Alarm.com Holdings Inc. (ALRM)
NASDAQ:ALRM
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Alarm
(NASDAQ:ALRM)
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Rating:66Neutral
Price Target:
$54.00
▲(24.40% Upside)
Action:ReiteratedDate:02/20/26
The score is driven primarily by solid underlying financial performance and a positive earnings-call outlook with raised guidance and margin targets. These are tempered by elevated leverage and softer recent cash-flow momentum, while technicals remain weak (price below key moving averages and negative MACD). Valuation appears reasonable at ~19x earnings, but with no dividend support.
Positive Factors
SaaS Revenue Growth & Scale
Alarm's SaaS revenue expansion to $689M and reaching >$1B in annual revenue strengthens a recurring, subscription-heavy revenue base. That scale supports more predictable cash flows, customer retention and cross-sell, and provides durable revenue leverage versus one-time hardware sales.
Negative Factors
Elevated Leverage
Materially higher leverage reduces financial flexibility and raises refinancing and interest-rate risk if growth or cash generation weakens. Debt-to-equity >1.0 constrains optionality for M&A, buybacks or aggressive R&D spending and increases vulnerability to cash-flow volatility.
Read all positive and negative factors
Positive Factors
Negative Factors
SaaS Revenue Growth & Scale
Alarm's SaaS revenue expansion to $689M and reaching >$1B in annual revenue strengthens a recurring, subscription-heavy revenue base. That scale supports more predictable cash flows, customer retention and cross-sell, and provides durable revenue leverage versus one-time hardware sales.
Read all positive factors
Alarm (ALRM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.16B
Dividend YieldN/A
Average Volume (3M)420.43K
Price to Earnings (P/E)19.2
Beta (1Y)1.01
Revenue Growth7.35%
EPS Growth2.44%
CountryUS
Employees2,020
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.72
Shares Outstanding49,666,157
10 Day Avg. Volume394,189
30 Day Avg. Volume420,434
Financial Highlights & Ratios
PEG Ratio2.99
Price to Book (P/B)3.00
Price to Sales (P/S)2.51
P/FCF Ratio18.54
Enterprise Value/Market Cap1.09
Enterprise Value/Revenue2.33
Enterprise Value/Gross Profit3.61
Enterprise Value/Ebitda10.32
Forecast
1Y Price Target
$45.00Price Target Upside3.66% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)2.79
Revenue Forecast (FY)$1.06B
Alarm Business Overview & Revenue Model
Company Description
Alarm.com Holdings, Inc. provides cloud-based solutions for smart residential and commercial properties in the United States and internationally. It operates in two segments, Alarm.com and Other. The company provides interactive security solutions...
How the Company Makes Money
Alarm generates revenue through multiple streams, primarily by offering subscription-based services for its cybersecurity solutions. This includes monthly or annual fees for continuous monitoring, threat detection, and response capabilities. Addit...
Alarm Earnings Call Summary
Earnings Call Date:Feb 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call communicated strong top-line and profitability momentum: SaaS revenue and adjusted EBITDA grew solidly, the company surpassed $1B in annual revenue, EnergyHub showed rapid device growth and increased utility engagement, and guidance for 2026 was raised with a clear medium-term margin target. Short-term headwinds include normalization of working capital that reduced year-over-year free cash flow, near-term lack of EBITDA contribution from the recent RGS acquisition, tariff and supply-chain risks, and EnergyHub's long sales cycles and seasonality that pressure Q1. On balance, the positive operational and financial progress, clear guidance, and strategic positioning (commercial, energy, video) outweigh the manageable short-term challenges.Positive Updates
SaaS and License Revenue Growth (Q4 & Full Year 2025)
Q4 SaaS and license revenue was $180.0M, up 8.8% year-over-year; full year SaaS and license revenue was $689.4M, up 9.2% year-over-year.
Negative Updates
Free Cash Flow Normalization
Free cash flow declined year-over-year as prior exceptionally favorable working capital dynamics normalized, despite positive absolute FCF ($137M full year).
Read all updates
Q4-2025 Updates
Positive
Negative
SaaS and License Revenue Growth (Q4 & Full Year 2025)
Q4 SaaS and license revenue was $180.0M, up 8.8% year-over-year; full year SaaS and license revenue was $689.4M, up 9.2% year-over-year.
Read all positive updates
Company Guidance
For guidance, Alarm.com expects Q1 2026 SaaS & license revenue of $175.8–176.0 million (reflecting EnergyHub seasonality) and full‑year 2026 SaaS & license revenue of $743–745 million, with total revenue of $1.058–1.065 billion (implying hardware & other revenue of $315–320 million, assuming dollar‑for‑dollar tariff pass‑throughs); non‑GAAP adjusted EBITDA is guided to $213–215 million (20.2% margin at the midpoint), noting RGS is included in revenue but not expected to contribute to 2026 adjusted EBITDA and the company still targets a ~21% adjusted EBITDA run‑rate margin exiting 2027; non‑GAAP adjusted net income is forecast at $150.5–151.0 million, or $2.78–2.79 per diluted share, based on ~57.2 million weighted‑average diluted shares, with an approximate 21% non‑GAAP tax rate and FY2026 stock‑based compensation of ~$40–43 million.Alarm Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
62
Positive
Cash Flow
66
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.01B | 939.83M | 881.68M | 842.56M | 748.97M |
| Gross Profit | 638.07M | 613.68M | 556.52M | 499.98M | 443.07M |
| EBITDA | 232.74M | 196.29M | 145.38M | 102.47M | 102.67M |
| Net Income | 132.57M | 124.12M | 81.04M | 56.34M | 52.26M |
Balance Sheet | |||||
| Total Assets | 2.17B | 2.04B | 1.44B | 1.33B | 1.23B |
| Cash, Cash Equivalents and Short-Term Investments | 960.58M | 1.22B | 696.98M | 622.16M | 710.62M |
| Total Debt | 1.13B | 1.06B | 526.03M | 529.91M | 468.27M |
| Total Liabilities | 1.28B | 1.27B | 714.71M | 706.53M | 605.96M |
| Stockholders Equity | 848.16M | 726.55M | 688.55M | 598.86M | 613.17M |
Cash Flow | |||||
| Free Cash Flow | 137.05M | 196.28M | 121.79M | 28.26M | 87.73M |
| Operating Cash Flow | 153.33M | 206.41M | 135.97M | 56.90M | 103.16M |
| Investing Cash Flow | -358.48M | -24.68M | -25.97M | -68.32M | -20.36M |
| Financing Cash Flow | -55.01M | 346.43M | -31.86M | -76.32M | 374.37M |
Alarm Technical Analysis
Negative
43.41
Price Trends
46.03
Negative
48.59
Negative
51.33
Negative
Market Momentum
-0.92
Negative
41.79
Neutral
35.15
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 43.41 is below the 20-day moving average (MA) of 44.08, below the 50-day MA of 46.03, and below the 200-day MA of 51.33, indicating a bearish trend. The MACD of -0.92 indicates Negative momentum. The RSI at 41.79 is Neutral, neither overbought nor oversold. The STOCH value of 35.15 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $2.35B | 27.11 | 60.60% | ― | 28.97% | -4.18% | |
66 Neutral | $2.16B | 19.16 | 16.41% | ― | 7.35% | 2.44% | |
66 Neutral | $3.10B | 57.31 | -8.90% | ― | 5.45% | ― | |
63 Neutral | $2.98B | 36.75 | 7.99% | ― | 5.71% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
54 Neutral | $274.93M | -6.33 | -25.34% | ― | -24.30% | -181.62% | |
53 Neutral | $1.74B | -50.30 | -13.71% | ― | 30.72% | 9.70% |
* Technology Sector Average
ALRM
Alarm
43.86
-7.58
-14.74%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.