Summary
Alarm.com closed fiscal 2025 with total revenue of $261.7 million in the fourth quarter, up 8.0% from $242.2 million in the prior-year quarter. Full-year revenue reached $1.0112 billion, up 7.6% from $939.8 million. Operating income rose to $34.9 million in the quarter, up 13.3% from $30.9 million, and full-year operating income increased to $133.6 million, up 23.1% from $108.5 million. GAAP net income was $34.6 million in the quarter, up 14.8% from $30.1 million, and $131.6 million for the full year, up 7.4% from $122.5 million. Operating margin improved to 13.4% in the quarter from 12.7%, and to 13.2% for the full year from 11.5%.
Non-GAAP adjusted EBITDA grew to $54.9 million in the quarter from $46.4 million, and to $206.0 million for the full year from $176.2 million. Non-GAAP adjusted net income attributable to common stockholders was $38.9 million, or $0.72 per diluted share, in the quarter, compared with $32.6 million, or $0.58 per diluted share. For the full year, that measure was $145.7 million, or $2.62 per diluted share, compared with $127.1 million, or $2.28 per diluted share. Management pointed to several product and platform milestones: the VDB775 video doorbell, a Gen-AI video search tool for advanced video subscribers, the commercial business passing 2 million active video devices in 2025, and EnergyHub reaching more than 2.5 million distributed energy resources under management while shifting approximately 38,000 MWh of load across more than three thousand events during the year.
Cash generation weakened in the quarter. Operating cash flow was $35.9 million, down 36.1% from $56.3 million in the prior-year quarter. For the full year, operating cash flow was $153.3 million, down 25.7% from $206.4 million. Capital expenditures were $0.9 million in the quarter, down 62.1% from $2.3 million, but full-year capital expenditures rose 60.7% to $16.3 million from $10.1 million. The company also reported deferred revenue of $29.9 million, up 12.5% from $26.6 million a year earlier.
Management guided SaaS and license revenue for the first quarter of 2026 to $175.8 million to $176.0 million. For the full year 2026, it guided SaaS and license revenue to $743.0 million to $745.0 million. Full-year 2026 total revenue is expected to be $1.0580 billion to $1.0650 billion. Non-GAAP adjusted EBITDA is expected to be $213.0 million to $215.0 million. Non-GAAP adjusted net income attributable to common stockholders is expected to be $150.5 million to $151.0 million, or $2.78 to $2.79 per diluted share, based on an estimated 21.0% tax rate and 57.2 million weighted average diluted shares.
The quarter and year included a string of acquisitions. EnergyHub acquired Resideo Grid Services for $77.2 million in November 2025, adding demand response aggregation and program management. The company also paid $30.1 million for 20.3% of Pronet and $12.4 million for BTR. On January 14, 2026, Alarm.com paid $500.0 million to settle the 2026 Notes with cash on hand and issued no shares. Management flagged tariffs as a headwind: a significant portion of hardware is produced in Vietnam, Thailand and Taiwan, and after passing through baseline tariffs in the second quarter of 2025, the company had not yet adjusted those pass-throughs for newer higher tariffs as of December 31, 2025. It expects those additional costs to hurt hardware revenue margins in 2026. Other risks include macroeconomic uncertainty, supply chain disruptions, competition, reliance on the service provider network, and the ability to integrate acquisitions. The company also noted that the OBBBA, enacted July 4, 2025, permanently reinstates the immediate deduction for domestic research and development expenditures, which it expects to significantly reduce current federal income tax cash outlays over the next several years.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $261.7M | $256.4M | +2.1% | $242.2M | +8.0% |
| Gross profit | $172.6M | $168.8M | +2.2% | $158.6M | +8.8% |
| Gross margin | 66.0% | 65.8% | +0.1 pp | 65.5% | +0.5 pp |
| Research & development | $66.2M | $66.6M | -0.7% | $62.0M | +6.8% |
| Sales & marketing | $34.6M | $29.5M | +17.3% | $30.9M | +11.8% |
| General & administrative | $28.4M | $27.9M | +2.0% | $27.8M | +2.4% |
| Total operating expenses | $137.7M | $131.8M | +4.4% | $127.8M | +7.7% |
| Operating income (loss) | $34.9M | $37.0M | -5.6% | $30.9M | +13.3% |
| Operating margin | 13.4% | 14.4% | -1.1 pp | 12.7% | +0.6 pp |
| Net income (loss) | $34.6M | $35.1M | -1.4% | $30.1M | +14.8% |
| Net margin | 13.2% | 13.7% | -0.5 pp | 12.4% | +0.8 pp |
| Diluted EPS | $0.59 | $0.65 | -$0.06 | $0.52 | +$0.07 |
Risks
The U.S. announced a 10% baseline tariff and country-specific tariffs in April 2025, and a significant portion of hardware is produced in Vietnam, Thailand and Taiwan. MD&A states pass-throughs of baseline tariffs began in Q2 2025 but were not adjusted for certain newer higher tariffs as of December 31, 2025, so the company began absorbing those costs and expects negative hardware revenue margin impact in 2026.
Negative macroeconomic conditions, including inflation, tariffs, interest rate changes and weakness in housing and mortgage markets, could reduce consumer discretionary spending and business investment. The company notes a prolonged economic slowdown could diminish sales and cause more service provider partners to file for bankruptcy.
The 10 largest revenue service provider partners or distributors accounted for 45% of revenue in 2025, down from 46% in 2024 and 50% in 2023, while ADT represented greater than 15% but not more than 20% of revenue in each of 2025, 2024 and 2023. Loss of, or a significant reduction in, orders from major partners would decrease revenue and profitability.
Substantially all revenue is generated through service provider partners, who are responsible for subscriber acquisition, installation, customer service and technical support. If partners fail to market, sell, install or support the platforms, or if the available pool of service providers declines, operating results could be adversely affected.
Alarm.com sells security and life safety solutions, and failures due to software defects, carrier outages, network operations center failures, service provider partner errors or user error could subject it to liability and harm its reputation. The company has found and may find defects in new, acquired or upgraded solutions.
The business is subject to FTC, FCC, state and international regulations, including TCPA, licensing and privacy laws, and prior TCPA settlement costs show compliance exposure. The U.S. government shutdown during part of Q4 2025 significantly limited FCC approval of new products and caused delays in launching certain new products.
Cyberattacks, ransomware, phishing and other breaches could disrupt networks, expose service provider partner, subscriber and employee data, and lead to regulatory fines, litigation and indemnity claims. The company notes acquired businesses may operate less mature technology platforms with distinct data security vulnerabilities.
The markets for security, video, automation and energy management are highly competitive, with large technology companies such as Amazon, Google, Apple and Samsung and aggressive competitor tactics like discounting and bundling. Increased competition could result in price reductions, loss of service provider partners and lower revenue growth.
The company is involved in patent litigation, including EcoFactor and Causam lawsuits alleging infringement of U.S. patents related to Alarm.com products and services such as smart thermostats. A negative outcome could result in material damages, licensing costs or limits on operating the business.
The 2029 Notes are senior unsecured obligations bearing 2.25% interest and may require cash settlement upon conversion or repurchase upon a fundamental change. The company may not have enough available cash or financing at the time, and failure to repurchase or pay cash would constitute a default under the 2029 Indenture.
Cash flows from operating activities were $153.3 million for FY2025 year to date, down 25.7% from $206.4 million for FY2024 year to date, primarily due to a $122.5 million decrease in cash from operating assets and liabilities. A continued decline could reduce liquidity for investments, acquisitions and repurchases.
Full-time employees increased from 1,733 as of December 31, 2022 to 2,058 as of December 31, 2025, and revenue increased from $881.7 million in 2023 to $1.0112 billion in 2025. The company does not expect similar growth rates in future periods and may fail to manage expansion, controls and expenses effectively.
The company completed several acquisitions in 2025, including CHeKT, BTR and RGS, and paid $30.1 million for a 20.3% equity stake in Pronet. Integration and management of acquired businesses, plus more speculative guidance for their results, could strain resources or lead to unexpected costs.
SaaS KPIs
All quarters →Non-GAAP free cash flow
Non-GAAP adjusted EBITDA
SaaS and License Revenue Renewal Rate
Summary, forecast, risks and KPIs are extracted from Alarm.com Holdings, Inc.'s SEC filings for Q4 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.