Education
About Us
Working with TipRanks
Follow Us
Alarm.com Holdings Inc. (ALRM)
NASDAQ:ALRM
Top Page
Alarm
(NASDAQ:ALRM)
Select Model
Select Model
Rating:66Neutral
Price Target:
$49.00
▲(7.76% 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 Scale
Surpassing $1B in revenue and nearly $690M in SaaS/license sales reflects durable subscription scale and recurring revenue. That scale supports product investment, sales efficiency and customer retention, reducing per-customer acquisition costs and increasing long-term margin resilience.
Improving Profitability & Margin Targets
Consistent EBITDA growth and an explicit mid-term ~21% margin target indicate scalable SaaS economics and operating leverage. Sustainable margin improvement supports reinvestment in R&D and go-to-market while generating cash to fund growth and reduce leverage over multiple quarters.
EnergyHub & Commercial Video Momentum
Rapid EnergyHub device growth and expanding video/commercial attach rates diversify recurring revenue across verticals. Utility engagement and VPP usage create sticky, contract-like revenue streams and cross-sell opportunities that support long-term ARR durability and reduced churn.
Negative Factors
Elevated Leverage
Material increase in debt and debt-to-equity >1.0 reduces financial flexibility and raises refinancing and interest-rate exposure. Higher leverage constrains capacity to absorb cyclical revenue swings, fund growth initiatives, or opportunistic M&A without deteriorating credit metrics over the medium term.
Weakened Cash-Flow Momentum
Normalization of working capital and a YoY drop in operating and free cash flow reduces the firm's ability to de-lever, invest, or return capital. Slower cash conversion weakens the safety margin for servicing higher debt and limits flexibility for sustained R&D and sales investment.
Energy/Utility Sales Cycles & Integration Risk
Long utility sales cycles and regulatory dependencies make revenue timing uncertain, reducing visibility on when investments convert to cash. Additionally, the RGS acquisition's delayed EBITDA contribution increases near-term integration and execution risk, complicating margin and cash-flow forecasts.
Alarm (ALRM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.26B
Dividend YieldN/A
Average Volume (3M)413.88K
Price to Earnings (P/E)19.1
Beta (1Y)1.07
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. Volume470,337
30 Day Avg. Volume413,877
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 Cap1.12
Enterprise Value/Revenue2.49
Enterprise Value/Gross Profit3.86
Enterprise Value/Ebitda11.03
Forecast
1Y Price Target
$58.33Price Target Upside28.28% Upside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)2.68
Revenue Forecast (FY)$1.04B
Alarm Business Overview & Revenue Model
Company DescriptionAlarm.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 to control and monitor their security systems, as well as connected security devices, including door locks, motion sensors, door locks, garage doors, Internet of Things, thermostats, and video cameras; and video monitoring solutions, such as video analytics, live streaming, video doorbell, video clips, video alerts, continuous high definition recording, and commercial video surveillance solutions. It also offers intelligent automation and energy management solutions comprising scenes button; smart thermostat schedules; responsive savings; precision comfort; energy usage monitoring; heating, ventilation, and air conditioning monitoring services; whole home water safety solutions; geo-services; and demand response programs. In addition, the company provides commercial solutions, such as daily safeguards, commercial grade video, energy savings, protection for valuables and inventory, temperature monitoring, multi-site management and access control, early identification, simple to use, professionally supported, and easy to maintain. Further, it offers service provider solutions, including a permission-based online portal that offers account management, sales, marketing, training, and support tools; sales, marketing, and training services; and home builder programs, as well as wellness solutions. The company serves residential and commercial subscribers. Alarm.com Holdings, Inc. was founded in 2000 and is based in Tysons, Virginia.
How the Company Makes MoneyAlarm 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. Additionally, the company may generate income through consulting services, where they assess and enhance clients' cybersecurity infrastructure. Key partnerships with technology providers and integration with existing IT systems also contribute to their revenue, as they can offer bundled services that enhance their value proposition to clients. Furthermore, Alarm may benefit from strategic alliances with industry leaders, which can lead to increased customer trust and expanded market reach.
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.Q4-2025 Updates
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.
Record Annual Revenue Scale
Company surpassed $1.0 billion in annual total revenue for FY2025, marking a key scale milestone for the business model and platform.
Improved Profitability Metrics
Adjusted EBITDA in Q4 was $54.9M, up 18.3% year-over-year; full year adjusted EBITDA was $206M, up 16.9% year-over-year. Non-GAAP adjusted net income in Q4 grew 19.2% to $38.9M and non-GAAP EPS rose 24.1% to $0.72.
Hardware Gross Profit Strength
Q4 total gross profit was $172.6M, up 8.8% year-over-year; hardware gross profit grew 13.4% year-over-year to $19.1M, with OpenEye enterprise camera sales and favorable camera mix contributing.
EnergyHub Momentum
EnergyHub devices under management increased by more than 50% in 2025; utilities called on EnergyHub VPPs 25% more often year-over-year. Energy and commercial businesses together contributed ~25% of SaaS revenue for 2025 and grew ~25% year-over-year.
Commercial Video Traction
More than 2 million active video cameras and devices deployed across the commercial property base and increasing attach rates for video; residential video attachment rate reached 33% in 2025.
Cash Generation & Balance Sheet Actions
Generated $35.1M non-GAAP free cash flow in Q4 and $137M for the full year; retired $500M of convertible notes that matured in Jan 2026, removing ~3.4M potential diluted shares from 2026 share counts.
2026 Guidance Raised and Clear Margin Targets
Full year 2026 SaaS & license revenue guidance raised to $743M–$745M and total revenue to $1.058B–$1.065B. Non-GAAP adjusted EBITDA guidance set at $213M–$215M (~20.2% margin at midpoint) with a targeted ~21% adjusted EBITDA run-rate margin by the end of 2027.
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).
Short-Term EBITDA Dilution from RGS
Acquisition of Resideo Grid Services (RGS) expands EnergyHub reach but is not expected to contribute to adjusted EBITDA in 2026, delaying acquisition synergies into the 12–24 month window.
Seasonality Impact on Q1 SaaS Guidance
Q1 2026 SaaS & license revenue guidance ($175.8M–$176.0M) reflects a sequential decline driven by EnergyHub's seasonal revenue profile (largest contribution in H2).
Tariff and Supply-Chain Risks
Hardware guidance assumes full pass-through of current tariffs (included ~$7M–$8M in prior period); tariffs rose Jan 1 and management assumes no demand degradation, but rising tariffs or supply-cost inflation (e.g., DRAM) could create risk and requires higher inventory (adding working capital).
One-Time/Non-Operational Items Affecting Metrics
Adjusted EBITDA in the quarter included a $4.7M mark-to-market gain on a treasury security, which modestly inflated reported adjusted EBITDA vs. underlying operating performance.
Long Sales Cycles for Energy/Utility Business
EnergyHub growth drivers include long utility sales cycles and regulatory approvals; pilots and customer onboarding can take years, making near-term visibility and timing to revenue variable.
Operating Expense and R&D Spend
Total operating expenses (ex-D&A and certain adjustments) were $121.7M in Q4, up 9.5% year-over-year; R&D in Q4 was $66.2M, up 6.8% year-over-year, reflecting continued reinvestment that weighs on near-term margins.
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
Strong multi-year revenue expansion and solid profitability (healthy EBITDA and net margins), but offset by materially higher leverage since 2023 (debt-to-equity above 1.0 in 2024–2025) and softer 2025 cash-flow momentum with weaker cash conversion/coverage.Income Statement
Revenue has expanded steadily from 2020–2024, with a sharper step-up in 2025 (annual revenue of ~$1.01B). Profitability is solid: net margins are consistently positive and improved meaningfully versus 2022–2023, while EBITDA margin remains healthy (about 18% in 2025). The main watch-out is some margin volatility over the cycle (notably lower net margin in 2022–2023 versus 2020), and the 2025 operating profit margin data appears inconsistent versus the reported EBIT level, which adds some uncertainty to year-to-year operating margin interpretation.78
Positive
Balance Sheet
The balance sheet shows improving equity scale over time, but leverage has risen materially: total debt increased sharply from 2023 to 2024–2025, pushing debt-to-equity above 1.0 in 2024–2025. Returns on equity are healthy (mid-teens in 2025), suggesting the business is still generating solid earnings power, but the higher leverage profile reduces flexibility and raises risk if growth or cash generation weakens.62
Positive
Cash Flow
Cash generation is generally supportive, with free cash flow tracking net income reasonably well (free cash flow running at ~89% of net income in 2025). However, momentum softened in 2025: operating cash flow and free cash flow declined versus 2024 and free cash flow growth turned negative. There is also a notable drop in the provided operating cash flow coverage figure in 2025 versus prior years, indicating weaker cash conversion/coverage in the most recent period.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
45.47
Price Trends
49.55
Negative
50.11
Negative
53.31
Negative
Market Momentum
-1.31
Positive
40.32
Neutral
34.04
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 45.47 is below the 20-day moving average (MA) of 46.75, below the 50-day MA of 49.55, and below the 200-day MA of 53.31, indicating a bearish trend. The MACD of -1.31 indicates Positive momentum. The RSI at 40.32 is Neutral, neither overbought nor oversold. The STOCH value of 34.04 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 |
|---|---|---|---|---|---|---|---|
66 Neutral | $2.26B | 19.11 | 16.84% | ― | 7.35% | 2.44% | |
66 Neutral | $3.01B | 71.55 | ― | ― | 5.45% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $2.67B | 24.47 | 0.76% | ― | 5.71% | ― | |
54 Neutral | $1.64B | -38.49 | -12.74% | ― | 30.72% | 9.70% | |
53 Neutral | $2.08B | -30.18 | -171.54% | ― | 28.97% | -4.18% | |
51 Neutral | $298.94M | -4.56 | -25.48% | ― | -24.30% | -181.62% |
* Technology Sector Average
ALRM
Alarm
47.08
-11.04
-19.00%
RNG
RingCentral
34.48
5.88
20.56%
GBTG
Global Business Travel Group
5.26
-2.85
-35.14%
GRND
Grindr
11.18
-6.83
-37.92%
SMRT
SmartRent
1.63
0.39
31.45%
ALKT
Alkami Technology
16.37
-12.59
-43.47%
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.