Alarm.com(ALRM) - 2025 Q2 - Quarterly Results

Executive Summary Alarm.com's Q2 2025 results show strong financial growth and strategic product innovation, supported by an optimistic full-year financial outlook Second Quarter 2025 Financial Highlights Alarm.com reported strong financial performance for Q2 2025, with significant year-over-year growth in SaaS and license revenue, GAAP net income, and non-GAAP adjusted EBITDA, demonstrating continued operational strength Second Quarter 2025 Key Financial Results (YoY Comparison) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :------------------------------------------------ | :----------------- | :----------------- | :--------- | | SaaS and license revenue | $170.0 | $155.9 | +9.0% | | GAAP net income | $34.2 | $32.5 | +5.2% | | Non-GAAP adjusted EBITDA | $48.4 | $42.8 | +13.0% | | Total revenue | $254.3 | $233.8 | +8.8% | | GAAP net income attributable to common stockholders | $34.6 | $33.5 | +3.1% | | GAAP diluted EPS | $0.63 | $0.62 | +1.6% | | Non-GAAP adjusted net income attributable to common stockholders | $34.1 | $32.0 | +6.5% | | Non-GAAP diluted EPS | $0.60 | $0.58 | +3.4% | Cash Position and Flow (Six Months Ended June 30) | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change (vs. Dec 2024) | | :-------------------------------------- | :----------------------- | :---------------------- | :-------------------- | | Total cash and cash equivalents | $1,020 | $1,220 | -$200 | | Six Months Ended June 30 | 2025 (Millions) | 2024 (Millions) | YoY Change | | Cash flows from operating activities | $46.8 | $72.8 | -$26.0 | | Non-GAAP free cash flow | $36.1 | $67.8 | -$31.7 | Recent Business Highlights Alarm.com's recent innovations include the launch of new AI-driven video analytics capabilities through its OpenEye subsidiary and a new smart thermostat, enhancing its connected property platform - OpenEye, Alarm.com's commercial video surveillance subsidiary, launched new AI-powered search tools that enhance video investigations, allowing subscribers to quickly locate footage by searching for individuals or vehicles using specific visual attributes[7] - Alarm.com launched a new T25 smart thermostat featuring a streamlined design, broad HVAC system compatibility, simplified installation, and seamless integration with the Alarm.com platform for intelligent energy management[7] Financial Outlook Alarm.com provided an optimistic financial outlook, increasing its full-year 2025 guidance for SaaS and total revenue, and projecting strong non-GAAP adjusted EBITDA and net income, while cautioning on the forward-looking nature of these estimates Financial Outlook: Q3 2025 and Full Year 2025 Guidance | Metric | Q3 2025 Outlook (Millions) | Full Year 2025 Guidance (Millions) | | :------------------------------------------------------------------ | :------------------------- | :--------------------------------- | | SaaS and license revenue | $171.4 - $171.6 | $681.0 - $681.4 | | Total revenue | N/A | $990.0 - $996.4 | | *Includes hardware and other revenue | N/A | $309.0 - $315.0 | | Non-GAAP adjusted EBITDA | N/A | $195.0 - $196.5 | | Non-GAAP adjusted net income attributable to common stockholders | N/A | $136.0 - $136.5 | | Non-GAAP adjusted net income attributable to common stockholders per diluted share | N/A | $2.40 | - The 2025 guidance is forward-looking and based on current management expectations, subject to material differences and no obligation to update after the release date[9] Company Information This section provides essential details about Alarm.com Holdings, Inc., including its business overview, conference call schedules, and investor relations contacts About Alarm.com Holdings, Inc. Alarm.com is a leading platform for intelligently connected properties, providing comprehensive security, monitoring, and management solutions to millions of homeowners and businesses globally through a network of professional service providers - Alarm.com is the leading platform for intelligently connected properties, offering solutions for security, video surveillance, access control, intelligent automation, energy management, and wellness[11] - Its technology is relied upon by millions of homeowners and businesses to secure, monitor, and manage their environments from anywhere, delivered exclusively through a trusted network of thousands of professional service providers and commercial integrators across North America and worldwide[11] - Alarm.com's common stock is traded on Nasdaq under the ticker symbol ALRM[11] Conference Call and Webcast Information Alarm.com scheduled a conference call and live audio webcast for August 7, 2025, to discuss its second quarter 2025 financial results and outlook, with details provided for registration and access - Alarm.com hosted a conference call and live audio webcast on August 7, 2025, at 4:30 p.m. ET to discuss Q2 2025 financial results and Q3/full-year 2025 outlook[10] - Analysts and investors could pre-register for the live call or access an archived webcast on Alarm.com's Investor Relations website[10] Investor & Media Relations Contact information for investor and media relations is provided for inquiries regarding Alarm.com - Matthew Zartman is the contact for Investor & Media Relations at Alarm.com, reachable via ir@alarm.com[26] GAAP Financial Statements This section presents Alarm.com's official GAAP financial statements, including consolidated statements of operations, balance sheets, and cash flows, detailing the company's financial performance and position Consolidated Statements of Operations The Consolidated Statements of Operations show robust revenue growth for both the three and six months ended June 30, 2025, driven by increases in SaaS and license revenue, leading to higher operating income and net income compared to the prior year Consolidated Statements of Operations (Three Months Ended June 30) | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YoY Change | | :---------------------------------------- | :------------------ | :------------------ | :--------- | | SaaS and license revenue | $169,993 | $155,927 | +9.0% | | Hardware and other revenue | $84,315 | $77,880 | +8.3% | | Total revenue | $254,308 | $233,807 | +8.8% | | Total cost of revenue | $87,462 | $81,282 | +7.6% | | Operating income | $32,022 | $25,774 | +24.2% | | Income before income taxes | $39,359 | $33,404 | +17.8% | | Net income | $34,217 | $32,520 | +5.2% | | Net income attributable to common stockholders | $34,552 | $33,511 | +3.1% | | Diluted EPS | $0.63 | $0.62 | +1.6% | Consolidated Statements of Operations (Six Months Ended June 30) | Metric | H1 2025 (Thousands) | H1 2024 (Thousands) | YoY Change | | :---------------------------------------- | :------------------ | :------------------ | :--------- | | SaaS and license revenue | $333,793 | $306,271 | +9.0% | | Hardware and other revenue | $159,337 | $150,819 | +5.6% | | Total revenue | $493,130 | $457,090 | +7.9% | | Total cost of revenue | $165,696 | $157,797 | +5.0% | | Operating income | $61,669 | $44,499 | +38.6% | | Income before income taxes | $74,378 | $59,555 | +24.9% | | Net income | $61,929 | $55,924 | +10.7% | | Net income attributable to common stockholders | $62,502 | $57,106 | +9.4% | | Diluted EPS | $1.15 | $1.06 | +8.5% | - Total stock-based compensation expense for Q2 2025 was $8,934 thousand, down from $11,213 thousand in Q2 2024; for the six months ended June 30, 2025, it was $18,392 thousand, down from $22,481 thousand in the prior year period[29] Consolidated Balance Sheets The Consolidated Balance Sheets show an increase in total assets and stockholders' equity as of June 30, 2025, compared to December 31, 2024, despite a decrease in cash and cash equivalents, primarily due to a reclassification of convertible senior notes to current liabilities Consolidated Balance Sheets (As of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Thousands) | Dec 31, 2024 (Thousands) | Change (vs. Dec 2024) | | :---------------------------------------- | :------------------------ | :----------------------- | :-------------------- | | Cash and cash equivalents | $1,024,862 | $1,220,701 | -$195,839 | | Total current assets | $1,292,556 | $1,481,592 | -$189,036 | | Total assets | $2,098,054 | $2,038,208 | +$59,846 | | Total current liabilities | $662,256 | $188,806 | +$473,450 | | Total liabilities | $1,246,121 | $1,266,915 | -$20,794 | | Total stockholders' equity | $797,345 | $726,546 | +$70,799 | - A significant increase in current liabilities is noted due to the reclassification of convertible senior notes, with $498.3 million now classified as current as of June 30, 2025, compared to none as of December 31, 2024[31] Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows indicate a decrease in cash from operating activities and a substantial increase in cash used in investing activities for the six months ended June 30, 2025, primarily due to significant investments in unconsolidated entities and business acquisitions Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | H1 2025 (Thousands) | H1 2024 (Thousands) | YoY Change | | :---------------------------------------- | :------------------ | :------------------ | :--------- | | Cash flows from operating activities | $46,773 | $72,816 | -$26,043 | | Cash flows used in investing activities | -$232,988 | -$9,159 | -$223,829 | | Cash flows (used in) / from financing activities | -$9,594 | $346,768 | -$356,362 | | Net (decrease) / increase in cash, cash equivalents and restricted cash | -$195,993 | $410,292 | -$606,285 | | Cash, cash equivalents and restricted cash at end of period | $1,033,139 | $1,111,371 | -$78,232 | - The significant increase in cash used in investing activities for H1 2025 was primarily driven by a $174.7 million purchase of investments in unconsolidated entities and a $23.4 million business acquisition, net of cash acquired[33] Non-GAAP Financial Measures & Reconciliation This section defines and reconciles Alarm.com's non-GAAP financial measures to their most comparable GAAP equivalents, offering additional perspectives on the company's operational and financial performance Explanation of Non-GAAP Measures Alarm.com utilizes various non-GAAP financial measures to provide a clearer view of its core operating performance, strategic decisions, and cash generation, while acknowledging their inherent limitations compared to GAAP - Alarm.com uses non-GAAP financial measures (e.g., adjusted EBITDA, adjusted net income, free cash flow) to supplement GAAP results, believing they provide useful insights into core operating performance, trends, capital allocation, and cash generation after capital expenditures[12] - Non-GAAP free cash flow is defined as cash flows from operating activities less purchases of property and equipment[13] - Key items excluded from non-GAAP measures include interest expense (for EBITDA), interest income, certain other expense/income, provision for income taxes (for EBITDA), income from equity method investments, amortization expense, depreciation expense (for EBITDA), amortization of debt issuance costs, stock-based compensation expense, acquisition-related expense, and non-ordinary course litigation expense[16][17][18][19][20][21][22][23][24] Reconciliation of Non-GAAP Measures The report provides detailed reconciliations of various non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and adjusted net income attributable to common stockholders, to their most directly comparable GAAP measures for both the three and six months ended June 30, 2025 and 2024 Non-GAAP Adjusted EBITDA Reconciliation This section provides a detailed reconciliation of GAAP net income to Non-GAAP adjusted EBITDA for the three and six months ended June 30, 2025 and 2024 Non-GAAP Adjusted EBITDA Reconciliation (Thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :---------------------- | :------ | :------ | :------ | :------ | | Net income (GAAP) | $34,217 | $32,520 | $61,929 | $55,924 | | Total adjustments | $14,195 | $10,311 | $30,023 | $23,953 | | Non-GAAP adjusted EBITDA | $48,412 | $42,831 | $91,952 | $79,877 | Non-GAAP Adjusted Net Income Reconciliation This section details the reconciliation of GAAP net income to Non-GAAP adjusted net income for the three and six months ended June 30, 2025 and 2024 Non-GAAP Adjusted Net Income Reconciliation (Thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | | Net income, as reported (GAAP) | $34,217 | $32,520 | $61,929 | $55,924 | | Income before income taxes (GAAP) | $39,359 | $33,404 | $74,378 | $59,555 | | Non-GAAP adjusted income before income taxes | $42,792 | $39,522 | $81,050 | $73,908 | | Non-GAAP adjusted net income | $33,805 | $31,222 | $64,029 | $58,387 | Non-GAAP Adjusted Net Income Attributable to Common Stockholders Reconciliation This section reconciles GAAP net income attributable to common stockholders to its Non-GAAP adjusted equivalent for the three and six months ended June 30, 2025 and 2024 Non-GAAP Adjusted Net Income Attributable to Common Stockholders Reconciliation (Thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------------ | :------ | :------ | :------ | :------ | | Net income attributable to common stockholders, as reported (GAAP) | $34,552 | $33,511 | $62,502 | $57,106 | | Income attributable to common stockholders before income taxes (GAAP) | $39,694 | $34,395 | $74,951 | $60,737 | | Non-GAAP adjusted income attributable to common stockholders before income taxes | $43,127 | $40,513 | $81,623 | $75,090 | | Non-GAAP adjusted net income attributable to common stockholders | $34,070 | $32,005 | $64,482 | $59,321 | Non-GAAP Adjusted Net Income Attributable to Common Stockholders Per Share Reconciliation This section provides the reconciliation of GAAP diluted EPS to Non-GAAP adjusted diluted EPS for the three and six months ended June 30, 2025 and 2024 Non-GAAP Adjusted Net Income Attributable to Common Stockholders Per Share Reconciliation | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------------ | :------ | :------ | :------ | :------ | | Net income attributable to common stockholders per share - basic, as reported (GAAP) | $0.69 | $0.67 | $1.26 | $1.14 | | Non-GAAP adjusted net income attributable to common stockholders per share - basic | $0.68 | $0.64 | $1.30 | $1.19 | | Non-GAAP adjusted net income attributable to common stockholders per share - diluted | $0.60 | $0.58 | $1.14 | $1.07 | Non-GAAP Free Cash Flow Reconciliation This section reconciles cash flows from operating activities to Non-GAAP free cash flow for the three and six months ended June 30, 2025 and 2024 Non-GAAP Free Cash Flow Reconciliation (Thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Cash flows from operating activities | $22,716 | $22,963 | $46,773 | $72,816 | | Additions to property and equipment | -$4,552 | -$1,992 | -$10,667 | -$5,058 | | Non-GAAP free cash flow | $18,164 | $20,971 | $36,106 | $67,758 | Forward-Looking Statements & Risks This section details the forward-looking nature of the company's statements and outlines various risks and uncertainties that could impact future financial results and operations Forward-Looking Statements & Risks This section outlines the forward-looking nature of the press release, identifying potential risks and uncertainties that could cause actual results to differ materially from projections, including macroeconomic conditions, competition, and operational challenges - The press release contains forward-looking statements regarding the Company's opportunities, positioning, benefits of new offerings, acquisitions, investments, and financial guidance for Q3 and full year 2025[25] - Actual results may differ materially due to known and unknown risks, uncertainties, and other factors, including global economic uncertainty, geopolitical upheaval, supply chain disruptions, interest rates, tariffs, and inflation (Macroeconomic Conditions)[25] - Other risks include the impact of Macroeconomic Conditions on demand, reliability of network operations, ability to retain partners and subscribers, manage growth, effects of competition, integration of acquired assets, reliance on service provider networks and suppliers, and new trade barriers[25]