solutions Inc., wrote: “The biggest concern I have pertains to access to qualified labor. Many industries are struggling to find good help but we have the additional complication of being a licensed trade. Electricians are retiring faster than the pace of apprentices getting licensed. I see this problem getting worse before it gets better.”
No 55, Fleenor Security Systems, also wrote a cautionary tale: “As an industry, and on the local level, we must continue to invest in training programs in order to recruit and train qualified technicians. Growth will be much slower for us all if we cannot fill the open positions with competent technical staff.”
Still, no matter what happens, many security dealers look to the positives in the industry, particularly on the new technology front.
No. 50, Prosegur Security Integration, summed up the philosophy that seems to be shared by many: “The security industry is on the cusp of a dynamic transformation, with technology, integration, and adaptability at its core. We are committed to staying at the forefront of these developments, leveraging innovation to provide our clients with the highest level of security services and support. Our goal is to continuously evolve to meet the evolving needs and challenges of the modern security landscape.” SDM
Objective of the SDM 100
The SDM 100 has been published since 1991. Its primary objective is to measure consumer dollars gained by security companies, in order to present an account of the size of the market captured by the 100 largest providers. SDM 100 companies are ranked by their recurring monthly revenue. RMR is the revenue associated with the contractual agreement between a security company and its subscriber — derived from customer billing for services such as monitoring, contracted service/system maintenance, security-as-a-service and managed/cloud solutions, and leasing of security systems — and is typically the basis for valuation of a security company. RMR is the language of security company executives and is meaningful in comparative analysis among industry peers. Of the 100 security dealers ranked, 34 of them earned more than $1 million in RMR in 2023.
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How to Use the SDM 100 Tables
The 2024 SDM 100 ranks U.S. companies that provide electronic security systems and services to both residential and non-residential customers. This ranking is based on information provided to or, in few cases, estimated by SDM. Ranked companies were asked to submit either an audited or reviewed financial statement, or a copy of their income tax return showing total gross receipts for the stated period. The vast majority of the firms ranked are privately held.
The main table, ranks 100 companies by their recurring monthly revenue (RMR) of December 31, 2023. The company with the highest RMR is ranked as No. 1, and so on. For each of the 100 companies, the following information is provided, from left to right:
- Current year rank, which is based on Dec. 31, 2023, RMR.
- Prior year rank.
- Company name, as used in the marketplace (doing business as), and headquarters location.
- Amount of RMR billed on Dec. 31, 2023.
- Percentage of RMR increase/decrease compared with Dec. 31, 2022.
- Number of subscribers (recurring-billable customers) at year-end 2023.
- Amount of sales revenue from residential system installations in 2023.
- Amount of sales revenue from non-residential system installations in 2023.
- Total gross revenue, in calendar-year or (the company’s) fiscal-year 2023 from security system sales/installation, services, leasing, and monitoring.
- Number of full-time employees.
- Number of business locations, including headquarters.
SDM 100 companies are then re-ranked by several other criteria, including total annual gross revenue; residential subscribers; and non-residential sales revenue. See the report online at SDMmag.com/sdm100report for more data than presented here.
Note: An e following the figure indicates it is an SDM estimate.
To find a company by name, use the alphabetical index.
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How to Purchase the SDM 100 Directory
Wouldn’t it be useful to have more information about each of the 100 companies ranked here? The 2024 SDM 100 Directory includes contact names, mailing addresses, telephone numbers, website URLs, branch office locations, product buyer names, installation data, and more. The SDM 100 Directory comes in Microsoft Excel format. To order, contact Jackie Bean at 215-939-8967 or by e-mail to beanj@bnpmedia.com.
