Security System Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 5,700 security systems service providers in the US design, sell, install, service, and monitor security alarm systems. Companies may install stand-alone systems or offer monitoring services. Customers include residential, commercial, educational, governmental, and industrial accounts.

Customer Attrition

Failure to retain customers is costly, as companies typically incur acquisition expenses and depend on payments over the term of a contract to recoup costs.

Technology Integration

Advances in technology help drive popularity for integrated security systems that combine multiple features, such as video surveillance, intruder detection, alarm systems, and home control.

Industry size & Structure

The average security systems services provider operates out of a single location, employs 21-22 workers, and generates $4-5 million annually.

    • The security systems services industry consists of about 5,700 firms that employ about 123,000 workers and generate about $27 billion annually.
    • The industry is concentrated at the top and fragmented at the bottom. The top four firms account for 34% of industry revenue. The top 50 firms account for 58% of industry revenue.
    • Large companies include Apollo Global (ADT) and Monitronics (Brinks Home Security). Large companies may be vertically-integrated and have international operations.
    • Estimated US household penetration of alarm systems is 50%.
    • The industry includes national and regional chains, franchises, and independent operators.
                                    Industry Forecast
                                    Security System Services Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Jan 12, 2024 - Companies Report Continued Pressure from “Shrink”
                                    • US retailers increasingly report that theft is contributing to higher “shrink,” which is hurting profitability, according to The Wall Street Journal. Shrink is a retail industry term for the difference between inventory on the books and inventory that’s on hand. Theft is only one contributor to shrink in addition to lost or damaged items or inaccurate record keeping. According to a recent investment bank William Blair analysis, US retailers experienced $142 billion in inventory shrink in 2023, up 25% from 2022. Shrink in 2023 was about 2% of total retail sales, the highest level since 2015. Analysts say they need more data to help curtail shrink, including how companies are reacting to it, if those efforts have been successful, and the costs of shrink control efforts. However, companies often don’t calculate shrink in the same way and are sometimes cagey about disclosing financial details related to shrink.
                                    • Persistent work-from-home patterns in the wake of the pandemic and years of overbuilding have contributed to the highest office vacancy rates in at least 40 years, according to The Wall Street Journal. In Q4 2023, 19.6% of US office space was vacant, according to Moody’s Analytics. The Q4 2023 vacancy rate was above the previous high of 19.3% seen in 1986 and 1991. Office vacancies rose steadily in the late 1980s and early 1990s after decades of overbuilding, primarily in the South, where inexpensive land and relatively lax regulation spurred speculative office development. Many vacant offices were built between the 1950s and 1980s, and the current demand is for more modern space. While office demand rebounded in the 1990s amid a rapidly expanding economy, the impact of remote work on current office demand means occupancy may take longer to recover. Weak office occupancies could reduce demand for security system services.
                                    • The rate of US business applications, a key demand indicator for security systems services, decreased in December 2023 compared to the prior month, according to the US Census Bureau. The West posted the strongest growth in December business applications, with a rise of 9.2%. Business applications fell 4.7% in the Midwest, dropped 4.6% in the South, and were down 4% in the Northeast. Of the 20 major industry sectors tracked by the Census Bureau, 11 posted growth in December, led by mining (+125.6%), manufacturing (+46.8%), wholesale trade (+9.5%), and construction (+5.7%). Industries that notched the largest drops in December business applications included utilities (-15.2%), retail trade (-12.5%), and agriculture (-10%).
                                    • The Security Industry Association (SIA) recently announced the debut of SIAcademy, an online depository of on-demand security industry training and professional development resources. SIAcademy aims to help security industry professionals gain industry knowledge, improve their technical skills, and advance their careers. The platform includes interactive training courses in key industry topics, including video surveillance, access control, sales strategies, and more. SIAcademy also includes exam prep for industry certifications and tools that help facilitate new-hire onboarding.
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