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Alarm.com Holdings Inc. (ALRM)
NASDAQ:ALRM
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Alarm
(NASDAQ:ALRM)
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Rating:72Outperform
Price Target:
$57.00
▲(9.74% Upside)
Alarm's strong SaaS revenue growth and positive earnings call sentiment are significant strengths, contributing to a robust outlook. However, increased leverage and declining free cash flow present risks that need careful management. The stock's moderate valuation and technical indicators support a positive but cautious investment stance.
Positive Factors
SaaS Revenue Growth
Strong SaaS revenue growth indicates robust demand for Alarm's subscription services, supporting long-term revenue stability and market expansion.
EnergyHub Performance
EnergyHub's strong performance and partnerships, such as with Tesla, enhance Alarm's competitive edge in the energy management sector.
New Product Launches
The introduction of new AI-driven products positions Alarm to capitalize on advanced technology trends, enhancing its market offering.
Negative Factors
Increased Leverage
Higher leverage may strain financial flexibility, requiring careful management to avoid impacting long-term financial health.
Declining Free Cash Flow
Declining free cash flow could challenge liquidity, affecting the company's ability to invest in growth and manage debt effectively.
International Growth Lagging
Lagging international growth may limit Alarm's global market expansion, impacting its long-term revenue diversification strategy.
Alarm (ALRM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.59B
Dividend YieldN/A
Average Volume (3M)352.89K
Price to Earnings (P/E)22.0
Beta (1Y)1.06
Revenue Growth7.35%
EPS Growth2.44%
CountryUS
Employees2,020
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.76
Shares Outstanding49,879,680
10 Day Avg. Volume274,646
30 Day Avg. Volume352,892
Financial Highlights & Ratios
PEG Ratio0.46
Price to Book (P/B)4.15
Price to Sales (P/S)3.21
P/FCF Ratio15.38
Enterprise Value/Market Cap1.22
Enterprise Value/Revenue3.19
Enterprise Value/Gross Profit4.40
Enterprise Value/Ebitda14.20
Forecast
1Y Price Target
$66.50Price Target Upside28.03% Upside
Rating ConsensusHold
Number of Analyst Covering6
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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:Nov 06, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 19, 2026
Earnings Call Sentiment Positive
The earnings call reflected strong performance in SaaS and license revenue, particularly driven by EnergyHub and commercial segments. New product launches and AI integrations were also positive highlights. However, challenges were noted in hardware margins due to tariffs and international growth lagging behind expectations. Residential market conditions also presented headwinds. Despite these challenges, the overall financial performance was robust.Q3-2025 Updates
Positive Updates
SaaS and License Revenue Growth
SaaS and license revenue grew 10.1% year-over-year to $175.4 million, exceeding the midpoint of guidance.
EnergyHub's Strong Performance
EnergyHub delivered a particularly strong quarter, driving SaaS revenue growth of roughly 20% to 25% year-over-year and expanded its partnership with Tesla.
Commercial Access Control Subscriber Growth
The commercial access control subscriber base increased approximately 30% year-over-year.
Adjusted EBITDA and Cash Flow
Adjusted EBITDA grew 18.4% year-over-year to $59.2 million, with free cash flow amounting to $65.9 million.
New Product Launches
New products, including enhanced video capabilities and AI-driven solutions, were successfully introduced.
Negative Updates
Hardware Gross Margin Compression
Hardware gross margins were impacted by reciprocal tariff costs and more expensive shipping methods, though total gross margins increased due to SaaS.
International Growth Lagging
International growth has not met expectations compared to other growth initiatives.
Residential Market Headwinds
Concerns about the job market offset potential excitement about a lower rate environment, affecting the residential segment.
Job Reductions
Some existing jobs were cut as part of reallocating resources within the portfolio.
Company Guidance
During Alarm.com's Third Quarter 2025 Earnings Conference Call, the company reported financial results that exceeded expectations, specifically noting SaaS and license revenue growth to $175.4 million and adjusted EBITDA of $59.2 million. The growth initiatives, including commercial, international, and EnergyHub, contributed significantly, driving SaaS revenue growth in the 20% to 25% year-over-year range and accounting for 30% of total SaaS revenue. EnergyHub, in particular, showed strong performance, benefiting from its platform strategy in the North American residential market. The company also discussed new product releases and AI applications, highlighting a 30% increase in their commercial access control subscriber base. For the full year 2025, Alarm.com raised its SaaS and license revenue outlook to between $685.2 million and $685.4 million, forecasting a total revenue slightly above $1 billion. Looking ahead to 2026, the preliminary estimate for SaaS and license revenue is between $722 million and $724 million, with adjusted EBITDA anticipated to range from $210 million to $212 million.Alarm Financial Statement Overview
Summary
Alarm demonstrates strong revenue growth and profitability, with improving gross margins. However, the high leverage and declining free cash flow pose potential risks. The company needs to address cash flow challenges to maintain financial stability.Income Statement
Alarm has shown consistent revenue growth over the years, with a TTM (Trailing-Twelve-Months) revenue growth rate of 1.63%. The gross profit margin has improved to 72.42% in the TTM, indicating strong cost management. However, the net profit margin slightly decreased to 12.92% from the previous year. The EBIT and EBITDA margins are stable, reflecting efficient operations.Balance Sheet
The company's debt-to-equity ratio is relatively high at 1.29 in the TTM, indicating significant leverage. However, the return on equity remains healthy at 16.48%, suggesting effective use of equity. The equity ratio is moderate, reflecting a balanced asset structure.Cash Flow
Alarm's free cash flow has declined significantly, with a TTM growth rate of -103.48%, raising concerns about cash generation. The operating cash flow to net income ratio is low at 0.09, indicating potential cash flow challenges. The negative free cash flow to net income ratio further highlights cash flow issues.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 991.77M | 939.83M | 881.68M | 842.56M | 748.97M | 618.00M |
| Gross Profit | 718.24M | 613.68M | 556.52M | 499.98M | 443.07M | 390.57M |
| EBITDA | 222.55M | 196.29M | 145.38M | 102.47M | 102.67M | 111.16M |
| Net Income | 128.17M | 124.12M | 81.04M | 56.34M | 52.26M | 77.85M |
Balance Sheet | ||||||
| Total Assets | 2.12B | 2.04B | 1.44B | 1.33B | 1.23B | 731.69M |
| Cash, Cash Equivalents and Short-Term Investments | 1.07B | 1.22B | 696.98M | 622.16M | 710.62M | 253.46M |
| Total Debt | 1.07B | 1.06B | 526.03M | 529.91M | 468.27M | 157.67M |
| Total Liabilities | 1.24B | 1.27B | 714.71M | 706.53M | 605.96M | 253.24M |
| Stockholders Equity | 827.19M | 726.55M | 688.55M | 598.86M | 613.17M | 467.75M |
Cash Flow | ||||||
| Free Cash Flow | 154.94M | 196.28M | 121.79M | 28.26M | 87.73M | 81.59M |
| Operating Cash Flow | 173.66M | 206.41M | 135.97M | 56.90M | 103.16M | 102.08M |
| Investing Cash Flow | -258.13M | -24.68M | -25.97M | -68.32M | -20.36M | -20.27M |
| Financing Cash Flow | -19.33M | 346.43M | -31.86M | -76.32M | 374.37M | 52.02M |
Alarm Technical Analysis
Positive
51.94
Price Trends
50.98
Positive
52.57
Negative
54.08
Negative
Market Momentum
0.06
Positive
52.28
Neutral
62.76
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALRM, the sentiment is Positive. The current price of 51.94 is below the 20-day moving average (MA) of 51.99, above the 50-day MA of 50.98, and below the 200-day MA of 54.08, indicating a neutral trend. The MACD of 0.06 indicates Positive momentum. The RSI at 52.28 is Neutral, neither overbought nor oversold. The STOCH value of 62.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | $2.59B | 21.98 | 16.89% | ― | 7.35% | 2.44% | |
62 Neutral | $4.32B | 368.30 | 0.76% | ― | 5.71% | ― | |
62 Neutral | $346.24M | -5.12 | -25.48% | ― | -24.30% | -181.62% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $2.33B | -52.15 | -12.74% | ― | 30.72% | 9.70% | |
55 Neutral | $2.56B | 204.81 | ― | ― | 5.45% | ― | |
53 Neutral | $2.44B | -35.63 | -171.54% | ― | 28.97% | -4.18% |
* Technology Sector Average
ALRM
Alarm
51.94
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-12.87%
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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.