Alarm.com's initial public offering filing has lifted a veil on the fast-growing niche of smartphone-controlled home security and automation services. And while there's plenty of competition, Alarm.com's results show at least the potential for heady profits beyond just the sale of remote-controlled thermostats and Internet-connected nanny cams.

Although Alarm.com sells its own line of hardware, its main business is selling monthly monitoring and security service that lets homeowners remotely control their lights, thermostats and appliances. But unlike traditional home security systems that rely on an expensive network of monitoring gear and communications equipment, Alarm.com and competitors like iControl Networks use an Internet-based cloud setup to reduce costs.

And therein lie the potential profits. Following the popular "software as a service" cloud business model, Alarm.com reported a gross profit margin of 60% last year. Excluding the lower margin hardware sales, the gross margin on services alone was close to 80%. The company doesn't sell directly to consumers, relying instead on a network of thousands of dealers and security companies to close the deal.

The strategy of offering a cloud service via third-party resellers is quite different from the path being pursued so far by the biggest tech companies. Apple (AAPL) is trying to establish a software standard, dubbed HomeKit, allowing iPhone owners to control all manner of home automation gear from different vendors. Via its Nest Labs unit, Google (GOOGL) is selling some hardware of its own but is also seeking to popularize a software interoperability standard. And Microsoft (MSFT) partnered with one hardware vendor, Insteon, to offer a Windows-compatible line of home automation gear.

Alarm.com's filing said the company planned to raise $75 million, though such amounts often change from the initial filing.

Analyzed in isolation, there's plenty for investors to like about the Alarm.com strategy. The company increased revenue by 28% to $167 million last year while its subscriber base grew by 21% to 2.3 million. The more profitable services segment grew 35% to $112 million while sales of gear like remote-controllable video cameras increased 17% to $56 million. Net income last year nearly tripled to $13.5 million and, unlike many tech companies that recently went public, the company has had positive cash flow from operations for each of the past three years.

And there's likely room for plenty more growth for Alarm.com, created as a unit of software developer MicroStrategy (MSTR) in 2000 and spun out in a private deal with venture capitalists in 2009.

While 1 in 5 broadband-connected U.S. households pay for some kind of professionally-monitored home security systems, fewer than 1 in 12 have installed so-called smart home gear, according to a survey by Parks Associates that was cited in the Alarm.com filing. The smart home security and automation market is projected to grow 21% annually, hitting $15 billion worldwide in 2018, according to Juniper Research.

Smart home technology is still fairly new, and many consumers are concerned about the privacy and security implications of installing smart home devices. And the warring software standards may persuade many potential buyers to wait for a consensus winner to emerge.

Waiting on information

Also, Alarm.com's initial filing doesn't include enough information to assess the company's upcoming public valuation. Potential investors will have to wait for an update to learn the per-share price range for the IPO and a fuller listing of the number shares that will be outstanding after the offering.

News reports last year said Alarm.com's owners were planning to sell the business or take it public at a valuation of $1.5 billion to $2 billion. At $2 billion, the company would trade at about 11 times revenue from the past 12 months and 163 times net income.

Among the handful of tech companies that have recently gone public, GoDaddy (GDDY) trades at only 3 times revenue, Etsy (ETSY) trades at 10 times revenue and Shopify (SHOP) at 18 times its revenue. None of the three are profitable.

A more relevant comparison might be ADT (ADT), the leader in old-fashioned home security systems and a top competitor for interactive systems. ADT is growing much more slowly -- revenue was up only 6% last quarter -- but it trades at less than 2 times sales and 21 times its net income.

The larger question for investors is the competitive landscape, however. IControl declined to disclose how many subscribers it has but its resellers include Comcast (CMSCA), Time Warner Cable (TWC) and Best Buy (BBY). Alarm.com said its largest resellers last year were led by Vivint, Monitronics International and United Technologies (UTX). These kinds of relationships can change quickly. Though Alarm.com reported a 93% annual renewal rate for its resellers, it also disclosed that in November 2013 one major customer decided to create its own offering and pay a lower licensing fee instead of the full service fee.

Longtime home security leader ADT has resold iControl's product, but only slightly more than 1 million of the company's nearly 7 million customers are on such a smartphone-compatible platform. Most still opt for traditional systems run from an in-home control panel. AT&T (T) is also pushing into home security with its digital life initiative.

The competition makes it hard to choose winners and losers. It's possible that Alarm.com will continue on its rapid yet profitable growth trajectory. But there's also the chance of being overtaken by a larger -- or smaller -- rival.