Alarm.com(US:ALRM)2025-11-06 21:46Revenue Performance - SaaS and license revenue increased by 10% to $175.4 million for the three months ended September 30, 2025, compared to $159.3 million for the same period in 2024[174]. - Total revenue rose by 7% to $256.4 million for the three months ended September 30, 2025, up from $240.5 million in the same period in 2024[174]. - SaaS and license revenue represented 68% of total revenue for the three and nine months ended September 30, 2025, compared to 66% and 67% in the same periods of the prior year[170]. - Hardware and other revenue accounted for 32% of total revenue for the three and nine months ended September 30, 2025, down from 34% and 33% in the same periods of the prior year[172]. - Total revenue for the three months ended September 30, 2025, was $256,400,000, a 7% increase from $240,497,000 in the same period of 2024[215]. - SaaS and license revenue increased by $16,096,000, or 10%, to $175,372,000 for the three months ended September 30, 2025, compared to $159,276,000 in 2024[219]. - Hardware and other revenue for the three months ended September 30, 2025, was $81,028,000, a slight decrease from $81,221,000 in the same period of 2024[215]. - Total revenue for the nine months ended September 30, 2025, was $749.53 million, with SaaS and license revenue accounting for $509.17 million[245]. - Total revenue for the company was $697.6 million for the nine months ended September 30, 2024, compared to $742.5 million in the same period last year, reflecting a decrease of approximately 6.0%[246]. Profitability Metrics - Net income decreased to $35.1 million for the three months ended September 30, 2025, compared to $36.5 million for the same period in 2024, while it increased to $97.0 million for the nine months ended September 30, 2025, from $92.4 million in 2024[174]. - Non-GAAP adjusted EBITDA increased to $59.2 million for the three months ended September 30, 2025, from $50.0 million in the same period in 2024[174]. - Operating income for the three months ended September 30, 2025, was $37,021,000, representing a 14% margin, compared to $33,194,000, also a 14% margin, in 2024[215]. - Net income for the three months ended September 30, 2025, was $35,100,000, or 14% of total revenue, compared to $36,456,000, or 15%, in the same period of 2024[215]. - Operating income for the nine months ended September 30, 2025, was $98.69 million, compared to $33.19 million for the same period in the prior year[245]. - Non-GAAP adjusted EBITDA for the nine months ended September 30, 2025, was $151.1 million, compared to $129.9 million for the same period in 2024, reflecting a year-over-year increase[279]. Expenses and Costs - Total cost of revenue for the three months ended September 30, 2025, was $87,562,000, which is 34% of total revenue, compared to $84,748,000, or 35%, in 2024[221]. - Research and development expenses for the three months ended September 30, 2025, were $66,637,000, accounting for 26% of total revenue, compared to $62,221,000, also 26%, in 2024[215]. - Sales and marketing expenses increased by $2.5 million (9%) for the three months ended September 30, 2025, and by $8.9 million (11%) for the nine months ended September 30, 2025, primarily due to increased personnel costs[227][228]. - General and administrative expenses rose by $2.2 million (8%) for the three months ended September 30, 2025, mainly due to a $1.9 million increase in legal costs related to intellectual property litigation[229]. - Research and development expenses increased by $4.4 million (7%) for the three months ended September 30, 2025, and by $10.2 million (5%) for the nine months ended September 30, 2025, primarily due to higher personnel and external consultant costs[231][233]. - The cost of SaaS and license revenue includes payments to wireless network providers and costs associated with network operations, while hardware costs include raw materials and manufacturing expenses[199]. - The cost of hardware and other revenue as a percentage of hardware and other revenue was 78% for the three months ended September 30, 2025, compared to 76% for the same period in the prior year[223]. Taxation - The effective tax rate for the three months ended September 30, 2025, was above the 21% statutory rate, primarily due to state taxes and foreign withholding taxes[213]. - Provision for income taxes increased by $8.5 million (126%) for the three months ended September 30, 2025, and $17.6 million (170%) for the nine months ended September 30, 2025, compared to the same periods in the prior year[238]. - The effective tax rate increased to 30.2% for the three months ended September 30, 2025, compared to 15.6% for the same period in the prior year[238]. - The company anticipates that its effective tax rate will vary from quarter to quarter based on stock price and equity compensation activities[213]. Employee and Workforce - As of September 30, 2025, the company had 2,075 employees, an increase from 2,055 employees as of September 30, 2024, indicating growth in workforce to support business expansion[202]. - The number of employees in sales and marketing functions increased from 583 as of September 30, 2024, to 614 as of September 30, 2025[228]. - The number of employees in the Alarm.com segment decreased slightly from 1,815 as of September 30, 2024, to 1,810 as of September 30, 2025[241]. Acquisitions and Investments - On August 15, 2025, Alarm.com acquired Bridge to Renewables, Inc. for $12.4 million, enhancing its managed charging solutions for electric vehicles[176][177]. - The company paid $23.6 million in cash for 81% of CHeKT's shares on February 10, 2025, after a working capital adjustment[255]. - The company paid $23.6 million to acquire 81% of CHeKT and $12.4 million for all shares of BTR during the nine months ended September 30, 2025[273]. Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2025, were $1.07 billion, down from $1.22 billion as of December 31, 2024[249]. - Working capital decreased to $691.7 million as of September 30, 2025, from $1.29 billion as of December 31, 2024, representing a decline of approximately 46.5%[249]. - Cash flows from operating activities for the nine months ended September 30, 2025, were $117.4 million, a decrease of $32.8 million compared to $150.2 million in the prior year[269]. - Cash flows used in investing activities increased to $250.0 million for the nine months ended September 30, 2025, compared to $16.6 million in the prior year, primarily due to increased investments in unconsolidated entities[273]. - Cash flows used in financing activities were $21.5 million for the nine months ended September 30, 2025, a significant decrease from $344.3 million in the prior year, mainly due to the absence of proceeds from the issuance of the 2029 Notes[275]. - The company’s future liquidity needs may require additional borrowing or equity financing if cash flows from operations are insufficient[261]. Market and Economic Conditions - Alarm.com processed over 345 billion data points from more than 160 million connected devices during 2024, reinforcing its leadership in the connected property market[165]. - The company generates hardware revenue from the sale of various devices, including video cameras and smart thermostats, which may be negatively impacted by macroeconomic conditions[198]. - The company has begun passing through baseline tariffs to customers, which may negatively impact hardware revenue margins due to additional costs absorbed[201]. - Market risk exposure is primarily due to inflation and foreign exchange rates, with significant volatility in financial markets noted post-September 30, 2025[280].