Alarm.com Holdings, Inc.

What they do

Alarm.com provides a cloud-based platform with an expansive suite of IoT solutions, including security, video surveillance, energy management, access control, and gunshot detection. It generates revenue primarily through SaaS and license fees from service provider partners who resell its services, and hardware sales of connected devices. In 2025, the platform processed over 365 billion data points from more than 170 million connected devices.

Revenue drivers

• SaaS and license revenue — The largest revenue stream, generated from monthly fees paid by service provider partners; totaled $689.4 million in 2025, representing 68% of total revenue and a 10.1% CAGR from 2023 to 2025.
• Hardware and other revenue — Derived from sales of connected devices such as cameras, video recorders, gunshot sensors, gateway modules, and smart thermostats; accounted for approximately $321.8 million in 2025 (total revenue minus SaaS and license revenue).
• EnergyHub platform — A subsidiary providing electric utility grid management; during a July 2026 heat wave, it dispatched 304 demand response events across 31 states and Ontario, shifting 17.5 gigawatt-hours of load, indicating growing scale.

Recent performance

In Q2 2026, total revenue grew 9.2% year-over-year to $277.7 million, with SaaS and license revenue up 11.1% to $188.8 million. GAAP net income was $24.2 million, down from $34.2 million in Q2 2025, and diluted EPS was $0.48 versus $0.63. Non-GAAP adjusted EBITDA rose to $57.7 million from $49.9 million. Cash flows from operations for the first half of 2026 were $92.5 million, up from $46.8 million in the prior-year period. Full-year 2025 revenue exceeded $1 billion for the first time at $1.0112 billion.

Strategy

Management's stated direction is to expand its platform across residential and commercial markets, with recent launches including a Commercial Fire Solution and enhanced CHeKT remote video monitoring for complex commercial environments. The company continues to grow its SaaS and license revenue, which it expects to drive overall profitability, and is focused on increasing its network of service provider partners. It also leverages its EnergyHub subsidiary to tap into utility grid management opportunities. Recent capital allocation includes settling $500 million of convertible notes, reducing leverage.

Risks

• Macroeconomic volatility — Global economic uncertainty, inflation, tariffs, and supply chain disruptions could pressure hardware sales and SaaS growth.
• Competition — Increased competition and innovations by new and existing competitors in the connected property market could erode market share.
• Dependence on service providers — Loss of key service provider partners or failure to add new ones could materially impact recurring SaaS revenue.
• Security and reliability — Security breaches, system outages, or perceived quality issues could damage brand reputation and subscriber retention.

Outlook

For Q3 2026, management expects SaaS and license revenue of $189.8 million to $190.0 million. Full-year 2026 guidance was raised: SaaS and license revenue now $754.0–754.4 million, total revenue $1.079–1.089 billion, including hardware and other revenue of $325–335 million. Non-GAAP adjusted EBITDA is expected between $221 million and $223 million, with adjusted EPS of $2.92–2.94 per diluted share.