Alarm.com (NASDAQ:ALRM) Announces Quarterly Earnings Results

Key Points

• Alarm.com beat quarterly estimates: EPS was $0.90 versus the $0.75 consensus, while revenue of $279.44 million exceeded estimates and rose 9% year over year.
• Third-quarter SaaS and license revenue increased 9% to $191.2 million, prompting the company to raise its 2026 revenue and adjusted EBITDA guidance.
• Cost pressures may weigh on margins: temporary tariff-related recoveries are ending and memory costs are rising, with management expecting a Q4 hardware-margin decline and an estimated $6.6 million sequential EBITDA headwind.

Alarm.com (NASDAQ:ALRM - Get Free Report) released its earnings results on Thursday. The software maker reported $0.90 EPS for the quarter, beating the consensus estimate of $0.75 by $0.15, FiscalAI reports. Alarm.com had a net margin of 11.11% and a return on equity of 15.65%. The firm had revenue of $279.44 million for the quarter, compared to analyst estimates of $265.82 million. During the same period last year, the firm earned $0.76 EPS. The business's quarterly revenue was up 9.0% compared to the same quarter last year.

Here are the key takeaways from Alarm.com's conference call:

• Third-quarter SaaS and license revenue rose 9% year over year to $191.2 million, exceeding expectations, and Alarm.com raised its 2026 SaaS and license revenue outlook to $756.1 million–$756.3 million. Full-year adjusted EBITDA guidance also increased to $227 million–$229 million.
• Q3 adjusted EBITDA and hardware margins benefited from about $3.8 million in temporary tariff-related cost recoveries, which the company does not expect to continue. Higher memory costs and the absence of those recoveries are expected to pressure Q4 hardware gross margin to about 20.5%, creating an estimated $6.6 million sequential EBITDA headwind.
• Alarm.com’s preliminary 2027 outlook calls for $815 million–$820 million in SaaS and license revenue and $240 million–$245 million in adjusted EBITDA, implying a roughly 20.5% margin. That is near, but below, its previously stated goal of exiting 2027 with margins around 21%; hardware costs and reinvestment decisions could affect progress.
• The newly acquired CellGate is expected to contribute $15 million–$20 million of SaaS and license revenue in 2027 and expand Alarm.com’s reach into the fence and gate contractor market. Management expects modest SaaS gross-margin and adjusted EBITDA dilution for the next couple of years, while citing longer-term opportunity as recurring revenue scales.
• Management cited revenue retention in the 95% range and continued momentum in growth initiatives, which it expects to account for about one-third of revenue and grow 25%–30% in 2026. Video adoption is also lifting new-account residential ARPU, which management estimated at about $5.50 per month.

Alarm.com Price Performance

ALRM stock traded down $0.93 during trading on Thursday, reaching $67.03. 549,565 shares of the company were exchanged, compared to its average volume of 515,111. The company has a market capitalization of $3.32 billion, a price-to-earnings ratio of 27.29, a P/E/G ratio of 2.14 and a beta of 0.70. The company has a debt-to-equity ratio of 0.57, a current ratio of 4.96 and a quick ratio of 4.38. The company has a 50-day moving average of $57.76 and a two-hundred day moving average of $50.41. Alarm.com has a twelve month low of $41.49 and a twelve month high of $69.39.

Analysts Set New Price Targets

A number of research analysts recently issued reports on ALRM shares. Weiss Ratings raised shares of Alarm.com from a "hold (c)" rating to a "hold (c+)" rating in a research note on Thursday, October 15th. JPMorgan Chase & Co. upped their target price on Alarm.com from $40.00 to $50.00 and gave the stock an "underweight" rating in a research note on Friday, October 30th. Wall Street Zen raised Alarm.com from a "hold" rating to a "buy" rating in a report on Sunday, August 16th. Zacks Research downgraded Alarm.com from a "strong-buy" rating to a "hold" rating in a report on Tuesday, October 6th. Finally, Barclays lifted their price target on Alarm.com from $55.00 to $60.00 and gave the company an "equal weight" rating in a research note on Monday, August 10th. One equities research analyst has rated the stock with a Strong Buy rating, three have given a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat, the company has an average rating of "Hold" and a consensus price target of $58.33.

Insider Buying and Selling

In other news, CFO Kevin Bradley sold 5,400 shares of the company's stock in a transaction on Wednesday, August 12th. The shares were sold at an average price of $55.07, for a total transaction of $297,378.00. Following the completion of the transaction, the chief financial officer directly owned 78,222 shares in the company, valued at approximately $4,307,685.54. This represents a 6.46% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, CEO Stephen Trundle sold 50,000 shares of the stock in a transaction on Monday, August 24th. The shares were sold at an average price of $57.67, for a total value of $2,883,500.00. Following the completion of the transaction, the chief executive officer owned 324,842 shares of the company's stock, valued at $18,733,638.14. The trade was a 13.34% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Company insiders own 4.80% of the company's stock.

Alarm.com Company Profile

Alarm.com Holdings, Inc develops cloud-based technology for connected security and smart automation. Its platform helps residential and commercial customers monitor and manage security systems, video cameras, access control, energy use, and other connected devices through mobile applications and web-based tools.

The company's products and services are delivered primarily through a network of authorized service providers, including security dealers and integrators. Its offerings include intrusion detection, smart-home automation, video surveillance, commercial security and access management, energy management, and solutions designed for property managers and other business customers.

Founded in 2000 and headquartered in Vienna, Virginia, Alarm.com serves customers through service providers in the United States and international markets.

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