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Alarm.com Holdings Inc. (ALRM)
NASDAQ:ALRM
Top Page
Alarm
(NASDAQ:ALRM)
74Outperform
Positive Factors
Earnings
The company's 4Q24 results exceeded expectations with SaaS and license revenue of $165.7 million, marking a 12% year-over-year increase.
Guidance
Management has raised the 2024 midpoint guidance for SaaS revenue, adjusted EBITDA, and non-GAAP EPS, indicating strong future performance expectations.
Market Position
Alarm.com holds a dominant position in the smart security operating system market with over 9 million connected properties and a consistent retention rate of over 93%.
Negative Factors
Client Transition
ADT transition is likely to remain a near-term overhang on the stock, as ADT is gradually moving new and existing subscribers to their proprietary ADT+ platform, affecting 15%-20% of company revenue.
Competition
The proliferation of 'plug-and-play' or DIY safety solutions, including offerings from Amazon and Google, creates less demand for service provider–installed solutions.
Revenue Mix
Alarm.com has a relatively higher mix of hardware/non-recurring revenue streams, versus similarly valued stocks, which may limit recurring revenue growth.
Alarm (ALRM) vs. S&P 500 (SPY)
Market Cap
$2.77B
Dividend YieldN/A
Average Volume (3M)429.85K
Price to Earnings (P/E)24.4
Beta (1Y)1.12
Revenue Growth6.59%
EPS Growth53.89%
CountryUS
Employees2,010
SectorTechnology
Sector Strength43
IndustrySoftware - Application
Share Statistics
EPS (TTM)2.28
Shares Outstanding49,646,942
10 Day Avg. Volume362,372
30 Day Avg. Volume429,850
Financial Highlights & Ratios
PEG Ratio0.45
Price to Book (P/B)N/A
Price to Sales (P/S)2.99
Price to Cash Flow (P/CF)12.50
P/FCF Ratio13.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$77.25Price Target Upside38.42% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Alarm Business Overview & Revenue Model
Company DescriptionAlarm.com Holdings, Inc. (ALRM) is a leading platform for intelligently connected property solutions, serving both residential and commercial markets. The company provides cloud-based services for remote control, home automation, and monitoring systems through a suite of smart home and business solutions. Its offerings include interactive security, video monitoring, intelligent automation, energy management, and wellness solutions. Alarm.com partners with a wide network of service providers to deliver its comprehensive suite of products to customers.
How the Company Makes MoneyAlarm.com generates revenue primarily through the sale of its subscription-based cloud services and software as a service (SaaS) platform. The company earns from service providers who offer these solutions to their end customers, creating a steady and recurring revenue stream. In addition to subscription fees, Alarm.com also derives revenue from the sale of hardware devices that complement its software services, such as cameras and sensors. The company's business model leverages partnerships with security dealers, service providers, and other channel partners to expand its market reach and increase adoption of its services. These partnerships are pivotal in driving growth, as they facilitate the distribution and integration of Alarm.com's solutions across various markets.
Alarm Financial Statement Overview
Summary
Alarm has demonstrated strong revenue growth and improved profitability margins, supported by a solid balance sheet and impressive cash flow generation. However, the increasing debt levels require monitoring.Income Statement
Alarm has demonstrated strong revenue growth with a consistent increase in total revenue over the years, reaching $939.8 million in 2024 from $502.4 million in 2019. The gross profit margin has improved significantly, indicating better cost management, while the net profit margin also shows an upward trend. EBIT and EBITDA margins have been solid, contributing to strong profitability. These factors highlight Alarm's robust financial performance and growth trajectory.85
Very Positive
Balance Sheet
Alarm's balance sheet reflects a healthy equity position with a steadily increasing stockholders' equity. The debt-to-equity ratio is manageable, and the equity ratio is stable, indicating financial stability. However, the total debt has increased over the years, which could pose potential risks if not managed well. Overall, the balance sheet shows strength with some caution required on leverage.78
Positive
Cash Flow
The company has shown impressive free cash flow growth, supported by strong operating cash flows. The operating cash flow to net income ratio indicates efficient cash generation from operations. Despite some fluctuations in capital expenditures, Alarm maintains a solid cash position, enhancing its ability to invest in growth opportunities and manage financial obligations effectively.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 939.83M | 881.68M | 842.56M | 748.97M | 618.00M | Gross Profit |
| 613.68M | 556.52M | 499.98M | 443.07M | 390.57M | EBIT |
| 108.55M | 66.83M | 51.04M | 61.57M | 82.76M | EBITDA |
| 196.29M | 145.38M | 102.47M | 102.67M | 111.16M | Net Income Common Stockholders |
| 124.12M | 81.04M | 56.34M | 52.26M | 77.85M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.22B | 696.98M | 622.16M | 710.62M | 253.46M | Total Assets |
| 2.04B | 1.44B | 1.33B | 1.23B | 731.69M | Total Debt |
| 1.06B | 526.03M | 529.91M | 468.27M | 157.67M | Net Debt |
| -163.99M | -170.96M | -92.26M | -242.35M | -95.79M | Total Liabilities |
| 1.27B | 714.71M | 706.53M | 605.96M | 253.24M | Stockholders Equity |
| 726.55M | 688.55M | 598.86M | 613.17M | 467.75M |
| Cash Flow | Free Cash Flow | |||
| 196.28M | 121.79M | 28.26M | 87.73M | 81.59M | Operating Cash Flow |
| 206.41M | 135.97M | 56.90M | 103.16M | 102.08M | Investing Cash Flow |
| -24.68M | -25.97M | -68.32M | -20.36M | -20.27M | Financing Cash Flow |
| 346.43M | -31.86M | -76.32M | 374.37M | 52.02M |
Alarm Technical Analysis
Negative
55.81
Price Trends
60.06
Negative
61.23
Negative
60.48
Negative
Market Momentum
-0.87
Positive
34.46
Neutral
32.61
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALRM, the sentiment is Negative. The current price of 55.81 is below the 20-day moving average (MA) of 58.10, below the 50-day MA of 60.06, and below the 200-day MA of 60.48, indicating a bearish trend. The MACD of -0.87 indicates Positive momentum. The RSI at 34.46 is Neutral, neither overbought nor oversold. The STOCH value of 32.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALRM.
Alarm Risk Analysis
Alarm disclosed 66 risk factors in its most recent earnings report. Alarm reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Alarm Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $274.89M | 3.18 | 11.68% | ― | 9.46% | ― | |
78 Outperform | $7.10B | 15.57 | 14.41% | 2.72% | -13.19% | 10.03% | |
77 Outperform | $14.10B | 14.02 | 7.95% | 2.77% | -0.47% | 1.69% | |
74 Outperform | $2.77B | 24.43 | 17.54% | ― | 6.59% | 53.89% | |
71 Outperform | $17.79B | 23.09 | 25.26% | 1.53% | 4.76% | 2.27% | |
66 Neutral | $2.64B | 25.24 | 3.83% | ― | 8.31% | -49.90% | |
58 Neutral | $21.03B | 10.28 | -16.29% | 2.47% | 4.45% | -23.80% |
* Technology Sector Average
Performance Comparison
ALRM
Alarm
55.81
-15.35
-21.57%
SSP
E. W. Scripps Company Class A
3.14
-0.58
-15.59%
HUBB
Hubbell B
332.01
-79.54
-19.33%
VIV
Telefonica Brasil
8.78
-0.60
-6.40%
ADT
Adt
8.10
1.80
28.57%
REZI
Resideo Technologies
17.82
-4.23
-19.18%
Alarm Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -7.84% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive picture with significant growth in SaaS and license revenue, strong performance from commercial and EnergyHub sectors, and a solid financial position. However, the hardware revenue decline, challenges with the ADT partnership, and potential impacts of tariffs present some concerns.Highlights
SaaS and License Revenue Growth
Fourth quarter SaaS and license revenue was $165.7 million, up 11.7% over the last year. For the full year of 2024, SaaS and license revenue grew 10.9% over 2023.
Commercial and EnergyHub Growth
Collectively, commercial business, international business, and EnergyHub contributed 26% of total SaaS in 2024, with SaaS revenue growing nearly 25% year-over-year.
Strong Financial Position
Alarm.com ended 2024 with $1.22 billion in cash and cash equivalents, up from $697 million at the end of 2023. Free cash flow for 2024 was $196.3 million compared to $128.4 million for 2023.
High Revenue Retention Rate
Revenue retention rate was 95% in the fourth quarter, above the historical trend and higher than the long-term target range of 92% to 94%.
OpenEye and EnergyHub Performance
OpenEye generated nearly $20 million in SaaS revenue in 2024, while EnergyHub is now more than a $50 million SaaS business.
Lowlights
Hardware Revenue Decline
Hardware and other revenue in Q4 2024 was $76.6 million compared to $77.9 million in the year-ago quarter, mainly due to slightly fewer sales of cameras and thermostats.
Challenges with ADT Partnership
The transition to ADT+ is expected to create a 200 basis point headwind in 2025, impacting growth.
Impact of Tariffs on Hardware Business
Continued monitoring of tariffs is necessary, though current exposure is minimal due to previous efforts to move manufacturing out of China.
Company Guidance
During the Alarm.com earnings call for the fourth quarter and full year 2024, the company provided guidance for 2025, projecting SaaS and license revenue to be between $671.2 million and $671.8 million. Total revenue for 2025 is expected to range from $978.2 million to $980.8 million, which includes estimated hardware and other revenue of $307 million to $309 million. The company also anticipates adjusted EBITDA to fall between $188 million and $192 million. Alarm.com estimates non-GAAP adjusted net income for 2025 to be between $130 million and $131 million, translating to $2.28 to $2.29 per diluted share. These projections take into account a 200 basis point headwind from the ADT+ transition, flat license revenue growth, and a stronger dollar impacting international revenues. The company also plans to maintain a non-GAAP tax rate of 21% for 2025 and expects full-year stock-based compensation expense to be $43 million to $45 million.Alarm Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Alarm.com Appoints Kevin Bradley as New CFO
Positive
Mar 19, 2025
On March 13, 2025, Alarm.com Holdings, Inc. announced the appointment of Kevin Bradley as its Chief Financial Officer, effective March 14, 2025. Mr. Bradley, who has been with the company since 2009, has held various roles in accounting and finance, most recently serving as Vice President of Financial Planning and Analysis. His promotion is expected to strengthen the company’s financial leadership, as he brings extensive experience in corporate strategy and financial planning. This move is anticipated to support Alarm.com’s continued growth and diversification in the connected property technology industry.
Executive/Board ChangesM&A TransactionsFinancial Disclosures
Alarm Announces CFO Steve Valenzuela’s Retirement
Positive
Feb 20, 2025
On February 17, 2025, Alarm.com announced the retirement of CFO Steve Valenzuela, effective June 2, 2025, emphasizing that his departure was amicable and unrelated to company disagreements. The company reported significant financial growth for the year 2024, with a notable increase in SaaS and license revenue and GAAP net income. The acquisition of CHeKT expanded its remote video monitoring offerings, reinforcing its industry position and enhancing solutions for commercial and residential markets.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.