Alarm.com (ALRM) Q1 2026 Earnings TranscriptMay 7, 2026
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DATE
Thursday, May 7, 2026, 4:30 p.m. ET
CALL PARTICIPANTS
President and Chief Executive Officer — Stephen Trundle Chief Financial Officer — Kevin Bradley
Full Conference Call Transcript
Stephen Trundle: Thank you, Matt. Good afternoon, and welcome to everyone. We are pleased to report first quarter results that exceeded our expectations. Our SaaS and license revenue in the first quarter was $181.5 million, up 10.8% year-over-year. Our adjusted EBITDA in the quarter was $49.6 million. Our results continue to reflect contributions from across our businesses, with nearly every area running at or slightly above the plan we set out for the year. We had a bit of revenue in the EnergyHub business move forward from the third quarter, but aside from this modest anomaly, the results are a broad-based reflection of how our various business units performed.
While our results are solid, there were a few bumps along the way in the quarter. In January and February, we saw new homebuilding and other business activity impacted by a long spell of snow and ice due to extreme cold weather that affected much of the U.S. Installation activity was greatly reduced for about three weeks and then bounced back strongly and accelerated through March, reflecting the durability of demand. Toward the end of the first quarter, we also began to deal with supply chain volatility related to standard memory availability as manufacturers shifted more production to sell into the HBM category for AI data centers.
This has led to widely reported substantial cost increases for the memory we use in cameras and other products. We are actively working to manage both supply chain availability of memory and the cost expansion caused by this market dynamic and expect these challenges to continue until the memory market corrects. As a reminder to investors, the portfolio of businesses that we consolidate into our quarterly results spans multiple markets at different stages of development. Our commercial business includes Alarm.com for Business, OpenEye, Checked, and Shooter Detection Systems. These commercial businesses are all growing as the security and access control markets evolve toward integrated, cloud-based, AI-driven solutions.
Our energy business, EnergyHub, continues to be a meaningful growth contributor and represents a growing share of our overall revenue mix. The EnergyHub platform provides mission-critical distributed IoT management solutions that help utilities address long-term structural pressures on grid reliability and infrastructure. Our core residential business provides a large, durable foundation with a large TAM and a highly productive service provider channel. Structurally high revenue retention is due to the wide range of physically installed devices that subscribers interact with through our application every day. In each business, we deliver software that orchestrates connected devices at scale.
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This enables us to leverage AI to improve ease of use, unlock new use cases, and make our solutions increasingly essential to both security and operational workflows. In our commercial offerings, where an enterprise may have dozens or even hundreds of video cameras installed, AI-driven use cases are particularly valuable. OpenEye, our enterprise commercial video business, released several capabilities during the quarter that fit this profile. One is a powerful new capability called AI Visual Check. AI Visual Check can detect and issue real-time notifications when a fire exit is blocked, a shelf needs restocking, or a security post is unattended.
Customers managing large properties or multisite environments can use AI Visual Check to reduce reliance on manual safety protocol oversight, enabling faster responses to operational issues and improving security compliance across geographically disparate locations. OpenEye also introduced AI Visual Search. This allows security personnel to describe what they are looking for using natural language and retrieve relevant forensic results. They can quickly locate specific moments, objects, or activities across their broad video environment. Both capabilities are included in OpenEye's premium video subscription service, and end-customer adoption of that service is rapidly growing. Before I hand things over to Kevin, I want to discuss our share repurchase program.
During the last two quarters, we purchased over 800,000 shares of our common stock, including over 400,000 shares during the first quarter. Last week, our board authorized the purchase of up to an aggregate of $150 million of our outstanding common stock over the next two years. As I expressed on last quarter's call, we believe that AI is primarily an opportunity for Alarm.com Holdings, Inc., and we will therefore seek to take advantage of any SaaS universe dislocations in the market while still maintaining balance sheet capacity to also pursue acquisitions opportunistically as we have done over the last several years. In summary, I am pleased with our first quarter results.
We remain focused on creating long-term value for our service providers and their customers across residential, commercial, and energy markets and, in the process, creating value for our long-term shareholders. I want to thank our service provider partners and our team for their hard work and our investors for their continued trust in our business. With that, I will turn things over to Kevin Bradley to review our detailed financials for the quarter and our updated guidance.
Kevin Bradley: Thanks, Steve. I will begin by reviewing highlights from our first quarter financial results, and then close with our updated guidance for the second quarter and full year 2026, including several moving parts in our hardware outlook. A few months into the year, I am pleased to report results that continue to demonstrate the durability and resilience of our target markets and business model. We are fortunate to have partnerships with thousands of talented operators who time and again prove their ability to navigate complex and dynamic market environments while delivering mission-critical IoT-based services across the globe. SaaS and license revenue grew 10.8% year-over-year to $181.5 million during the quarter, exceeding the midpoint of our guide by $5.6 million.
A driving factor here is our revenue retention rate of over 95% for the quarter, one of the highest readings on this metric in the past ten years. Another factor contributing to the SaaS beat is the continued outperformance at EnergyHub. As a reminder, EnergyHub revenue recurs on an annual basis, and seasonality can vary based on utility program activity and other factors. Hardware and other revenue totaled $83.7 million, up 11.5% year-over-year, and total revenue grew 11% year-over-year to $265.2 million. As you will recall, on January 1, we began passing through the higher tariff rates that had been implemented under the International Emergency Economic Powers Act. Approximately $5 million of our Q1 hardware revenue is from those pass-throughs.
We continue to charge those fees today, consistent with the rates we paid to U.S. Customs and Border Protection upon import for the inventory we are currently selling. I will address the expected impact of the February Supreme Court ruling on hardware revenue when I provide our updated guidance for full year 2026. Hardware gross margin came in to the upside at 25.2%, which can be attributed to the mix of products sold skewing toward commercial products generally, and in particular, in the commercial video business. Total operating expenses, excluding depreciation and amortization as well as stock-based compensation and other items we adjust from G&A for non-GAAP purposes, were $125.1 million, a 9.3% increase year-over-year.
Note that sales and marketing expense in the quarter includes our presence at ISC West, our largest trade show presence of the year. The event moved from the second quarter last year into the first quarter this year. R&D expense in the quarter, inclusive of stock-based compensation, was $72.1 million, a 5.4% increase year-over-year. The total number of employees we have in R&D functions at the end of Q1 2026 was 1,140, up 1% year-over-year. Non-GAAP adjusted EBITDA was $49.6 million, slightly higher than we anticipated due to the revenue outperformance we saw during the quarter. GAAP net income was $23.6 million in the first quarter, down from $28 million in the prior year.
The primary driver here is lower interest income because we are holding less excess cash after retiring $500 million of convertible notes in January 2026. Non-GAAP adjusted net income was $34.7 million in the quarter, an increase from $32.2 million in the year-ago quarter. We produced $0.65 of earnings per diluted share, which is up 14% year-over-year. We ended the quarter with $497.4 million of cash on the balance sheet and produced $49.7 million of free cash flow. We repurchased 428,000 shares of stock during the quarter for $20 million, bringing our total share repurchases since the beginning of 2025 to 1.2 million shares. As Steve mentioned, our board recently authorized $150 million of repurchases over the next two years.
Before turning to our financial outlook, I wanted to comment on an improvement that we have made to the definition of our non-GAAP profitability metrics. Several times in the past year, you have heard us refer to results being impacted by mark-to-market gains or losses on equity positions included in our treasury portfolio. Because we are not in the business of active investing, we have determined that the fluctuations in market value of these securities do not relate to the operating performance of the business from period to period. As such, we will be excluding these fluctuations from our non-GAAP profitability metrics prospectively, including any reference to comparable periods in the past.
Under this new definition, for example, our non-GAAP adjusted EBITDA during fiscal year 2025 would have been $201.3 million rather than $206 million. Our non-GAAP adjusted net income would have been $142 million versus $145.7 million, and our non-GAAP earnings per diluted share would have been $2.55 versus $2.62. We clearly articulated this $4.7 million non-GAAP adjusted EBITDA tailwind for 2025 on our last earnings call and have been disclosing it in our quarterly filings as well, and we currently plan to continue providing similar disclosures in our filings. I will turn now to our financial outlook. For the second quarter of 2026, we expect SaaS and license revenue of between $185.5 million and $185.7 million.
For the full year 2026, we are raising our SaaS and license revenue outlook to between $749.5 million and $750.5 million. This is an increase from prior guidance of $6 million at the midpoint. We are raising our total revenue outlook for 2026 to be between $1.0595 billion and $1.0705 billion, which includes hardware and other revenue of between $310 million and $320 million. The modest reduction at the midpoint on the hardware line since our February update reflects a couple of exogenous dynamics. The primary factor in our updated hardware outlook follows the Supreme Court ruling in late February 2026 that tariffs implemented using the International Emergency Economic Powers Act were unauthorized.
While it does not change the fact that we paid those tariffs on products imported through that date, it does mean that once we have sold that product subjected to those tariffs, we will be lowering our tariff pass-through fees to reflect the new lower tariffs that the administration put into place immediately following that ruling. As a general rule of thumb, those new tariffs are about half of what the old ones were as of right now. We anticipate that change occurring toward the end of Q2.
So if we were running at $5 million of tariff pass-through fees per quarter in Q1, then this represents approximately $5 million less in tariff pass-through fees during the second half of the year relative to our prior outlook. A second factor is that we are monitoring the turbulence in the memory market and evaluating the impact to our hardware business. The cost impacts that we are seeing there will require that we increase prices for our products that use memory, and we do not yet know if or how these price increases will affect demand. As such, our outlook on the hardware revenue line is cautious at this point in the year, despite the outperformance in Q1.
We are raising our non-GAAP adjusted EBITDA outlook for 2026 to between $215 million and $216 million, a $1.5 million increase at the midpoint. The 20.2% adjusted EBITDA margin implied by the midpoint is consistent with our prior guide and represents 30 basis points of margin expansion year-over-year. Non-GAAP adjusted net income for 2026 is projected to be $151.5 million to $152 million, or $2.81 to $2.82 per diluted share, a 10% year-over-year increase. EPS is based on approximately 56.9 million weighted average diluted shares outstanding for the year. We currently project our non-GAAP tax rate for 2026 to remain at 21% under current tax rules. We expect full-year 2026 stock-based compensation expense of between $35 million and $37 million.
In closing, I am pleased with the broad-based momentum in the business that we have seen so far this year. We delivered a solid quarter against our plan, and we believe we are well positioned to deliver continued revenue growth and profitability while investing to expand our long-term growth opportunities. With that, we will now open the call for questions.
Operator: Thank you. Our first question comes from Adam Hotchkiss with Goldman Sachs. Your line is open.
Adam Hotchkiss: I guess, Steve, with the widest beat on the SaaS and license line in at least a number of years, what drove that? It is particularly interesting to see that line reaccelerate when historically we had been talking about ADT being a couple hundred basis point headwind. It does not really seem like that is showing up in your numbers. Can you walk us through the moving pieces and what is driving the maintenance of that roughly 10% growth rate here?
Stephen Trundle: Sure, Adam. I will start, then hand it to Kevin to fill in the blanks. At a high level, everything was slightly above plan, so we had a bit of a tailwind against our plan. The big drivers were the revenue retention rate, which was unusually high versus our traditional range—I believe we were at about 95.4%—and then a little bit of revenue moved from the third quarter on the EnergyHub side into the first quarter as we had one meaningful agreement adjusted in the way it is structured. Those are the primary drivers. Kevin, anything I missed?
Kevin Bradley: Yes, I think those are the two primary drivers. To add some numbers, the difference between running at 95.4% revenue retention and around 94%, the high end of our historical range, is $2 million to $2.5 million per quarter. That is by far the biggest chunk. The EnergyHub component of the beat was another couple million dollars, and as Steve said, about half of that pulled forward from Q3. In retrospect, we probably had a slightly too conservative posture on the modeling around our revenue retention going into the year. We were anticipating 94%, but we have accounted for that in our guide somewhat.
Adam Hotchkiss: Great, that is helpful. And then how should we think about the competitive environment for the OpenEye business in the commercial space? How fast is the broader market moving on software and hardware with AI use cases versus what OpenEye is doing? When you are talking to customers, what does demand look like around AI capabilities? Are they patient and willing to wait for advancements, or do they go with the first mover?
Stephen Trundle: It is a good question, because purchasing behavior has changed a bit. On OpenEye, the pipeline looks very solid to us. We are seeing broader awareness of what a commercial customer can do with AI to enhance not only security but also operations—getting business value in addition to security value when we can take rich video content and glean insight. Demand looks solid. Customers are looking at products through an AI lens—which product will solve a problem best with AI.
For example, with a large specialty retailer in the quarter, traditionally we would have sold a security solution, but in their case their highest margin item is sushi, and they need fresh prepared sushi stocked between 4 PM and 7 PM. Visual Check is being used to monitor stockouts in that cabinet during those hours using a security camera view. It is an example of customers thinking more about devices and the business insight they can glean. I think we are solidly positioned versus competitors in our AI capabilities in that domain.
Operator: Our next question comes from Stephen Sheldon with William Blair. Your line is open.
Matthew Filek: Hey, Steve and Kevin, you have Matthew Filek on for Stephen Sheldon. Thank you for taking my questions. Can you talk about the gross margin profiles across your growth segments and how those compare to consolidated gross margins? I am trying to get a sense of what continued growth at EnergyHub and others could mean for consolidated gross margins over the mid-to-long term as the revenue mix shifts toward those faster-growing parts of the business.
Kevin Bradley: Sure. If you look at our two public reporting segments, you will see in Q1 that SaaS gross margins in the Alarm.com segment are about 87% to 88%. In the Other segment, which is where EnergyHub currently sits, they were closer to 60% for Q1. That is probably a bit on the low side, as EnergyHub gross margins were temporarily depressed related to the RGS acquisition. Longer term, you are more likely to see gross margin in the Other segment closer to 65% to 70%, and gross margins in the Alarm.com segment staying in the 87% to 88% range. That is how I would think about the profiles going forward.
Matthew Filek: That is very helpful. And for R&D, do you still expect it to remain roughly flat as a percentage of revenue in 2026? Over the next couple of years, where do you see the biggest opportunities for operating leverage across the business?
Kevin Bradley: On the first question, yes, we see R&D roughly flat as a percentage of revenue for the remainder of this year. Everyone is trying to figure out whether we will do a lot more with the same people or the same amount with fewer people as the full AI story unfolds. Our view is to remain positioned to be very competitive and do as much as possible to take advantage of evolving opportunities, so we are not betting on massive R&D leverage right now. As businesses mature—especially some of our growth initiatives—once they reach scale, we should see natural operating leverage, contributing out of areas that currently, in the consolidated picture, drag down operating margin.
That is the primary place we look for margin expansion.
Operator: Our next question comes from Jack Vander Aarde with Maxim Group. Your line is open.
Jack Vander Aarde: Congrats on the solid results and strong retention rate, and thanks for taking my questions. Steve, on EnergyHub, you have over 80 utility partners. How do you see the number of utility partners and your wallet share growing over the next couple of years? It sounds like there is a lot of blue sky left. And as a follow-up, any updates on the PointCentral business?
Stephen Trundle: On EnergyHub, after completing the RGS acquisition and adjusting a bit how we label utilities, we now say we have over 155 utilities in the program, which we define as entities with more than 100,000 meters in their territory. We are working with utilities that service roughly 75 million to 77 million meters, out of about 130 million total meters we would like to get to. So things are trending in the right direction with utility pickups. The next game is driving up enrollment within a given territory—what percentage of consumers have connected thermostats, and of those with connected thermostats or other devices like EVs or batteries, can we get those devices enrolled and move that number up?
We feel good about TAM coverage and the completeness of the software solution, so we can focus more on driving up attachment rates with our utility partners. On PointCentral, it continues to ramp at a double-digit growth rate, but it is not a massive driver of consolidated growth at the moment. It is a nice business with positive contribution to consolidated EBITDA. We believe we are probably number two in the multifamily space and are well into the six digits in terms of apartments or multifamily units serviced. We are committed and making progress, likely taking share, but not at a 30% growth rate.
Jack Vander Aarde: Thanks. And for Kevin, a couple of quarters ago you provided exit-year 2027 targets for hardware margin and adjusted EBITDA margin. Any updates? I think you were targeting around a 21% adjusted EBITDA margin.
Kevin Bradley: No changes. We are still anticipating and working toward exiting 2027 at about a 21% adjusted EBITDA margin. Hardware margins are harder to pin down and will depend on tariffs and memory prices, but we will manage through that volatility and still target the 21% adjusted EBITDA margin.
Operator: Our next question comes from Eleanor Smith with JPMorgan. Your line is open.
Eleanor Smith: First on EnergyHub. As you think about your internal projections, what does growth look like in terms of expanding within existing customers, cross-selling new products, and adding new logos?
Stephen Trundle: We do not break out EnergyHub with a specific growth rate, but you can deduce it is a strong contributor to our growth initiatives, where we have commented we expect 25% to 30% growth this year, including any inorganic activity. Inside EnergyHub, growth is a mix of new logos, expanding programs within existing logos, and driving up device enrollment. We started focused on connected thermostats and modest residential thermostat adjustments for VPPs. Now capabilities are broader—batteries, EV chargers, solar inverters—while utility supply is more variable, so there is strong demand to expand programs into these other edge resource categories.
And we are doing the work to drive enrollment—making sure, for example, when someone buys a Model Y and a wall charger, they take the time to enroll in the program and get the benefits. Those are the three growth drivers.
Eleanor Smith: Thank you. As a follow-up, what synergies, if any, exist between EnergyHub and your security business, and to what extent have you tapped into those cross-sell synergies?
Stephen Trundle: We define our core residential business as smart security or smart home, and many properties today get thermostats through our service provider channel. Each of those creates an opportunity for that customer to become an EnergyHub participant, which is a natural synergy. We also have an R&D sandbox to test features that can increase engagement or drive additional downstream value for utilities, including innovative thermostat-level approaches. There is synergy on the R&D and channel sides, helping our partners offset some costs of offering broader services. In terms of how far along we are, I would say we are in the third inning. We are seeing security being defined to include energy security—certainty of your energy supply.
Some of our security partners are now bringing batteries, in addition to generators, to bear. We expect more synergy to develop over time.
Operator: I am not showing any further questions at this time. This concludes today’s presentation. You may now disconnect, and have a wonderful day.
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Alarm.com Reports First Quarter 2026 ResultsMay 7, 2026
-- SaaS and license revenue increased 10.8% to $181.5 million, compared to $163.8 millionfor the first quarter of 2025 --
-- GAAP net income was $23.4 million, compared to $27.7 million --
-- Non-GAAP adjusted EBITDA was $49.6 million, compared to $45.8 million --
TYSONS, VA., May 07, 2026--(BUSINESS WIRE)--Alarm.com Holdings, Inc. (Nasdaq: ALRM), the leading platform for intelligently connected properties, today reported financial results for its first quarter ended March 31, 2026. Alarm.com also provided its financial outlook for SaaS and license revenue for the second quarter of 2026 and increased its guidance for the full year of 2026.
First Quarter 2026 Financial Results as Compared to First Quarter 2025
SaaS and license revenue increased 10.8% to $181.5 million, compared to $163.8 million. Total revenue increased 11.0% to $265.2 million, compared to $238.8 million. GAAP net income was $23.4 million, compared to $27.7 million. GAAP net income attributable to common stockholders was $23.6 million, or $0.47 per diluted share, compared to $28.0 million, or $0.52 per diluted share. Non-GAAP adjusted EBITDA(*) was $49.6 million, compared to $45.8 million(^). Non-GAAP adjusted net income attributable to common stockholders(*) was $34.7 million, or $0.65 per diluted share, compared to $32.2 million(^), or $0.57 per diluted share(^).
Balance Sheet and Cash Flow
Total cash and cash equivalents was $497.4 million as of March 31, 2026, compared to $960.6 million as of December 31, 2025. The decrease in cash and cash equivalents was primarily due to the payment and full settlement of the $500.0 million aggregate principal amount of the 0% convertible senior notes on January 14, 2026. For the three months ended March 31, 2026, cash flows from operating activities was $50.6 million, compared to $24.1 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, non-GAAP free cash flow(*) was $49.7 million, compared to $17.9 million for the three months ended March 31, 2025.
(*) Reconciliations of the non-GAAP measures are set forth at the end of this press release.
(^) During the first quarter of 2026, the Company revised its definition of certain non-GAAP metrics to exclude gains and losses on investments with readily determinable fair value. Comparable information for the prior periods presented has been updated to conform to the current presentation. Further details are set forth at the end of this press release.
Recent Business Highlights
OpenEye Adds New AI Capabilities to Improve Operational Intelligence: OpenEye, an Alarm.com subsidiary focused on enterprises, introduced AI Visual Check, a new set of AI-driven video analytics capabilities designed to automate monitoring of business operations, safety protocols and compliance across multiple locations. These capabilities provide proactive alerts when issues are detected, such as blocked fire exits, out-of-stock shelves or unattended security posts, reducing reliance on manual oversight and enabling faster resolution. AI Visual Check is designed to enhance OpenEye’s premium video offering and support more efficient, scalable operations for customers.
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Enhanced User Experience with Intelligent Automation Capabilities: Alarm.com introduced Automation Suggestions, which provides personalized, in-app recommendations for end user subscribers to discover and configure automation rules and schedules. A new HomeLink integration enables subscribers to trigger automation scenes directly from compatible vehicles. These new capabilities are expected to further simplify system configuration, drive user engagement and enable a seamless onboarding experience at installation.
Launched Location Insights for Smarter Emergency Response: Alarm.com introduced Location Insights to provide subscribers with real-time visibility into whether household members are home, nearby or away during an alarm event. From the Alarm.com mobile app, subscribers can quickly assess the situation and cancel or verify the alarm, supporting faster emergency response and reducing unnecessary dispatches. Designed with privacy in mind, the app displays location data only during alarm events, and subscribers maintain full control over which devices share their location.
Financial Outlook
Alarm.com is providing its outlook for SaaS and license revenue for the second quarter of 2026 and increasing its guidance for the full year of 2026 based upon current management expectations.
For the second quarter of 2026:
SaaS and license revenue is expected to be in the range of $185.5 million to $185.7 million.
For the full year of 2026:
SaaS and license revenue is now expected to be in the range of $749.5 million to $750.5 million, up $6.0 million from the midpoint of the full year of 2026 SaaS and license revenue guidance provided last quarter. Total revenue is expected to be in the range of $1.0595 billion to $1.0705 billion, which includes anticipated hardware and other revenue in the range of $310.0 million to $320.0 million. Non-GAAP adjusted EBITDA is expected to be in the range of $215.0 million to $216.0 million. Non-GAAP adjusted net income attributable to common stockholders is expected to be in the range of $151.5 million to $152.0 million, based on an estimated tax rate of 21.0%. Based on an expected 56.9 million weighted average diluted shares outstanding, non-GAAP adjusted net income attributable to common stockholders is expected to be $2.81 to $2.82 per diluted share.
The 2026 guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding "Forward-Looking Statements" below. The guidance provided above is based on expectations as of the date of this press release and Alarm.com undertakes no obligation to update guidance after such date.
Conference Call and Webcast Information
Alarm.com will host a conference call to discuss its first quarter 2026 financial results and its outlook for the second quarter and full year of 2026. A live audio webcast is scheduled to begin at 4:30 p.m. ET on May 7, 2026. To participate on the live call, analysts and investors should pre-register to obtain a dial-in number and individual passcode by visiting: https://register-conf.media-server.com/register/BI5a72758bb63a4af6bba09f1a89dc7256. Alarm.com will also offer a live and archived webcast of the conference call accessible on Alarm.com’s Investor Relations website at http://investors.alarm.com. The information contained on any referenced website is not incorporated herein.
About Alarm.com Holdings, Inc.
Alarm.com is the leading platform for intelligently connected properties. Millions of homeowners and businesses rely on Alarm.com's technology to secure, monitor and manage their environments from anywhere. Our comprehensive suite of solutions — including security, video surveillance, access control, active shooter detection, intelligent automation, energy management and wellness — is delivered exclusively through a trusted network of thousands of professional service providers and commercial integrators across North America and worldwide. Alarm.com's common stock is traded on Nasdaq under the ticker symbol ALRM. Alarm.com delivers serious security for serious people. To learn more, visit www.alarm.com.
Non-GAAP Financial Measures
To supplement our consolidated selected financial data presented on a basis consistent with GAAP, this press release contains certain non-GAAP financial measures, including non-GAAP adjusted EBITDA, non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders, non-GAAP adjusted net income attributable to common stockholders per share and non-GAAP free cash flow. We have included non-GAAP measures in this press release because they are financial, operating or liquidity measures used by our management to (i) understand and evaluate our core operating performance and trends and generate future operating plans, (ii) make strategic decisions regarding the allocation of capital and investments in initiatives that are focused on cultivating new markets for our solutions and (iii) provide useful information to management about the amount of cash generated by the business after necessary capital expenditures. We also use non-GAAP adjusted EBITDA as a performance measure under our executive bonus plan. Further, we believe that these non-GAAP measures of our financial results provide useful information to investors and others in understanding and evaluating our results of operations, business trends and financial condition. While we believe the use of these non-GAAP measures provides useful information to investors and management in analyzing our financial performance, non-GAAP measures have inherent limitations in that they do not reflect all of the amounts and transactions that are included in our financial statements prepared in accordance with GAAP. Non-GAAP measures do not serve as an alternative to GAAP nor do we consider our non-GAAP measures in isolation. Accordingly, we present non-GAAP financial measures only in connection with GAAP results. We urge investors to consider non-GAAP measures only in conjunction with our GAAP financials and to review the reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measures, which are included in this press release.
We consider non-GAAP free cash flow to be a liquidity measure, which we define as cash flows from operating activities less purchases of property and equipment.
With respect to our expectations under "Financial Outlook" above, reconciliation of non-GAAP adjusted EBITDA and non-GAAP adjusted net income attributable to common stockholders guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures. In particular, non-ordinary course litigation expense, acquisition-related expense and tax adjustments can have unpredictable fluctuations based on unforeseen activity that is out of our control and/or cannot reasonably be predicted. We expect the above charges to have a significant and potentially highly variable impact on our future GAAP financial results.
We exclude one or more of the following items from non-GAAP financial and operating measures:
Interest expense: We record interest expense primarily related to the January 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, and the May 2024 issuance of $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029, or the 2029 Notes. We exclude interest expense in calculating our non-GAAP adjusted EBITDA. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, we do not exclude interest expense other than the interest expense related to the amortization of debt issuance costs related to the 2026 Notes and 2029 Notes as discussed below.
Interest income and certain activity withinother expense, net: We exclude interest income as well as certain activity within other expense, net including gains, losses or impairments on investments with readily determinable fair values and without readily determinable fair values and on other assets, gains on settlement fees as well as losses on the early extinguishment of the debt, when applicable, from our non-GAAP financial measures because we do not consider it part of our ongoing results of operations.
Provision for income taxes: We exclude the impact related to our provision for income taxes from our non-GAAP adjusted EBITDA calculation. We do not consider this tax adjustment to be part of our ongoing results of operations.
(Income) / loss from equity method investments, net: We exclude (income) / loss from equity method investments, net from our non-GAAP financial measures because we do not consider it part of our ongoing results of operations.
Amortization expense: GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed technology and trade names. We exclude amortization of intangibles from our non-GAAP financial measures because we do not consider amortization expense when we evaluate our ongoing business operations, nor do we factor amortization expense into our evaluation of potential acquisitions, or our measurement of the performance of those acquisitions. We believe that the exclusion of amortization expense enables the comparison of our performance to other companies in our industry as other companies may be more or less acquisitive than we are and therefore, amortization expense may vary significantly by company based on their acquisition history. Although we exclude amortization of acquired intangible assets from our non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.
Depreciation expense: We record depreciation primarily for investments in property and equipment. We exclude depreciation in calculating non-GAAP adjusted EBITDA because we do not consider depreciation when we evaluate our ongoing business operations. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, we do not exclude depreciation.
Amortization of debt issuance costs: We record amortization of debt issuance costs related to the 2026 Notes and 2029 Notes as interest expense. We exclude amortization of debt issuance costs from our non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, because we believe that the exclusion of this non-cash interest expense will provide for more meaningful information about our financial performance.
Stock-based compensation expense: We exclude stock-based compensation expense, which relates to restricted stock units and other forms of equity incentives primarily awarded to employees of Alarm.com, because they are non-cash charges that we do not consider when assessing the operating performance of our business. Additionally, the determination of stock-based compensation expense can be calculated using various methodologies and is dependent upon subjective assumptions and other factors that vary on a company-by-company basis. Therefore, we believe that excluding stock-based compensation expense from our non-GAAP financial measures improves the comparability of our results to the results of other companies in our industry.
Acquisition-related expense: Included in operating expenses are incremental costs directly related to business and asset acquisitions as well as changes in the fair value of contingent consideration liabilities, when applicable. We exclude acquisition-related expense from our non-GAAP financial measures because we believe that the exclusion of this expense allows us to better provide meaningful information about our operating performance, facilitates comparisons to our historical operating results, improves the comparability of our results to the results of other companies in our industry, and ultimately, we believe helps investors better understand the acquisition-related expense and the effects of the transaction on our results of operations.
Litigation expense: We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred and received in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes, particularly costs incurred in ongoing intellectual property litigation, to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by their use of terms and phrases such as "anticipate," "believe," "continue," "designed," "enable," "ensure," "expect," "intend," "will," and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding the Company’s opportunities, positioning, the benefits of recently launched offerings, acquisitions and investments, and the Company’s guidance for the second quarter and full year of 2026 described under "Financial Outlook" above and key assumptions related thereto. The events described in these forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: impact of the global economic uncertainty and financial market conditions caused by significant worldwide events, including public health crises, and geopolitical upheaval (including the ongoing conflicts in Ukraine and in the Middle East and surrounding areas), disruptions to global supply chains, fluctuations in interest rates, tariffs, risk of recession and inflation (collectively, the Macroeconomic Conditions) on the Company's business, results of operations and financial condition, including on the Company's hardware sales and Software-as-a-Service, or SaaS, and license revenue growth rate; the Company's business strategy, plans and objectives for future operations; continued enhancements of the Company's platform and offerings; the potential impact of trade policies and new or increased tariffs on the Company's cost of hardware revenue and hardware revenue margins; and the Company's future financial and business performance; and other risks and uncertainties discussed in the "Risk Factors" section of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 19, 2026 and other subsequent filings the Company makes with the Securities and Exchange Commission from time to time, including its Form 10-Q for the quarter ended March 31, 2026. In addition, the forward-looking statements included in this press release represent the Company’s views and expectations as of the date hereof and are based on information currently available to the Company. The Company anticipates that subsequent events and developments may cause the Company’s views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so except as required by law. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof.
ALARM.COM HOLDINGS, INC.
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited) Three Months Ended
March 31, 2026 2025 Revenue: SaaS and license revenue $ 181,524 $ 163,800 Hardware and other revenue 83,669 75,022 Total revenue 265,193 238,822 Cost of revenue(1): Cost of SaaS and license revenue 27,895 21,568 Cost of hardware and other revenue 62,616 56,666 Total cost of revenue 90,511 78,234 Operating expenses: Sales and marketing 34,434 28,549 General and administrative 27,454 27,001 Research and development 72,059 68,367 Amortization and depreciation 9,092 7,024 Total operating expenses 143,039 130,941 Operating income 31,643 29,647 Interest expense (3,672 ) (4,314 ) Interest income 4,931 12,371 Other expense, net (3,909 ) (2,660 ) Income before income taxes 28,993 35,044 Provision for income taxes 5,856 7,307 (Income) / loss from equity method investments, net (245 ) 25 Net income 23,382 27,712 Net loss attributable to redeemable noncontrolling interests 201 238 Net income attributable to common stockholders $ 23,583 $ 27,950 Per share information attributable to common stockholders: Net income attributable to common stockholders per share: Basic $ 0.48 $ 0.56 Diluted $ 0.47 $ 0.52 Weighted average common shares outstanding: Basic 49,599,698 49,659,741 Diluted 56,322,662 60,077,247 ______________________________ (1) Exclusive of amortization and depreciation shown in operating expenses below. Stock-based compensation expense data: Three Months Ended
March 31, 2026 2025 Sales and marketing $ 742 $ 480 General and administrative 3,056 2,972 Research and development 4,251 6,006 Total stock-based compensation expense $ 8,049 $ 9,458
ALARM.COM HOLDINGS, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited) March 31,
2026 December 31,
2025 Assets Current assets: Cash and cash equivalents $ 497,449 $ 960,584 Accounts receivable, net of allowance for credit losses of $6,113 and $5,171, and net of allowance for product returns of $2,080 and $2,140 as of March 31, 2026 and December 31, 2025, respectively 141,221 141,852 Inventory 95,132 94,429 Other current assets, net of allowance for credits losses of $749 as of March 31, 2026 and December 31, 2025 67,192 75,646 Total current assets 800,994 1,272,511 Property and equipment, net 62,819 64,799 Intangible assets, net 93,421 99,352 Goodwill 224,708 224,987 Deferred tax assets 149,463 152,255 Operating lease right-of-use assets 51,880 52,636 Investments in unconsolidated entities 219,850 226,931 Other assets, net of allowance for credit losses of $0 as of March 31, 2026 and December 31, 2025 40,502 43,120 Total assets $ 1,643,637 $ 2,136,591 Liabilities, redeemable noncontrolling interests and stockholders’ equity Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 106,522 $ 107,195 Accrued compensation 23,021 31,126 Deferred revenue 18,088 16,428 Convertible senior notes, net — 499,867 Operating lease liabilities 7,624 8,524 Total current liabilities 155,255 663,140 Deferred revenue 13,755 13,456 Convertible senior notes, net, noncurrent 490,365 489,641 Operating lease liabilities 68,740 67,609 Other liabilities 11,732 11,735 Total liabilities 739,847 1,245,581 Redeemable noncontrolling interests 43,978 42,847 Stockholders’ equity Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2026 and December 31, 2025 — — Common stock, $0.01 par value, 300,000,000 shares authorized; 53,723,295 and 53,540,939 shares issued; and 49,385,005 and 49,630,714 shares outstanding as of March 31, 2026 and December 31, 2025, respectively 538 536 Additional paid-in capital 558,532 549,913 Treasury stock, at cost; 4,338,290 and 3,910,225 shares as of March 31, 2026 and December 31, 2025, respectively (247,847 ) (227,852 ) Accumulated other comprehensive income 2,130 2,690 Retained earnings 546,459 522,876 Total stockholders’ equity 859,812 848,163 Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 1,643,637 $ 2,136,591
ALARM.COM HOLDINGS, INC.
Reconciliation of Non-GAAP Measures
(in thousands)
(unaudited) Three Months Ended
March 31, Cash flows from operating activities: 2026 2025 Net income $ 23,382 $ 27,712 Adjustments to reconcile net income to net cash flows from operating activities: Provision for credit losses on accounts receivable 1,167 977 Reserve for product returns 381 425 Amortization and depreciation 9,092 7,024 Amortization of debt issuance costs 857 1,498 Amortization of operating leases 3,726 3,903 Deferred income taxes 2,792 (8,791 ) Stock-based compensation 8,049 9,458 Distributions on investments in unconsolidated entities 2,668 — Loss from investments in unconsolidated entities 3,620 2,313 Other adjustments 305 (123 ) Changes in operating assets and liabilities (net of business acquisitions): Accounts receivable (904 ) 6,283 Inventory (776 ) (1,859 ) Other current and non-current assets 6,758 (8,768 ) Accounts payable and other current liabilities (8,373 ) (12,749 ) Deferred revenue 1,959 965 Operating lease liabilities (4,072 ) (3,474 ) Other liabilities 4 (737 ) Cash flows from operating activities 50,635 24,057 Cash flows from / (used in) investing activities: Business acquisitions, net of cash acquired — (23,412 ) Additions to property and equipment (912 ) (6,115 ) Issuances of notes receivable (1,462 ) (21,500 ) Receipt of payments on notes receivable 41 29 Capitalized software development costs (212 ) (408 ) Proceeds from sale of investments in unconsolidated entities 6,012 — Purchase of investments in unconsolidated entities (1,062 ) (3,773 ) Cash flows from / (used in) investing activities 2,405 (55,179 ) Cash flows used in financing activities: Repayments of convertible senior notes (500,000 ) — Payments of deferred consideration for acquisitions (300 ) — Purchases of treasury stock, including transaction costs (19,995 ) (5,059 ) Issuances of common stock from equity-based plans 2,059 1,583 Cash flows used in financing activities (518,236 ) (3,476 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (36 ) (118 ) Net decrease in cash, cash equivalents and restricted cash (465,232 ) (34,716 ) Cash, cash equivalents and restricted cash at beginning of the period 968,807 1,229,132 Cash, cash equivalents and restricted cash at end of the period $ 503,575 $ 1,194,416 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 497,449 $ 1,186,195 Restricted cash included in other current assets and other assets 6,126 8,221 Total cash, cash equivalents and restricted cash $ 503,575 $ 1,194,416
ALARM.COM HOLDINGS, INC.
Reconciliation of Non-GAAP Measures
(in thousands)
(unaudited) Three Months Ended
March 31, 2026 2025 Non-GAAP adjusted EBITDA: Net income $ 23,382 $ 27,712 Adjustments: Interest expense, interest income and certain activity within other expense, net1 2,606 (5,769 ) Provision for income taxes 5,856 7,307 (Income) / loss from equity method investments, net (245 ) 25 Amortization and depreciation expense 9,092 7,024 Stock-based compensation expense 8,049 9,458 Acquisition-related expense 59 50 Litigation expense 774 21 Total adjustments 26,191 18,116 Non-GAAP adjusted EBITDA $ 49,573 $ 45,828 Three Months Ended
March 31, 2026 2025 Non-GAAP adjusted net income: Net income, as reported $ 23,382 $ 27,712 Provision for income taxes 5,856 7,307 (Income) / loss from equity method investments, net (245 ) 25 Income before income taxes 28,993 35,044 Adjustments: Interest income and certain activity within other expense, net1 (1,066 ) (10,083 ) Amortization expense 6,030 4,558 Amortization of debt issuance costs 857 1,498 Stock-based compensation expense 8,049 9,458 Acquisition-related expense 59 50 Litigation expense 774 21 Total adjustments 14,703 5,502 Income taxes 2 (9,176 ) (8,515 ) Non-GAAP adjusted net income $ 34,520 $ 32,031 1 During the three months ended March 31, 2026, the Company revised its definition of non-GAAP adjusted EBITDA and non-GAAP adjusted net income to exclude gains and losses on investments with readily determinable fair value, in addition to gains and losses on investments without readily determinable fair value, which the Company has historically excluded. The Company believes this change provides a consistent and useful view of its core operating performance, as such gains and losses are not reflective of the Company’s underlying business operations, are driven by market price fluctuations that are outside of management’s control and can vary significantly from period to period in ways that may obscure trends in operating results. For comparability and to conform the prior period to the current presentation, the Company has revised non-GAAP adjusted EBITDA and non-GAAP adjusted net income for the three months ended March 31, 2025. As a result, the Company adjusted for losses on investments with readily determinable fair value of $3.7 million and $2.3 million during the three months ended March 31, 2026 and 2025, respectively, within "Interest expense, interest income and certain activity within other expense, net" and "Interest income and certain activity within other expense, net."
2 Income taxes are calculated using a rate of 21.0% for each of the three months ended March 31, 2026 and 2025. The 21.0% effective tax rate for each of the three months ended March 31, 2026 and 2025 excludes the income tax effect on the non-GAAP adjustments and reflects the estimated long-term corporate tax rate.
ALARM.COM HOLDINGS, INC.
Reconciliation of Non-GAAP Measures - continued
(in thousands)
(unaudited) Three Months Ended
March 31, 2026 2025 Non-GAAP adjusted net income attributable to common stockholders: Net income attributable to common stockholders, as reported $ 23,583 $ 27,950 Provision for income taxes 5,856 7,307 (Income) / loss from equity method investments, net (245 ) 25 Income attributable to common stockholders before income taxes 29,194 35,282 Adjustments: Interest income and certain activity within other expense, net1 (1,066 ) (10,083 ) Amortization expense 6,030 4,558 Amortization of debt issuance costs 857 1,498 Stock-based compensation expense 8,049 9,458 Acquisition-related expense 59 50 Litigation expense 774 21 Total adjustments 14,703 5,502 Income taxes 2 (9,218 ) (8,565 ) Non-GAAP adjusted net income attributable to common stockholders $ 34,679 $ 32,219 1 During the three months ended March 31, 2026, the Company revised its definition of non-GAAP adjusted net income attributable to common stockholders to exclude gains and losses on investments with readily determinable fair value. For comparability and to conform the prior period to the current presentation, the Company has revised non-GAAP adjusted net income attributable to common stockholders for the three months ended March 31, 2025. As a result, the Company adjusted for losses on investments with readily determinable fair value of $3.7 million and $2.3 million during the three months ended March 31, 2026 and 2025, respectively, within "Interest income and certain activity within other expense, net."
2 Income taxes are calculated using a rate of 21.0% for each of the three months ended March 31, 2026 and 2025. The 21.0% effective tax rate for each of the three months ended March 31, 2026 and 2025 excludes the income tax effect on the non-GAAP adjustments and reflects the estimated long-term corporate tax rate.
ALARM.COM HOLDINGS, INC.
Reconciliation of Non-GAAP Measures - continued
(in thousands, except share and per share data)
(unaudited) Three Months Ended
March 31, 2026 2025 Non-GAAP adjusted net income attributable to common stockholders per share: Net income attributable to common stockholders per share - basic, as reported $ 0.48 $ 0.56 Provision for income taxes 0.12 0.15 (Income) / loss from equity method investments, net — — Income attributable to common stockholders before income taxes 0.60 0.71 Adjustments: Interest income and certain activity within other expense, net1 (0.02 ) (0.20 ) Amortization expense 0.12 0.09 Amortization of debt issuance costs 0.02 0.03 Stock-based compensation expense 0.15 0.19 Acquisition-related expense — — Litigation expense 0.02 — Total adjustments 0.29 0.11 Income taxes 2 (0.19 ) (0.17 ) Non-GAAP adjusted net income attributable to common stockholders per share - basic $ 0.70 $ 0.65 Non-GAAP adjusted net income attributable to common stockholders per share - diluted 3 $ 0.65 $ 0.57 Weighted average common shares outstanding: Basic, as reported 49,599,698 49,659,741 Diluted, as reported 56,322,662 60,077,247 1 During the three months ended March 31, 2026, the Company revised its definition of non-GAAP adjusted net income attributable to common stockholders per share – basic and diluted, to exclude gains and losses on investments with readily determinable fair value. For comparability and to conform the prior period to the current presentation, the Company has revised non-GAAP adjusted net income attributable to common stockholders for the three months ended March 31, 2025. As a result, the Company adjusted for losses on investments with readily determinable fair value of $3.7 million and $2.3 million during the three months ended March 31, 2026 and 2025, respectively, within "Interest income and certain activity within other expense, net," impacting the per share amounts.
2 Income taxes are calculated using a rate of 21.0% for each of the three months ended March 31, 2026 and 2025. The 21.0% effective tax rate for each of the three months ended March 31, 2026 and 2025 excludes the income tax effect on the non-GAAP adjustments and reflects the estimated long-term corporate tax rate.
3 Non-GAAP adjusted net income attributable to common stockholders per diluted share includes the add back of cash interest expense, net of tax, attributable to convertible senior notes of $2.1 million for each of the three months ended March 31, 2026 and 2025.
Three Months Ended
March 31, 2026 2025 Non-GAAP free cash flow: Cash flows from operating activities $ 50,635 $ 24,057 Additions to property and equipment (912 ) (6,115 ) Non-GAAP free cash flow $ 49,723 $ 17,942
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Contacts
Investor & Media Relations:
Matthew Zartman
Alarm.com
ir@alarm.com
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