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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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 25-26 workers, and generates $4.5 million annually.

    • The security systems services industry consists of about 5,700 firms that employ about 146,600 workers and generate about $26 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 Ascent Capital Group (Brinks). Large companies may be vertically-integrated and have international operations.
    • Estimated US household penetration of alarm systems is 18-19%.
    • The industry includes national and regional chains, franchises, and independent operators.
                                    Industry Forecast
                                    Security System Services Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Coronavirus Update

                                    May 5, 2022 - DIY Security Systems Gaining Ground
                                    • The do-it-yourself (DIY) residential security systems market accounted for half of the US security system market in 2021, according to the recent Residential Security Tracker report by Parks Associates. Professional installations account for the other 50%, but if consumer trends continue as they have, DIY is projected to grow and account for a majority of the market. Amid falling market share, some security systems service providers are expanding into the solar energy market. ADT has acquired Sunpro Solar to create ADT solar. Brinks home has partnered with Sunnova to offer solar energy solutions to Brinks customers. About 17% of households with security systems also have solar panels, compared to the 8% of households overall that have solar panels.
                                    • The lingering effects of the pandemic could negatively affect demand for security system services if small businesses cut back on investments, go out of business, or the rate of new business formations slows. About 42% of small business owners in the US and Canada report they are no longer affected by the pandemic, according to the Q2 2022 Road to Recovery Report by Alignable, a social media outlet for small business owners. Only 27% of small businesses report being fully recovered from the pandemic, but the share of small businesses reporting a significant negative impact due to the pandemic fell to 22%, a new low. Inflation and the cost of supplies was small business owners’ top concern in Q2, followed by luring customers back and improving revenue.
                                    • The COVID-19 pandemic reduced security system demand, especially in the commercial and retail sectors. Some non-residential access control end-user segments are not expected to recover to pre-pandemic levels until 2023, according to Omdia. However, coronavirus awareness should drive demand for contactless access control upgrades, including smartphone-enabled entry systems. Facial and iris recognition readers may also see increased demand, despite their higher cost compared to fingerprint readers, which may fall out of favor. According to a report by Global Market Estimates, the touchless access control market is expected to see average annual growth of more than 8% through 2026.
                                    • The pandemic is expected to drive demand for cloud-based security systems as firms rethink their security needs and business challenges, according to Security Today. Before the pandemic, some organizations were reluctant to invest in cloud-based video security systems due to the investments already made in on-premise systems. However, more companies are projected to adopt cloud-based solutions due to their ease in scaling up or down, depending on business conditions. For example, cloud-based systems were better able to pivot from onsite human guards to remotely monitored cameras. Cloud-based systems also offer seamless sharing, long-term video footage storage, and advanced analytics and intelligence capabilities.
                                    • More than a quarter of US households with broadband are more concerned about the physical security of their homes than they were five years ago, according to a survey released in December by market research firm Parks Associates. The percentage rose to 43% for households that have children. Parks Associates said the pandemic has generally increased consumer concerns about safety and security and the number and type of consumers interested in safety solutions. The survey showed that more than 40% of US broadband households plan to buy at least one security device in the next six months.
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