Summary
Alarm.com posted second quarter 2025 revenue of $254.3 million, up 8.8% from $233.8 million in the prior-year quarter. First-half revenue was $493.1 million, up 7.9% from $457.1 million. GAAP net income rose 5.2% to $34.2 million for the quarter and 10.7% to $61.9 million for the six months. Diluted EPS was $0.63 for the quarter versus $0.62 a year earlier, and $1.15 year to date versus $1.06. Profit grew more slowly than revenue. Interest expense rose on the 2029 Notes, and the tax provision climbed on higher pre-tax income and on discrete tax items tied to employee stock-based compensation, plus a less favorable true-up adjustment of the 2024 research and development tax credit estimate.
Operating leverage was the brighter part of the release. Operating income climbed 24.2% to $32.0 million in the quarter from $25.8 million, lifting operating margin to 12.6% from 11.0%, a gain of 1.6 percentage points. First-half operating income rose 38.6% to $61.7 million from $44.5 million, and operating margin reached 12.5%, up 2.8 percentage points from 9.7%. Non-GAAP adjusted EBITDA increased 13.0% to $48.4 million from $42.8 million. Non-GAAP adjusted net income attributable to common stockholders rose 6.5% to $34.1 million, or $0.60 per diluted share, from $32.0 million, or $0.58.
Cash generation slowed. Operating cash flow was $22.7 million for the quarter, down 1.1% from $23.0 million, and $46.8 million for the six months, down 35.8% from $72.8 million. Non-GAAP free cash flow, which subtracts purchases of property and equipment from cash flows from operating activities, was $36.1 million for the first half against $67.8 million a year earlier. Capital expenditures rose 128.5% to $4.6 million in the quarter from $2.0 million and 110.9% to $10.7 million year to date. Deferred revenue stood at $27.2 million on June 30, 2025, up 5.1% from $25.9 million. Management expects capital expenditure requirements of $4.0 million to $7.0 million over the final six months of fiscal 2025.
The company put cash to work in minority stakes in service provider partners. It paid $29.1 million on April 28, 2025 for 24.7% of Safe Streets USA, $119.3 million on May 30, 2025 for 32.5% of Safe Haven Security Services, and $19.2 million on June 6, 2025 for 32.5% of All Access Holdings. None of the three meets the criteria for consolidation, so all are accounted for under the equity method. Alarm.com also paid $23.6 million in February 2025 for 81% of CHeKT and recorded a $0.7 million credit loss on a loan to a service provider partner. On taxes, the company paid $33.5 million in April 2025 tied to the Section 174 research and development capitalization rules, then saw the One Big Beautiful Bill Act signed on July 4, 2025, which management expects will significantly reduce federal income tax cash outlays over the next several years.
Guidance points to continued growth. For the third quarter of 2025, the company guided SaaS and license revenue to a range of $171.4 million to $171.6 million. For the full year 2025, it raised its outlook and now expects SaaS and license revenue of $681.0 million to $681.4 million, non-GAAP adjusted EBITDA of $195.0 million to $196.5 million, and non-GAAP adjusted net income attributable to common stockholders of $136.0 million to $136.5 million, or $2.40 per diluted share. Those figures assume a 21.0% tax rate and 60.3 million weighted average diluted shares outstanding.
Risks cluster around tariffs and demand. In April 2025 the U.S. government announced a baseline 10% tariff on imported products, and a significant portion of Alarm.com hardware is produced in Vietnam, Thailand and Taiwan. The company passed most of the baseline tariff cost through to customers in the second quarter, but it expects hardware revenue margins to decline slightly because part of hardware revenue now incorporates a pass-through cost. Broader tariffs would increase the cost of hardware revenue and reduce hardware margins further. Management also flags Macroeconomic Conditions, including supply chain disruptions, interest rates, inflation, tariffs and geopolitical conflict in Ukraine and the Middle East, as pressures on demand. The business depends on a network of service provider partners to attract and retain subscribers, and it faces increased competition and evolving technologies. The trailing twelve-month SaaS and license revenue renewal rate was 94% at June 30, 2025, the same as a year earlier. Headcount stood at 2,048 employees on June 30, 2025, up from 2,033 a year earlier, with sales and marketing and general and administrative teams growing while research and development headcount fell from 1,155 to 1,136.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $254.3M | $238.8M | +6.5% | $233.8M | +8.8% |
| Gross profit | $166.8M | $160.6M | +3.9% | $152.5M | +9.4% |
| Gross margin | 65.6% | 67.2% | -1.6 pp | 65.2% | +0.4 pp |
| Research & development | $69.1M | $68.4M | +1.0% | $65.7M | +5.1% |
| Sales & marketing | $31.1M | $28.5M | +9.1% | $27.8M | +11.9% |
| General & administrative | $27.1M | $27.0M | +0.3% | $26.1M | +3.8% |
| Total operating expenses | $134.8M | $130.9M | +3.0% | $126.8M | +6.4% |
| Operating income (loss) | $32.0M | $29.6M | +8.0% | $25.8M | +24.2% |
| Operating margin | 12.6% | 12.4% | +0.2 pp | 11.0% | +1.6 pp |
| Net income (loss) | $34.2M | $27.7M | +23.5% | $32.5M | +5.2% |
| Net margin | 13.4% | 11.6% | +1.8 pp | 13.9% | -0.5 pp |
| Diluted EPS | $0.63 | $0.52 | +$0.11 | $0.62 | +$0.01 |
Risks
In April 2025 the U.S. announced a baseline 10% tariff on imported products plus additional country-specific tariffs, and a significant portion of hardware is produced in Vietnam, Thailand and Taiwan. During Q2 2025 the company passed through most of the baseline tariff cost, and hardware revenue margins are expected to decline slightly because a component of hardware revenue now incorporates a pass-through cost.
Macroeconomic Conditions have created uncertainty and volatility, and MD&A cites risks of supply chain disruptions, inventory disruptions, inflation, tariffs, energy prices and consumer sentiment. Prolonged uncertainty could cause an economic slowdown and reduce demand for platforms and solutions.
The company faces ongoing IP lawsuits, including EcoFactor (five U.S. patents) and Causam (four U.S. patents related to smart thermostats), and MD&A expects continued IP litigation costs. A negative outcome could require costly licenses or damages and materially affect financial condition.
A substantial portion of revenue comes from a limited number of service provider partners, and the loss of or significant reduction in orders from one or more major partners would decrease revenue and profitability. MD&A also recorded $0.7 million of credit loss expense on a loan agreement with a service provider partner during Q2 2025.
The 2026 Notes are due January 15, 2026 and are presented as a current liability as of June 30, 2025. If holders require repurchase upon a fundamental change or elect conversion, the company may need cash it does not have, and conversion of the 2026 or 2029 Notes may dilute stockholders.
Cash and cash equivalents declined to $1.02 billion at June 30, 2025 from $1.22 billion at December 31, 2024, and operating cash flow for the six months ended June 30, 2025 was down 35.8% to $46.8 million versus the prior-year period. Investing activities used $233.0 million in the current year to date, largely for acquisitions and investments.
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 Q2 FY2025 (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.