Alarm.com Q2 Earnings Call Highlights

Key Points

• Alarm.com exceeded second-quarter expectations, with SaaS and license revenue rising 11.1% to $188.8 million and adjusted EBITDA increasing 15.7% to $57.7 million. Commercial initiatives and EnergyHub grew more than 30% year over year, while residential retention remained around 95%.
• The company is expanding growth opportunities through OpenEye commercial video, its new Fire Communicator product and EnergyHub demand-response programs. EnergyHub dispatched more than 300 events during the quarter, while Alarm.com’s international business surpassed 1 million active subscriber accounts.
• Alarm.com raised its 2026 outlook, projecting SaaS and license revenue of $754 million to $754.4 million, total revenue of $1.079 billion to $1.089 billion and adjusted EBITDA of $221 million to $223 million. The company also repurchased approximately 570,000 shares for $25 million during the quarter.

Alarm.com NASDAQ: ALRM reported second-quarter results that exceeded its expectations, supported by growth in its SaaS and license business, commercial video operations and EnergyHub utility programs. The company also raised its full-year revenue and profitability outlook.

SaaS and license revenue rose 11.1% year over year to $188.8 million, exceeding the midpoint of management’s guidance by about $3.2 million. Adjusted EBITDA increased 15.7% to $57.7 million, while adjusted EBITDA margin expanded 115 basis points from the prior-year period to 20.8%.

Chief Executive Officer Stephen Trundle said the company saw performance above plan in most parts of the business. Residential operations remained steady, aided by revenue retention in the 95% range for a third consecutive quarter. Commercial initiatives and EnergyHub collectively grew more than 30% year over year, according to Chief Financial Officer Kevin Bradley.

Commercial Video and Fire Expansion

Alarm.com said its OpenEye commercial business generated strong SaaS and hardware revenue as enterprise customers expanded video-surveillance deployments. Trundle said those customers increasingly adopted more advanced AI-enabled services.

During the quarter, the company launched a Fire Communicator for commercial customers. The product transmits alarm signals to monitoring stations while also sending notifications to designated users through Alarm.com applications and services.

Trundle said the product is designed to work with most new and existing fire panels and relies on Alarm.com’s cellular communications infrastructure and back-end platform. Fire communicators are often replaced independently from fire alarm control panels, particularly when legacy equipment fails testing or loses network support as cellular networks change.

Management estimates the addressable market includes 4 million to 5 million fire panels across the U.S. and Canada. Trundle said roughly 3,000 of Alarm.com’s service providers are involved in the commercial fire business to some extent and could potentially deploy the offering. The company had nearly 1,000 units installed within the first two to three weeks after launch, though Trundle said adoption will take time to develop through the service-provider channel.

Bradley said the Fire Communicator’s delivery model is channel-based, similar to Alarm.com’s residential offerings. The company expects hardware gross margin for the product to be neutral to slightly positive, while recurring service revenue could be about twice the average revenue per user of a typical residential account.

EnergyHub Benefits From Grid Demand

EnergyHub continued to grow as utilities expanded distributed energy resource and demand-response programs. Trundle said the market is benefiting from growing power demand, including demand related to data centers and vehicle electrification, as well as a more variable energy supply mix that includes wind and solar power.

Over the July 4 weekend, utilities dispatched more than 300 demand-response events through EnergyHub across more than 30 states and Ontario, the company said. Those events shifted 17.5 gigawatt hours of electricity, which Trundle said was roughly equal to New York City’s total electricity consumption for more than two hours.

Trundle said EnergyHub has expanded beyond thermostat-based demand-response programs to include electric vehicles, EV chargers and batteries. He estimated the company is currently about 2% penetrated in the North American total addressable market, with somewhat higher penetration among utilities that already have EnergyHub programs.

Bradley said EnergyHub is the growth initiative contributing most rapidly to the company’s accelerating SaaS growth rate. International, commercial and EnergyHub businesses represented about 35% of revenue in the second quarter and grew by more than 30% year over year, though the company expects those operations to account for roughly 35% of revenue and grow 25% to 30% for the full year.

International Milestone and Financial Results

Alarm.com’s international business surpassed 1 million active subscriber accounts during the quarter. The company operates with service-provider partners in more than 70 countries. Trundle said the business has established critical infrastructure and localized products across its markets, and he expects the next 1 million international accounts to come faster than the first, though he did not predict an exact pace.

Hardware and other revenue increased 5.5% to about $89 million. The company cited strong enterprise demand in commercial video as well as increased activity in EnergyHub’s low-carbon and renewable-fuel credit business. The sales mix contributed to a 180-basis-point year-over-year expansion in hardware gross margin.

GAAP net income attributable to common stockholders declined to $24.2 million, or $0.48 per diluted share, from $34.6 million a year earlier. Bradley said lower interest income following the January retirement of $500 million in convertible notes was a key contributor to the decline.

Non-GAAP adjusted net income rose about 17% to $41.1 million, while non-GAAP diluted earnings per share increased 24% to $0.77. Alarm.com ended the quarter with $479.4 million in cash and generated $37 million in free cash flow.

The company repurchased about 570,000 shares for $25 million during the quarter, bringing repurchases since the beginning of 2025 to 1.8 million shares. It continues to operate under a $150 million share-buyback authorization.

Raised 2026 Outlook

For the third quarter, Alarm.com forecast SaaS and license revenue of $189.8 million to $190 million, representing growth of about 8.3% at the midpoint.

For full-year 2026, the company raised its SaaS and license revenue outlook to $754 million to $754.4 million, up about $4.2 million from its May forecast. The updated range implies approximately 9.4% annual growth at the midpoint.

• Total revenue is projected at $1.079 billion to $1.089 billion.
• Hardware and other revenue is expected to be $325 million to $335 million, up about $15 million at the midpoint from prior guidance.
• Adjusted EBITDA is forecast at $221 million to $223 million, an increase of about $6.5 million at the midpoint.
• Non-GAAP adjusted net income is projected at $156 million to $157 million, or $2.92 to $2.94 per diluted share.

Bradley said the updated outlook reflects second-quarter outperformance and keeps the company on track toward its previously stated goal of exiting 2027 with a 21% adjusted EBITDA margin.

About Alarm.com (NASDAQ:ALRM)

Alarm.com Holdings, Inc provides a cloud-based software platform for connected properties, enabling residential and commercial customers to monitor, manage and control security, energy and home automation solutions. The company's interactive services connect security systems, smart thermostats, door locks, lights and video cameras through cellular, broadband and Z-Wave networks, offering real-time alerts and remote access via mobile and web applications.

Through its platform, Alarm.com delivers an integrated suite of products that includes intrusion detection, video monitoring and cloud recording, energy management features such as smart thermostat scheduling, and home automation controls for lighting, garage doors and connected appliances.

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