Summary
Alarm.com reported second-quarter fiscal 2024 total revenue of $233.8 million, up 4.4% from $223.9 million in the prior-year quarter. Year-to-date revenue reached $457.1 million, up 5.4% from $433.6 million. SaaS and license revenue represented 67% of total revenue, up from 63% in the prior-year quarter, while hardware and other revenue represented 33%, down from 37%. Operating income rose to $25.8 million from $16.2 million, a 59.5% increase. Operating margin expanded to 11.0% from 7.2%. For the six months, operating income rose 78.2% to $44.5 million from $25.0 million, and operating margin expanded to 9.7% from 5.8%. Net income attributable to common stockholders jumped 112.1% to $33.5 million from $15.8 million. Diluted EPS came in at $0.62, up from $0.30. Non-GAAP adjusted EBITDA increased 17.8% to $42.8 million from $36.4 million. Non-GAAP adjusted net income attributable to common stockholders increased 20.2% to $32.0 million, or $0.58 per diluted share, from $26.6 million, or $0.49 per diluted share. Non-GAAP adjusted EBITDA for the six months was $79.9 million, up from $66.9 million. Non-GAAP adjusted net income for the six months was $59.3 million, up from $48.6 million.
Cash generation was mixed. Second-quarter operating cash flow fell 37.6% to $23.0 million from $36.8 million in the prior-year quarter. For the six months, operating cash flow rose 118.9% to $72.8 million from $33.3 million. Capital expenditures were $2.0 million in the quarter, up 100.2% from $1.0 million, and $5.1 million year to date, up 49.1% from $3.4 million. Non-GAAP free cash flow for the six months was $67.8 million, compared with $29.9 million in the prior-year period. Deferred revenue increased 20.7% to $25.9 million from $21.5 million. The company issued $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029. Net proceeds were $485.2 million. Alarm.com used $63.1 million for capped call transactions and $75.0 million to repurchase 1,117,068 shares at $67.14 per share. The 2029 Notes carry an initial conversion price of $87.28 per share, and the capped call transactions have a cap price of $134.28 per share. During the six months ended June 30, 2023, the company repurchased 134,255 shares for $6.7 million under a prior program. The 2029 Notes bear interest at 2.25% per annum, payable semiannually on June 1 and December 1, beginning December 1, 2024. The company may redeem the notes on or after June 7, 2027, under certain conditions.
Management gave third-quarter 2024 SaaS and license revenue guidance and increased full-year 2024 guidance for revenue, non-GAAP adjusted EBITDA and non-GAAP adjusted net income. For the full year, non-GAAP adjusted EBITDA is expected to be $165.0 million to $167.0 million. Non-GAAP adjusted net income attributable to common stockholders is expected to be $119.5 million to $120.5 million, or $2.06 to $2.07 per diluted share, based on an estimated tax rate of 21.0% and 58.1 million weighted average diluted shares outstanding. The company also raised its full-year revenue outlook. Management said the guidance is based on current expectations and that actual results may differ materially.
Operational highlights included several business wins. EnergyHub received a Grid Innovators Award from Grid Forward. The company hosted its first regional partner event in Latin America at its new Bogota, Colombia headquarters. Shooter Detection Systems won a Secure Campus Award for its indoor gunshot detection system. The trailing twelve-month SaaS and license revenue renewal rate was 94%, up from 93%. Headcount grew to 2,033 employees from 1,909. The Alarm.com segment had 1,801 employees, and the Other segment had 232 employees. Risks include Macroeconomic Conditions, supply chain disruptions, tariffs of up to 25% on certain products, and the fact that one-fifth to one-half of hardware products are imported from China. The company also faces litigation, competition and reliance on its service provider network. The forward-looking statements also cite risks such as the reliability of network operations centers, the ability to retain service provider partners and subscribers, the ability to manage growth, increased competition, evolving technologies, and dependence on suppliers. Management estimates the increased 2024 Section 174 federal and state cash tax payable at $35.0 million to $40.0 million, assuming the requirement to capitalize and amortize research and development expenditures is not deferred, modified or repealed.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $233.8M | $223.3M | +4.7% | $223.9M | +4.4% |
| Gross profit | $152.5M | $146.8M | +3.9% | $137.5M | +10.9% |
| Gross margin | 65.2% | 65.7% | -0.5 pp | 61.4% | +3.8 pp |
| Research & development | $65.7M | $66.0M | -0.3% | $60.9M | +7.9% |
| Sales & marketing | $27.8M | $25.5M | +9.4% | $23.8M | +17.1% |
| General & administrative | $26.1M | $29.3M | -10.9% | $28.8M | -9.4% |
| Total operating expenses | $126.8M | $128.0M | -1.0% | $121.3M | +4.5% |
| Operating income (loss) | $25.8M | $18.7M | +37.6% | $16.2M | +59.5% |
| Operating margin | 11.0% | 8.4% | +2.6 pp | 7.2% | +3.8 pp |
| Net income (loss) | $32.5M | $23.4M | +39.0% | $15.6M | +108.3% |
| Net margin | 13.9% | 10.5% | +3.4 pp | 7.0% | +6.9 pp |
| Diluted EPS | $0.62 | $0.44 | +$0.18 | $0.30 | +$0.32 |
Risks
The filing repeatedly cites Macroeconomic Conditions, including inflation, rising interest rates, supply chain disruptions, and geopolitical conflicts, as creating significant uncertainty. Weak economic times could reduce consumer discretionary spending and the pool of service providers, and increase service provider partner bankruptcies, harming revenue and cash flows.
The markets for connected property are highly competitive, with large technology companies such as Amazon, Google, Apple, Comcast, and others targeting security, video, automation, and energy management. The filing states competitors may use aggressive tactics such as selling at a discount, bundling similar products at no charge, and providing financing incentives, which could reduce revenue or force price cuts.
A substantial portion of revenue comes from a limited number of service provider partners. The filing notes Vivint transitioned from selling Alarm.com solutions directly to selling its own home automation product and now generates lower per-customer monthly fees than SaaS subscribers, and ADT pays royalties only for subscribers not supported on Alarm.com platforms.
Substantially all revenue is generated through service provider partners, who are responsible for subscriber acquisition, installation, and support. The filing states recruiting and retaining qualified partners and training them is more challenging due to Macroeconomic Conditions, and there is a finite pool of partners able to perform the required technical installations.
The filing identifies patent infringement lawsuits from EcoFactor and Causam regarding Alarm.com products and smart thermostats. It states litigation is costly, diverts management attention, and a negative outcome could materially and adversely affect business, financial condition, cash flows, or results of operations.
On May 31, 2024, the company issued $500.0 million aggregate principal amount of 2.25% convertible senior notes due 2029 and used $63.1 million for capped call transactions and $75.0 million to repurchase 1,117,068 shares. Risk Factors state holders may require repurchase upon a fundamental change, conversion may dilute stockholders or depress the stock price, and capped call counterparties pose credit risk.
U.S. tariffs have subjected certain Alarm.com products manufactured overseas to additional import duties of up to 25%, and approximately one-fifth to one-half of hardware products sold are imported from China. The filing states increased or expanded tariffs may increase cost of hardware revenue and reduce hardware revenue margins.
The business and its service provider partners are subject to FTC, FCC, state licensing, consumer protection, and privacy laws, including restrictions on telemarketing and automatic telephone dialing. The filing states the company has incurred costs to settle alleged TCPA violations and that partner conduct could lead to fines or reduced subscriber acquisition opportunities.
MD&A reports a $4.0 million increase in the provision for credit losses related to a loan provided to an affiliated entity of one of its distribution partners for the six months ended June 30, 2024, partially offsetting a decrease in general and administrative expense.
The filing states full-time employees increased from 1,404 as of December 31, 2020 to 2,033 as of June 30, 2024 and from 1,909 as of June 30, 2023. This growth places strain on managerial, operational, financial, and reporting resources, and failure to manage it could harm solution quality, brand, and ability to retain partners.
Risk Factors expand cybersecurity risk to acquired businesses and subsidiaries that may operate distinct data infrastructure less mature than the Alarm.com core platform. A breach could result in regulatory fines, indemnity claims from customers, reputational harm, and costs, and hybrid return to office may increase vulnerability.
MD&A reports hardware and other revenue decreased 7% for the three months ended June 30, 2024 and 4% for the six months ended June 30, 2024, primarily due to lower camera and thermostat volumes. Continued declines could pressure total revenue growth and hardware margins.
SaaS KPIs
All quarters →SaaS and license revenue
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 Q2 FY2024 (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 2, 2026.