Summary
Alarm.com opened fiscal 2026 with first-quarter revenue of $265.2 million, up 11.0% from $238.8 million in the prior-year quarter. Growth came from both recurring software and hardware. The recurring base still looks durable: the trailing twelve-month SaaS and license revenue renewal rate was 95% for the periods ended March 31, 2026 and March 31, 2025.
Profit did not scale with revenue. Operating income rose 6.7% to $31.6 million from $29.6 million, while operating margin slipped to 11.9% from 12.4%. Net income fell 15.6% to $23.4 million, and diluted EPS declined to $0.47 from $0.52. The pressure sits below the operating line. Alarm.com settled the full $500.0 million principal of its 0% convertible notes on January 14, 2026, which cut into interest income. Cash and cash equivalents were $497.4 million at March 31, 2026, down from $960.6 million at December 31, 2025. Other expense, net also widened on higher losses on equity securities. On a non-GAAP basis, adjusted EBITDA rose to $49.6 million from $45.8 million, and adjusted net income attributable to common stockholders was $34.7 million, or $0.65 per diluted share, versus $32.2 million, or $0.57 per diluted share, a year ago.
Cash flow was the quarter's standout. Operating cash flow was $50.6 million, up 110.5% from $24.1 million. Capital expenditures dropped 85.1% to $0.9 million from $6.1 million, so non-GAAP free cash flow reached $49.7 million against $17.9 million. Management tied the operating cash flow gain to a swing in deferred income taxes from the immediate deduction of post-2024 domestic research and development costs under the One Big Beautiful Bill Act, along with a smaller inventory build and a lower income tax receivable. Deferred revenue rose 15.7% to $31.8 million from $27.5 million.
Capital allocation stayed active. The company repurchased 428,065 shares for $20.0 million during the quarter. On May 4, 2026, the board cancelled the remaining balance under the old repurchase program and authorized a new $150.0 million program running through May 4, 2028. Headcount was 2,051 employees at March 31, 2026, up from 2,020 a year earlier.
Guidance points to continued momentum. For the second quarter of 2026, SaaS and license revenue is guided to $185.5 million to $185.7 million. For the full fiscal year 2026, that line was raised to $749.5 million to $750.5 million, $6.0 million above the midpoint of the prior outlook, and total revenue is guided to $1.0595 billion to $1.0705 billion. Non-GAAP adjusted EBITDA is expected at $215.0 million to $216.0 million, and non-GAAP adjusted net income attributable to common stockholders at $151.5 million to $152.0 million, or $2.81 to $2.82 per diluted share, based on an estimated 21.0% tax rate and 56.9 million weighted average diluted shares.
Tariffs are the clearest risk. Much of the hardware is produced in Vietnam, Thailand and Taiwan, and management said tariff framework agreements have already pressured hardware revenue margins and shifted product mix toward higher-cost hardware. The legal picture remains unsettled: the U.S. Supreme Court invalidated the baseline tariffs announced in April 2025, and the government may impose duties under other authorities. Macroeconomic conditions, supply chain disruption, inflation and interest rate swings remain on the risk list. The Other segment is still an investment-stage business with significant operating expenses relative to its revenue, and it is taking a bigger share of the consolidated total: the Alarm.com segment was 90% of revenue net of intersegment eliminations this quarter, down from 93% a year earlier. The company also revised its non-GAAP definitions this quarter to exclude gains and losses on investments with readily determinable fair value, restating prior periods for comparability. Capital spending is expected to run $7.0 million to $10.0 million over the final nine months of fiscal 2026.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $265.2M | $261.7M | +1.4% | $238.8M | +11.0% |
| Gross profit | $174.7M | $172.6M | +1.2% | $160.6M | +8.8% |
| Gross margin | 65.9% | 66.0% | -0.1 pp | 67.2% | -1.4 pp |
| Research & development | $72.1M | $66.2M | +8.9% | $68.4M | +5.4% |
| Sales & marketing | $34.4M | $34.6M | -0.5% | $28.5M | +20.6% |
| General & administrative | $27.5M | $28.4M | -3.5% | $27.0M | +1.7% |
| Total operating expenses | $143.0M | $137.7M | +3.9% | $130.9M | +9.2% |
| Operating income (loss) | $31.6M | $34.9M | -9.5% | $29.6M | +6.7% |
| Operating margin | 11.9% | 13.4% | -1.4 pp | 12.4% | -0.5 pp |
| Net income (loss) | $23.4M | $34.6M | -32.4% | $27.7M | -15.6% |
| Net margin | 8.8% | 13.2% | -4.4 pp | 11.6% | -2.8 pp |
| Diluted EPS | $0.47 | $0.59 | -$0.12 | $0.52 | -$0.05 |
Risks
A significant portion of hardware is produced in Vietnam, Thailand and Taiwan, and U.S. tariffs or other trade barriers could raise costs or require price increases. The filing notes that tariff framework agreements have impacted hardware revenue margins, and MD&A says cost of hardware and other revenue rose partly due to product mix with higher costs related to tariffs and supplier price increases.
Substantially all revenue is generated through service provider partners, and the 10 largest partners or distributors accounted for 45% of revenue in 2025. ADT represented greater than 15% but not more than 20% of revenue in 2025, 2024 and 2023, and substantially all non-hosted software platform revenue comes from ADT.
The company faces ongoing intellectual property litigation, including the EcoFactor patent lawsuit and the SkyBell trade secret lawsuit, and has indemnity obligations to certain service provider partners for infringement claims. A negative outcome could materially affect business, financial condition, cash flows and results of operations.
Macroeconomic Conditions, including inflation, tariffs, interest rates and housing market fluctuations, could reduce consumer discretionary spending and demand for platforms and solutions. The company also notes increased risk that service provider partners may file for bankruptcy during weak economic times.
The markets for home and business automation, security monitoring, video monitoring and energy management are highly competitive, with large technology companies and broadband providers among competitors. Competitors may use aggressive tactics such as discounting, bundling or asserting intellectual property rights.
The business operates in a regulated industry subject to consumer protection, licensing, privacy and trade regulations, and has previously incurred costs to settle alleged TCPA violations. The filing also notes that the U.S. government shutdown in part of Q4 2025 limited FCC product certifications and delayed certain new product launches.
The company may not sustain its growth rate, and revenue increased from $238.8 million in the three months ended March 31, 2025 to $265.2 million in the three months ended March 31, 2026. Expanding operations, service provider network and acquisitions place strain on managerial, administrative, operational and financial resources.
The company depends on suppliers and third-party manufacturers for hardware components, and the loss of a key supplier or inability to obtain products on time, with sufficient availability or at stable prices would harm results. MD&A cites supplier price increases as a factor in higher cost of hardware and other revenue.
The filing expands cybersecurity risk to acquired businesses and subsidiaries that in some cases operate data infrastructure distinct from Alarm.com and may have less mature technology platforms. The hybrid return-to-office plan with mandatory in-office workdays is also noted as potentially increasing vulnerability to cyber-attacks.
SaaS KPIs
All quarters →Non-GAAP free cash flow
Non-GAAP adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from Alarm.com Holdings, Inc.'s SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.