Alarm.com NASDAQ: ALRM executives said the company delivered fourth-quarter and full-year 2025 results that exceeded internal expectations, highlighted by continued growth in its core security platform and strong momentum at its EnergyHub business, which was bolstered late in the year by the acquisition of Resideo Grid Services (RGS).
Q4 and full-year 2025 results
CEO Steve Trundle said fourth-quarter SaaS and license revenue was $180 million, up 8.8% year over year, and adjusted EBITDA was $55 million. For the full year, Trundle noted the company surpassed a major milestone by generating more than $1 billion in annual total revenue.
CFO Kevin Bradley provided additional details, stating full-year 2025 SaaS and license revenue for the consolidated business rose 9.2% to $689.4 million. Bradley said total revenue grew 8% year over year in the fourth quarter and exceeded $1 billion for the full year.
Fourth-quarter total gross profit was $172.6 million, up 8.8%, including hardware gross profit of $19.1 million, which increased 13.4%. Bradley attributed higher-than-expected hardware performance to OpenEye’s sales of enterprise-grade video devices and a favorable mix of Alarm.com residential cameras. He also emphasized the strategic role hardware plays in the company’s model, noting that hardware gross profit offset about 55% of GAAP sales and marketing expense in Q4 and more than 60% for the full year.
On profitability, Bradley reported Q4 GAAP net income of $34.7 million, or $0.66 per diluted share. Non-GAAP adjusted net income rose 19.2% to $38.9 million, with non-GAAP EPS up 24.1% to $0.72. Adjusted EBITDA increased 18.3% to $54.9 million in the quarter. For the full year, adjusted EBITDA was $206 million, up 16.9%.
Bradley noted adjusted EBITDA included a $4.7 million mark-to-market gain on a security in the company’s treasury portfolio, which he described as “a tad” inflating the quarter’s figure.
Non-GAAP free cash flow was $35.1 million in Q4 and $137 million for the full year. Bradley said free cash flow declined year over year as unusually favorable working capital dynamics in 2024 normalized.
Business model and AI positioning
Trundle spent time addressing investor concerns about AI’s potential impact on SaaS pricing models. He argued Alarm.com’s revenue drivers differ from “seat-based” software businesses, emphasizing that its SaaS revenue is driven by the number of connected devices installed by service provider partners rather than per-user licensing. He also said connected devices typically remain in service for nearly a decade and that the company creates value through device-generated data, insights, and in many cases managed cellular and supervised internet connectivity.
While Trundle said the company will continue using AI for internal productivity and to augment product capabilities—citing existing AI-based deterrence and monitoring features—he said management does not expect AI to change the company’s “fundamental business model structure.” In Q&A, he highlighted ongoing work to streamline the subscriber interface using large language models and referenced “attribute search” as a way to interact with video data through text-based queries. He characterized some productivity benefits as “early days,” noting a gap between what appears possible and what can be implemented immediately.
Residential product updates and ARPU-driven growth
In the core North American residential market, Trundle said growth continues to be driven primarily by ARPU expansion, supported by adoption of video solutions, video analytics, and remote video monitoring augmented by the central station. He framed Alarm.com’s residential customer as seeking professionally installed and serviced security with privacy protections.
Product updates mentioned on the call included:
- A new premium video doorbell enabling 24/7 continuous onboard recording via SD card and designed to support advanced analytics and higher-tier video subscriptions.
- The company’s first battery-powered camera (the “731”), supporting wireless installation, optional solar-based charging, and premium video features including AI deterrence, Perimeter Guard, and remote video monitoring.
- New AI software capabilities aimed at improving automation and personalization to help identify and respond to important events, which Trundle said could support retention and adoption of premium video subscriptions over time.
During Q&A, Bradley said growth in the core segment remains weighted toward ARPU dynamics, describing a roughly 70/30 to 75/25 split favoring ARPU over other factors. He said most of that comes from “organic product-led feature adoption,” led primarily by video, rather than from pricing. He also noted a consistent pattern: 20% to 25% of cameras sold go into the installed base, supporting upgrades as customers add cameras or adopt higher-capability devices that prompt package upgrades.
Commercial security, international progress, and video monitoring
Trundle said the company’s commercial security and energy businesses combined contributed 25% of full-year 2025 SaaS revenue and grew about 25% year over year. In commercial security, he said growth remained solid despite economic uncertainty that slowed some larger deployments, while demand fundamentals remained “solid.”
Trundle pointed to continued efforts to integrate video, access control, and intrusion on a single platform and highlighted a new lineup of commercially targeted video cameras, the Prism Series, which he said provides higher-resolution imaging, color video at night, two-way audio, and support for premium video analytics including AI-driven proactive deterrence and central-station remote video monitoring.
He also said more than 2 million active video cameras and devices are deployed across Alarm.com’s commercial property base, driven by increasing attach rates as service providers incorporate video into standard offerings. Asked about pockets of strength, Trundle said demand tends to be strongest in areas with both high crime and high assets, and he cited central-station-augmented remote video monitoring as a key driver because it shifts the value proposition from forensic review to deterrence. He also noted early progress deploying commercial offerings internationally, including in Latin America.
Internationally, Trundle said video attachment rates rose to 33% in 2025 and that remote video monitoring is being increasingly introduced and adopted by international partners.
EnergyHub growth, RGS acquisition, and 2026 guidance
EnergyHub was a major theme, with both Trundle and Bradley describing network effects as the platform scales across utility programs and device partners. Trundle said EnergyHub helps utilities manage grid pressures by orchestrating networks of connected devices—such as thermostats, EVs, batteries, and water heaters—to create virtual power plants (VPPs). He cited forecasts calling for the strongest sustained growth in U.S. electricity demand in more than two decades, driven by electrification and data centers, alongside increased variability in generation sources.
Trundle said that in 2025, connected devices under EnergyHub management increased by more than 50%, and utilities increased the number of times they called on EnergyHub VPPs by 25%. He said Alarm.com acquired Resideo Grid Services late in 2025; management described RGS as focused primarily on smart thermostats and said the combination should allow EnergyHub to bring multi-device capabilities to RGS clients. On synergies, Trundle said the company is currently operating two platforms and expects limited synergies in 2026, with more material benefits emerging over a 12- to 24-month period as capabilities are fused into the EnergyHub platform.
In Q&A, Trundle offered operating framework metrics for EnergyHub, saying there are roughly 130 million meters in North America and that EnergyHub is transacting with utilities covering around 50 million meters, with about 5% enrollment across those. He said it is “not inconceivable” that enrollment could rise to 10% over time, and he reiterated three growth drivers: increasing enrollment, adding more utilities, and expanding device categories. He also acknowledged utility sales cycles can take years but said supply constraints are helping shorten cycles “some.”
For 2026, Bradley guided:
- Q1 2026 SaaS and license revenue: $175.8 million to $176.0 million (noting a sequential decline from Q4 due to EnergyHub seasonality, with revenue weighted to the second half).
- Full-year 2026 SaaS and license revenue: $743 million to $745 million, which Bradley said is higher than previously expected due to RGS and continued healthy organic growth.
- Full-year 2026 total revenue: $1.058 billion to $1.065 billion, implying hardware and other revenue of $315 million to $320 million and assuming tariff costs are passed through dollar for dollar with no incremental tariff increases.
- Full-year 2026 adjusted EBITDA: $213 million to $215 million, implying a 20.2% margin at the midpoint. Bradley said RGS is not expected to contribute to adjusted EBITDA in 2026, but the company continues to target exiting 2027 with a 21% adjusted EBITDA run-rate margin.
- Full-year 2026 non-GAAP adjusted net income: $150.5 million to $151.0 million, or $2.78 to $2.79 per diluted share, based on about 57.2 million weighted average diluted shares.
Bradley also said the company retired $500 million of convertible notes maturing in January 2026, removing 3.4 million shares of potential dilution from diluted share counts for all of 2026. He added that the company expects a non-GAAP tax rate around 21% and projected 2026 stock-based compensation of $40 million to $43 million.
On tariffs and demand, Bradley said the company reviewed prior cost inflation during COVID-era periods and did not see meaningful demand impacts, adding that management assumes no degradation in demand from tariff pass-throughs that increased again on January 1. He also said the company plans to extend inventory days by about 30 to 40 days early in 2026 to de-risk supply chain concerns such as potential DRAM market issues.
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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