10q10k10q10k.net

What changed in Alarm.com Holdings, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Alarm.com Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+499 added−493 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in Alarm.com Holdings, Inc.'s 2024 10-K

499 paragraphs added · 493 removed · 405 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

93 edited+20 added−10 removed155 unchanged
Biggest changeWhether the security system is armed or disarmed, we continuously monitor sensors in the property and can keep subscribers aware of system events in all kinds of situations. Notifications for any type of system event are delivered through push notifications, short message service, or SMS, or email, based on the subscriber's preference.
Biggest changeNotifications and reminders for any type of system event are delivered through push notifications, short message service, or SMS, or email, based on the subscriber's preference. Our proprietary algorithms help safeguard connected properties by continuously monitoring devices and sensors and learning the unique activity patterns in a property.
Alarm.com’s battery-powered 780 video doorbell gives service providers a more flexible installation option for challenging installations, particularly in 5 international markets where regional wiring standards do not always support wired video doorbells. An on-board neural network rapidly identifies people while optimizing energy usage for extended battery life. ◦ Intelligent Integration.
Alarm.com’s battery-powered 780 video doorbell gives service providers a more flexible installation option for challenging installations, particularly in international markets where regional wiring standards do not always support wired video doorbells. An on-board neural network rapidly identifies people while optimizing energy usage for extended battery life. ◦ Intelligent Integration.
We seek to protect our intellectual property rights by requiring our employees and independent contractors involved in development to enter into agreements acknowledging that all inventions, trade secrets, works of authorship, developments, concepts, processes, improvements and other works generated by them on our behalf are our intellectual property, and assigning to us any rights, including intellectual property rights, that they may claim in those works.
We seek to protect our intellectual property rights by requiring our employees and independent contractors involved in development to enter into agreements acknowledging that all inventions, trade secrets, works of authorship, developments, 17 concepts, processes, improvements and other works generated by them on our behalf are our intellectual property, and assigning to us any rights, including intellectual property rights, that they may claim in those works.
Substantially all of the assets acquired consisted of developed technology. We believe the acquisition of the developed technology will continue to advance our load-shaping energy management solution allowing additional devices to participate in utility programs that reduce or shift power consumption during peak demand periods. 19 • On April 21, 2023, we acquired certain assets of Vintra, Inc., or Vintra.
Substantially all of the assets acquired consisted of developed technology. We believe the acquisition of the developed technology will continue to advance our load-shaping energy management solution allowing additional devices to participate in utility programs that reduce or shift power consumption during peak demand periods. • On April 21, 2023, we acquired certain assets of Vintra, Inc., or Vintra.
The device can also detect burst pipes, major leaks, and wasteful slow persistent drips, and can respond by informing the property owners of opportunities to reduce water waste, or as needed, by automatically shutting off the water supply to quickly protect properties from damage. 17 Our commitment extends to the buildings in which our employees work.
The device can also detect burst pipes, major leaks, and wasteful slow persistent drips, and can respond by informing the property owners of opportunities to reduce water waste, or as needed, by automatically shutting off the water supply to quickly protect properties from damage. Our commitment extends to the buildings in which our employees work.
Integrated with Alarm.com’s Smart Water Valve + Meter and Water Dragon devices, our solution can monitor water usage, detect both low- and high-volume leaks, alert the subscriber about conditions that can lead to frozen and burst pipes, intelligently manage 6 humidity levels and notify homeowners if a sump pump fails.
Integrated with Alarm.com’s Smart Water Valve + Meter and Water Dragon devices, our solution can monitor water usage, detect both low- and high-volume leaks, alert the subscriber about conditions that can lead to frozen and burst pipes, intelligently manage humidity levels and notify homeowners if a sump pump fails.
We utilize both instructor-led training and online learning to provide custom training courses to ensure our sales and services teams stay up-to-date on our products and service offerings. For our talent pipeline development, we work closely with individual departments to provide training and hands-on support for managers and leaders, to assess talent, 18 identify development opportunities and discuss succession planning.
We utilize both instructor-led training and online learning to provide custom training courses to ensure our sales and services teams stay up-to-date on our products and service offerings. For our talent pipeline development, we work closely with individual departments to provide training and hands-on support for managers and leaders, to assess talent, identify development opportunities and discuss succession planning.
Additionally, we provide notifications of news or announcements regarding our business and financial performance, SEC filings, investor events, and our press and earnings releases, as part of our investor relations website. Investors and others can receive real-time notifications of new information posted on our investor relations website by signing up for email alerts and RSS feeds.
Additionally, we provide notifications of news or announcements regarding our business and financial performance, SEC filings, investor events, and our press and earnings releases, as part of our investor relations website. Investors and others can receive real-time notifications of new information posted on our investor relations website by 20 signing up for email alerts and RSS feeds.
Capabilities such as advanced forensic video search, point of sale system integration and customer site mapping address the specific needs of enterprise-level subscribers and allow loss prevention officers, business analysts and other IT resources to employ video as a key operational and management tool. 8 ◦ Large-Scale Video Deployments.
Capabilities such as advanced forensic video search, point of sale system integration and customer site mapping address the specific needs of enterprise-level subscribers and allow loss prevention officers, business analysts and other IT resources to employ video as a key operational and management tool. ◦ Large-Scale Video Deployments.
We believe the combination of the size of our subscriber base, service provider network and the volume of data generated by the integrated devices on our platforms creates a competitive advantage for us. ◦ Security Grade, Cloud-Based Architecture. We built our platforms with a cloud-based, multi-tenant architecture that allows for real-time updates and upgrades.
We believe the combination of the 12 size of our subscriber base, service provider network and the volume of data generated by the integrated devices on our platforms creates a competitive advantage for us. ◦ Security Grade, Cloud-Based Architecture. We built our platforms with a cloud-based, multi-tenant architecture that allows for real-time updates and upgrades.
For example, when the security system is armed away, an arming state used when the property is not occupied, the thermostat can automatically adjust to save energy. Additionally, if a window is open for a period of time, the smart thermostat can adjust to an efficiency setting and alert the property owners. ◦ Precision Comfort.
For example, when the security system is armed away, an arming state used when the property is not occupied, the thermostat can automatically adjust to save energy. Additionally, if a window is open for a period of time, the smart thermostat can adjust to an efficiency setting and alert the property owners. 6 ◦ Precision Comfort.
ITEM 1. BUSINESS Overview Alarm.com is the leading platform for the intelligently connected property. Our cloud-based platform offers an expansive suite of Internet of Things, or IoT, solutions addressing opportunities in the residential, multi-family, small business and enterprise commercial markets.
ITEM 1. BUSINESS Overview Alarm.com is the leading platform for the intelligently connected property. Our cloud-based platform offers an expansive suite of Internet of Things, or IoT, solutions addressing global opportunities in the residential, multi-family, small business and enterprise commercial markets.
Smarter business security powered by Alarm.com is supported by our authorized service provider partners from start to finish, with installation, configuration and technical support included. Our OpenEye subsidiary offers enterprise commercial video management solutions that complement the Alarm.com for Business platform.
Smarter business security powered by Alarm.com is supported by our authorized service provider partners from start to finish, with installation, configuration and technical support included. 8 Our OpenEye subsidiary offers enterprise commercial video management solutions that complement the Alarm.com for Business platform.
Security systems, thermostats, door locks, video cameras, lights, garage doors and other devices that were once inert can now be intelligent and connected. Our intelligently connected property solutions provide a wealth of benefits to our subscribers and our service provider partners. Benefits to Subscribers: ◦ Single Connected Platform.
Security systems, thermostats, door locks, video cameras, lights, garage doors and other devices that were once inert can now be intelligent and connected. Our intelligently connected property solutions provide a wealth of benefits to our subscribers and our service provider partners. 11 Benefits to Subscribers: ◦ Single Connected Platform.
Subscribers can receive real-time alerts and video clips if the alarm goes off, a door is unlocked, or unexpected activity occurs outside of normal business hours. Our commercial video solution operates with a diverse array of third-party commercial video cameras.
Subscribers can receive real-time alerts and video clips if the alarm goes off, a door is unlocked, or unexpected activity occurs outside of normal business hours. Our 7 commercial video solution operates with a diverse array of third-party commercial video cameras.
Business Intelligence provides key operational metrics related to account plan adoption, attrition and service quality to help service provider partners grow their business and improve customer retention. 10 ◦ Sales, Marketing & Training. Our comprehensive customer lifecycle sales and marketing services are available to help our service provider partners effectively market and sell our solutions. • Marketing Portal.
Business Intelligence provides key operational metrics related to account plan adoption, attrition and service quality to help service provider partners grow their business and improve customer retention. ◦ Sales, Marketing & Training. Our comprehensive customer lifecycle sales and marketing services are available to help our service provider partners effectively market and sell our solutions. • Marketing Portal.
Amazon.com offers Amazon Home Services security packages with bundled equipment and professional installation, and Amazon Key, a security camera and smart lock integration feature. Ring Inc., owned by Amazon.com, offers a connected video doorbell, video cameras and an integrated security system, Ring Alarm. Samsung's SmartThings offers a security system and a home automation and awareness hub.
Amazon.com offers Amazon Home Services security packages with bundled equipment and professional installation, and Amazon Key, a security camera and smart lock integration feature. Ring Inc., owned by Amazon.com, offers a connected 16 video doorbell, video cameras and an integrated security system, Ring Alarm. Samsung's SmartThings offers a security system and a home automation and awareness hub.
Our new temperature monitoring solution provides monitoring 24 hours a day, seven days a week, real-time alerts and historical temperature reporting to support the temperature control needs of restaurants, grocery stores, pharmacies and other single-system and multi-location commercial customers.
Our temperature monitoring solution provides monitoring 24 hours a day, seven days a week, real-time alerts and historical temperature reporting to support the temperature control needs of restaurants, grocery stores, pharmacies and other single-system and multi-location commercial customers.
We believe these services strengthen our partnerships with service providers as they build their businesses on our platforms. Capabilities associated with these solutions include: ◦ Service Provider Portal. Our permission-based online portal provides account management, sales, marketing, training and support tools.
We believe these services strengthen our partnerships with service providers as they build their businesses on our platforms. Capabilities associated with these solutions include: 9 ◦ Service Provider Portal. Our permission-based online portal provides account management, sales, marketing, training and support tools.
We designed these capabilities to streamline their operations, empower them to provide critical information to public safety dispatchers and first responders, enhance the value of the monitoring services they provide to subscribers and reduce false alarm dispatches. • Ambient Insights for Alarm Response.
We designed these capabilities 10 to streamline their operations, empower them to provide critical information to public safety dispatchers and first responders, enhance the value of the monitoring services they provide to subscribers and reduce false alarm dispatches. • Ambient Insights for Alarm Response.
We believe our 2023 acquisition of certain assets of Vintra, Inc., or Vintra, will help to expand our learning program and accelerate deployment of advanced video analytics commercial solutions for the Alarm.com and OpenEye platforms. ◦ Smarter Access Control.
We believe our 2023 acquisition of certain assets of Vintra, Inc., or Vintra, will continue to help expand our learning program and accelerate deployment of advanced video analytics commercial solutions for the Alarm.com and OpenEye platforms. ◦ Smarter Access Control.
We offer training, tools and other resources to help our service provider partners fully leverage the breadth and depth of our platforms. 11 ◦ Expanded Set of Value-Added Services. We provide value-added services to our service provider partners, including training, marketing, installation and support tools and business intelligence analytics.
We offer training, tools and other resources to help our service provider partners fully leverage the breadth and depth of our platforms. ◦ Expanded Set of Value-Added Services. We provide value-added services to our service provider partners, including training, marketing, installation and support tools and business intelligence analytics.
Some of our prior asset acquisitions include: • On January 1, 2017, we acquired certain assets of ObjectVideo, Inc., or ObjectVideo, that constituted a business now called ObjectVideo Labs, LLC, or ObjectVideo Labs, including products, technology portfolio and engineering team.
Some of our prior asset acquisitions include: • On January 1, 2017, we acquired certain assets of ObjectVideo, Inc., or ObjectVideo, that constituted a business now called ObjectVideo Labs, LLC, or ObjectVideo Labs, including products, a technology portfolio and an engineering team.
We also believe that the combination of our solutions and our service provider partners’ expertise is the most effective way to drive mass market adoption of the intelligently connected property. The traditional security and home automation market is highly fragmented.
We also believe that the combination of our solutions and our service provider partners’ expertise is the most effective way to drive mass market adoption of the intelligently connected property. 15 The traditional security and home automation market is highly fragmented.
OpenEye provides cloud-managed video surveillance solutions for the enterprise commercial market. • On December 14, 2020, we acquired 100% of the issued and outstanding ownership interest units of Shooter Detection Systems, LLC, or SDS.
OpenEye provides cloud-managed video surveillance solutions for the enterprise commercial market. 19 • On December 14, 2020, we acquired 100% of the issued and outstanding ownership interest units of Shooter Detection Systems, LLC, or SDS.
Leveraging advanced algorithms, our Smarter Access Control solution intelligently learns the activity patterns of users and access points for single or multiple property installations, detects unexpected events and alerts the subscriber of the irregular activity. 7 ◦ Cell Connector .
Leveraging advanced algorithms, our Smarter Access Control solution intelligently learns the activity patterns of users and access points for single or multiple property installations, detects unexpected events and alerts the subscriber of the irregular activity. ◦ Cell Connector .
We intend to leverage our 12 status as a trusted provider to drive consumer interest in our offerings and enable our service provider partners to upgrade their legacy security customers to our connected property solutions. ◦ Continue to invest in our platforms.
We intend to leverage our status as a trusted provider to drive consumer interest in our offerings and enable our service provider partners to upgrade their legacy security customers to our connected property solutions. ◦ Continue to invest in our platforms.
Further corporate governance information, including our corporate governance guidelines and board committee charters, is also available on our investor relations website under the heading "Corporate Governance." The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 20
Further corporate governance information, including our corporate governance guidelines and board committee charters, is also available on our investor relations website under the heading "Corporate Governance." The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 21
The Alarm.com 770 video doorbell operates proprietary video analytics software that can quickly and accurately detect visitors while reducing unwanted alerts, such as those caused by passing vehicle traffic or swaying branches. A touch-free capability immediately activates the doorbell chime when a visitor is detected, eliminating the need to physically press a doorbell button.
The Alarm.com 770 video doorbell operates proprietary video analytics software that can quickly and accurately detect package deliveries and visitors while reducing unwanted alerts, such as those caused by passing vehicle traffic or swaying branches. A touch-free capability immediately activates the doorbell chime when a visitor is detected, eliminating the need to physically press a doorbell button.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States, or GAAP, for the years ended December 31, 2023, 2022 and 2021.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States, or GAAP, for the years ended December 31, 2024, 2023 and 2022.
We continue to make significant investments in innovative research and development. Our investment resulted in hundreds of issued patents as of December 31, 2023 and numerous patent applications pending which we believe can help ensure our technology remains competitively differentiated and legally protected.
We continue to make significant investments in innovative research and development. Our investment resulted in hundreds of issued patents as of December 31, 2024 and numerous patent applications pending which we believe can help ensure our technology remains competitively differentiated and legally protected.
ADT LLC represented greater than 15% but not more than 20% of our revenue in each of 2021, 2022 and 2023. Subscribers We define subscribers as residential or commercial properties to which we are delivering at least one of our solutions.
ADT LLC, or ADT, represented greater than 15% but not more than 20% of our revenue in each of 2022, 2023 and 2024. Subscribers We define subscribers as residential or commercial properties to which we are delivering at least one of our solutions.
Continued growth in the connected property market has invited new participants into the space that can complement our current partner ecosystem. We intend to continue to develop partnerships with heating, ventilation and air conditioning installers, property management companies, utility companies, insurance providers and other services companies to expand avenues into residential and commercial properties. ◦ Pursue selective strategic acquisitions.
Continued growth in the connected property market has invited new participants into the space that can complement our current partner ecosystem. We intend to continue to develop partnerships with heating, ventilation and air 13 conditioning installers, property management companies, utility companies, insurance providers and other service companies to expand avenues into residential and commercial properties. ◦ Pursue selective strategic acquisitions.
We believe there is an opportunity to significantly increase the adoption of our solutions as more residential and commercial property owners adopt intelligently connected property solutions and as the major technology trends of mobile access, the IoT, cloud technology and artificial intelligence continue to create opportunities to connect people with their properties in new ways.
We believe there is an opportunity to significantly increase the adoption of our solutions as more residential and commercial property owners adopt intelligently connected property solutions and as the major technology trends of mobile access, the IoT, cloud technology and AI continue to create opportunities to connect people with their properties in new ways.
Our platforms were purpose-built from the ground up with life safety standards at the core. ◦ Highly Scalable Data Analytics Engine. We processed more than 325 billion data points in 2023. As consumer preferences shift towards more proactive, intelligence-based features, we believe our investments in proprietary analytics, machine learning and artificial intelligence give us a competitive advantage. ◦ Trusted Brand.
Our platforms were purpose-built from the ground up with life safety standards at the core. ◦ Highly Scalable Data Analytics Engine. We processed more than 345 billion data points in 2024. As consumer preferences shift towards more proactive, intelligence-based features, we believe our investments in proprietary analytics, machine learning and AI give us a competitive advantage. ◦ Trusted Brand.
Today, our products are currently localized and available in over 50 countries outside of North America, including Argentina, Australia, Chile, Colombia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and Uruguay. We intend to continue to grow our number of international subscribers by strengthening our presence in existing markets and expanding to additional markets.
Today, our products are currently localized and available in over 50 countries outside of North America, including Argentina, Chile, Switzerland, Turkey and the United Kingdom. We intend to continue to grow our number of international subscribers by strengthening our presence in existing markets and expanding to additional markets.
These features help to increase accuracy of installations, decrease time spent on-site and reduce support calls and return visits, which saves subscribers and service providers money while increasing subscriber satisfaction. ▪ Gopher Info.
These features help to increase accuracy of installations, decrease time spent on-site and reduce support calls and return visits, which saves subscribers and service providers money while increasing subscriber satisfaction. ▪ On-Site Wrap Up.
Our demand response programs manage over 1.2 million connected devices for more than 60 energy utilities in North America. These programs support energy utilities as they pursue aggressive clean energy goals. Our lineup of smart thermostats and intelligent energy management solutions can automatically adjust to reduce energy waste in residential and commercial properties.
Our demand response programs manage over 1.6 million connected devices for more than 70 energy utilities in North America. These programs support energy utilities as they pursue ambitious clean energy goals. Our lineup of smart thermostats and intelligent energy management solutions can automatically adjust to reduce energy waste in residential and commercial properties.
To accomplish these objectives, we rely on a combination of patent, trademark, copyright and trade secret laws in the United States and other jurisdictions, as well as license agreements, confidentiality agreements and other contractual protections. As of December 31, 2023, we owned 761 issued United States utility patents, one issued United States design patent and 152 issued international patents.
To accomplish these objectives, we rely on a combination of patent, trademark, copyright and trade secret laws in the United States and other jurisdictions, as well as license agreements, confidentiality agreements and other contractual protections. As of December 31, 2024, we owned 883 issued United States utility patents, one issued United States design patent and 251 issued international patents.
To help achieve this objective, our suite of employee community groups offers identity- and interest-based outlets where employees can come together over shared interests, seek support and professional mentorship, and develop the relationships that help them thrive on their teams and in the broader workplace.
To help achieve this objective, our suite of employee community groups that are open to all employees offers outlets where employees can come together over shared interests, seek support and professional mentorship, and develop the relationships that help them thrive on their teams and in the broader workplace.
Our current competitors include providers of other technology platforms for the connected property with interactive security, including Alula (formed following the merger of ipDatatel, LLC and Resolution Products, LLC), Avigilon Corporation, Brivo Inc., Digital Monitoring Products Inc., Eagle Eye Networks Inc., Honeywell International Inc., Resideo Technologies Inc., SecureNet Technologies, LLC, Telular Corporation (acquired by AMETEK, Inc.), United Technologies Corporation, and Verkada Inc., which sell solutions to service providers, cable operators, technology retailers and other residential and commercial automation providers.
Our current competitors include providers of other technology platforms for the connected property with interactive security, including Alula (formed following the merger of ipDatatel, LLC and Resolution Products, LLC), Ajax Systems CH, Avigilon Corporation, Brivo Inc., Digital Monitoring Products Inc., Eagle Eye Networks Inc., Hangzhou Hikvision Digital Technology Co., Ltd., Honeywell International Inc., Napco Security Technologies, Inc., Resideo Technologies Inc., SecureNet Technologies, LLC, Telular Corporation (acquired by AMETEK, Inc.), and Verkada Inc., which sell solutions to service providers, cable operators, technology retailers and other residential and commercial automation providers.
When fully integrated with the Alarm.com platform, EBS communicators are expected to enable Alarm.com’s services to work with a wide range of legacy security control panels commonly deployed in international markets. ◦ Expand into the commercial market segment.
When fully integrated with the Alarm.com platform, EBS communicators are expected to enable Alarm.com’s services to work with a wide range of legacy security control panels commonly deployed in international markets.
Alarm.com also relies on third-party technology providers to process 13 certain information, such as video. In addition, certain of our acquired companies maintain their own technology platform distinct from Alarm.com’s platform. Hardware and Manufacturing We are involved in designing and manufacturing various types of hardware that enable our solutions, including: ◦ Cellular Communication Modules and Gateways.
Alarm.com also relies on third-party technology providers to process certain information, such as video. In addition, certain of our acquired companies maintain their own technology platform distinct from Alarm.com’s platform. Hardware and Manufacturing We are involved in designing and manufacturing various types of hardware that enable our solutions, including: ◦ Video Cameras and Doorbells .
As of December 31, 2023, we had 1,776 employees in our Alarm.com segment and 213 employees in our Other segment. We also engage consultants and temporary employees from time to time. None of our employees are covered by collective bargaining agreements and we consider our relations with our employees to be good.
As of December 31, 2024, we had 1,773 employees in our Alarm.com segment and 237 employees in our Other segment. We also engage consultants and temporary employees from time to time. None of our employees are covered by collective bargaining agreements and we consider our relations with our employees to be good.
Alarm.com is a pioneer in the intelligently connected property market. In 2023, our platforms processed more than 325 billion data points generated by over 150 million connected devices.
Alarm.com is a pioneer in the intelligently connected property market. In 2024, our platforms processed more than 345 billion data points generated by over 160 million connected devices.
The integrated solution allows subscribers to monitor and track the location of gunshots, quickly view videos of the time and place that gunshots occurred and share critical situational awareness information with first responders with no onsite software installation required. ◦ Video Cameras and Doorbells .
The integrated solution allows subscribers to monitor and track the location of gunshots, quickly view videos of the time and place that gunshots occurred and share critical situational awareness information with first responders with no onsite software installation required. ◦ Smart Water Valve + Meter and Water Dragon.
We also generated net income attributable to common stockholders of $81.0 million, $56.3 million and $52.3 million in 2023, 2022 and 2021, respectively, as well as non-GAAP adjusted EBITDA of $154.0 million, $146.8 million and $142.5 million in 2023, 2022 and 2021, respectively. See the "Non-GAAP Measures" section of Item 7.
We also generated net income attributable to common stockholders of $124.1 million, $81.0 million and $56.3 million in 2024, 2023 and 2022, respectively, as well as non-GAAP adjusted EBITDA of $176.2 million, $154.0 million and $146.8 million in 2024, 2023 and 2022, respectively. See the "Non-GAAP Measures" section of Item 7.
According to the Barnes Buchanan 2024 Security Alarm Industry Overview and Update report, the top 5 dealers represented approximately 35% of all industry recurring monthly revenue in 2022. The distribution of revenue among our service provider partners is reflective of the industry overall.
According to the Barnes Buchanan 2025 Security Alarm Industry Overview and Update report, the top six dealers represented approximately 37% of all industry recurring monthly revenue in 2023. The distribution of revenue among our service provider partners is reflective of the industry overall.
Subscribers can seamlessly connect to our services to control and monitor their security systems, as well as to IoT devices including door locks, garage doors, thermostats and video cameras, through our family of mobile apps, websites and engagement platforms like voice control through Siri Shortcuts, Amazon Echo and Google Home, wearable devices like the Apple Watch and TV applications such as Apple TV and Amazon Fire TV. 4 The capabilities associated with this solution include: ◦ Real-Time Alerts and Always-On Monitoring.
Subscribers can seamlessly connect to our services to control and monitor their security systems, as well as to IoT devices including door locks, garage doors, thermostats and video cameras, through our family of mobile apps, websites and engagement platforms like voice control through Siri Shortcuts, Amazon Echo and Google Home, wearable devices like the Apple Watch and TV applications such as Apple TV and Amazon Fire TV.
We transmit alarm signals from monitored properties through our cloud platforms to approximately 1,000 third-party central monitoring stations staffed 24 hours a day, seven days a week with live operators ready to initiate emergency response. ◦ Smart Signal.
When unexpected activity is detected, the subscriber is automatically notified. ◦ Alarm Transmission. We transmit alarm signals from monitored properties through our cloud platforms to approximately 1,000 third-party central monitoring stations staffed 24 hours a day, seven days a week with live operators ready to initiate emergency response. ◦ Smart Signal.
Employees are informed about our governance expectations through our Code of Business Conduct, compliance training programs and ongoing communications. The Nominating and Corporate Governance Committee of our Board of Directors oversees our corporate governance objectives, strategies, goals, compliance and risk mitigation.
Governance Our corporate behavior and leadership practices are based on integrity and ethical decision-making. Employees are informed about our governance expectations through our Code of Business Conduct, compliance training programs and ongoing communications. The Nominating and Corporate Governance Committee of our board of directors oversees our corporate governance objectives, strategies, goals, compliance and risk mitigation.
We continue to broaden our intellectual property portfolio and file patent applications and as of December 31, 2023, we had 210 pending utility patent applications and six pending provisional patent applications filed in the United States. We also had 152 pending international patent applications and 17 international patent applications pending under the Patent Cooperation Treaty.
We continue to broaden our intellectual property portfolio and file patent applications and as of December 31, 2024, we had 169 pending utility patent applications and 21 pending provisional patent applications filed in the United States. We also had 134 pending international patent applications and four international patent applications pending under the Patent Cooperation Treaty.
Subscribers select periods when they want their system to monitor activity in their property and then either automatically arm or disarm the system. Intelligently automating the security system enhances customer security and drives further user engagement with our smart home systems. ◦ Wellness.
Subscribers select periods when they want their system to monitor activity in their property and then either automatically arm or disarm the system. Intelligently automating the security system enhances customer security and drives further user engagement with our smart home systems. ◦ Personal Safety and Awareness. Our suite of mobile-first products and capabilities extends security beyond the home.
Alarm.com’s solutions include security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness and data-rich emergency response. During 2023, our platforms processed more than 325 billion data points generated by over 150 million connected devices.
Alarm.com’s solution suite includes security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness, personal safety and data-rich emergency response. During 2024, our platforms processed more than 345 billion data points generated by over 160 million connected devices.
Sophisticated rules, user permissions and schedules streamline access management across multiple locations and security partitions. ◦ Energy Savings. Our smarter thermostats help subscribers reduce energy costs automatically, even if someone forgets to adjust the temperature when they are closing up at the end of the day, generating a return on investment. ◦ Proactive Protection for Valuables and Inventory.
Our smarter thermostats help subscribers reduce energy costs automatically, even if someone forgets to adjust the temperature when they are closing up at the end of the day, generating a return on investment. ◦ Proactive Protection for Valuables and Inventory.
We generated total revenue of $881.7 million, $842.6 million and $749.0 million in 2023, 2022 and 2021, respectively. Our SaaS and license revenue was $569.2 million, $520.4 million and $460.4 million in 2023, 2022 and 2021, respectively, representing a compound annual growth rate of 11.2%.
We generated total revenue of $939.8 million, $881.7 million and $842.6 million in 2024, 2023 and 2022, respectively. Our SaaS and license revenue was $631.2 million, $569.2 million and $520.4 million in 2024, 2023 and 2022, respectively, representing a compound annual growth rate of 10.1%.
Our Human Capital Resources As of December 31, 2023, we had 1,989 full-time employees, including 565 in sales and marketing, 1,118 in research and development, 229 in a general and administrative capacity and 77 who manufacture hardware for our suite of IoT solutions.
Our Human Capital Resources As of December 31, 2024, we had 2,010 full-time employees, including 572 in sales and marketing, 1,127 in research and development, 237 in a general and administrative capacity and 74 who manufacture hardware for our suite of IoT solutions.
Our solutions are sold, installed, and serviced by a network of independent licensed, professional service provider partners. Our channel network of active service provider partners includes smaller local providers, larger regional providers and national service providers.
Service Provider Network Our trusted service provider partner network is key in driving the adoption of connected home and commercial solutions. Our solutions are sold, installed, and serviced by a network of independent licensed, professional service provider partners. Our channel network of active service provider partners includes smaller local providers, larger regional providers and national service providers.
Video clips are uploaded to our cloud-based storage system for secure storage and remote viewing. ◦ Video Alerts . Smart clips can be automatically sent via SMS, push notifications or email as soon as they are recorded.
Subscribers can securely access live video feeds through the web and mobile apps at any time. ◦ Secure Cloud Storage . Video clips are uploaded to our cloud-based storage system for secure storage and remote viewing. ◦ Video Alerts . Video clips can be automatically sent via SMS, push notifications or email as soon as they are recorded.
We also offer a network video recording device, the SVR, for on-premise, continuous video recording seamlessly connected to our cloud platforms for remote playback through our user interfaces. All of these video products and SVRs are specified to our platforms through proprietary software. ◦ Alarm.com Smart Thermostats .
We also offer network video recording devices for on-premise, continuous video recording seamlessly connected to our cloud platforms for remote playback through our user interfaces. All of these video products and recorders are specified to our platforms through proprietary software. ◦ Alarm.com Smart Thermostats . Our Smart Thermostats combine elegant design, sophisticated cloud services and advanced energy management features.
We have an open platform which allows service provider partners to respond to market innovation and consumer demands for connected devices. Device hardware is deeply integrated into our platforms to provide a more cohesive experience than stand-alone products deliver.
We have an open platform which allows service provider partners to respond to market innovation and consumer demands for connected devices. Device hardware is deeply integrated into our platforms to provide a more cohesive experience than stand-alone products deliver. Our platforms also support various broadly adopted communications protocols commonly used in many automation devices, including Z-Wave, Wi-Fi and cellular.
Our Competition The market in which we participate for connected property solutions is fragmented, highly competitive and constantly evolving. We expect competition to continue from existing competitors as well as potential new market entrants in the interactive security, video monitoring, intelligent automation and energy management markets.
We expect competition to continue from existing competitors as well as potential new market entrants in the interactive security, video monitoring, intelligent automation and energy management markets.
We offer a full range of high-definition video cameras and video doorbells enabled for Internet Protocol-based video monitoring services. Our indoor, outdoor, and video doorbell cameras include options for night vision capabilities as well as wireless or Power over Ethernet communication features.
We offer a full range of high-definition video cameras and video doorbells enabled for Internet Protocol-based video monitoring services. Our indoor, outdoor, and video doorbell cameras include options for night vision capabilities, two-way voice and wired or battery-powered operation.
From a single screen on the Alarm.com mobile app, subscribers can see and speak with visitors and control their door locks. The Alarm.com 750 video doorbell is a battery-free video doorbell that has a wide operating temperature range and includes Alarm.com’s video analytics software package and delivers advance performance specifications, including an expansive field of view and two-megapixel resolution.
The Alarm.com 750 video doorbell is a battery-free video doorbell that has a wide operating temperature range and includes Alarm.com’s video analytics software package and delivers advanced performance specifications, including an expansive field of view and two-megapixel resolution.
With every interaction, our team is committed to exceptional customer satisfaction and industry-leading response times. We use a tiered structure to efficiently escalate and resolve issues of varying complexity and to scale our support organization as we grow. Our staff is multilingual and we continue to grow our language capabilities to support our international expansion.
We offer high-quality support to our service providers via phone, chat, web ticketing and email. With every interaction, our team is committed to exceptional customer satisfaction and industry-leading response times. We use a tiered structure to efficiently escalate and resolve issues of varying complexity and to scale our support organization as we grow.
Alarm.com’s video surveillance solution works intelligently with other devices and sensors in the property. Subscribers can create intelligent rules to capture video clips of important events to enhance security and privacy. ◦ Live Streaming . Subscribers can securely access live video feeds through the web and mobile apps at any time. ◦ Secure Cloud Storage .
Alarm.com’s video surveillance solution works intelligently with other devices and sensors in the property. Subscribers can create intelligent rules to capture video clips of important events to enhance security and privacy and can also integrate with other supported automation devices. ◦ Live Streaming .
Our technology intelligently monitors quality of life through a suite of connected sensors and devices, and delivers proactive insights into activities of daily living. With alerts about changes in behavior that can indicate emerging quality of life issues, family members and homecare and senior living providers can address issues before they escalate and deliver more efficient care.
With alerts about changes in behavior that can indicate emerging quality of life issues, family members and homecare and senior living providers can address issues before they escalate and deliver more efficient care.
We have 39 registered trademarks in the United States, including Alarm.com and the Alarm.com logo and design, 11 registered trademarks in Canada, nine in the United Kingdom and seven in the European Union.
We have 46 registered trademarks in the United States, including Alarm.com and the Alarm.com logo and design, 12 registered trademarks in Canada, 13 in the United Kingdom, 12 in the European Union, and 44 in other countries.
Our Smart Thermostats combine elegant design, sophisticated cloud services and advanced energy management features. They were designed by our Building36 and device engineering teams to work in concert with other devices in the connected property.
They were designed by our Building36 and device engineering teams to work in concert with other devices in the connected property.
We offer cellular communications modules that are tightly integrated with security system control panels, sensors and other devices. We also offer fully integrated cellular gateways. We regularly pioneer technical advances in this space, including the expansion of our deployment of security services hardware with 4G LTE and LTE CAT-M cellular network connections.
We regularly pioneer technical advances in this space, including the expansion of our deployment of security services hardware with 4G LTE and LTE CAT-M cellular network connections.
Participating monitoring stations can receive alerts when a device malfunctions or its batteries are low, and operators can then communicate to subscribers to remotely address the issue or schedule a service appointment with a technician, if needed. • Video Health Reports: Video Health Reports give Alarm.com’s service provider partners and their commercial video customers a monthly snapshot of the condition of video cameras and stream video recorders.
Participating monitoring stations can receive alerts when a device malfunctions or its batteries are low, and operators can then communicate to subscribers to remotely address the issue or schedule a service appointment with a technician, if needed. • Gopher Info.
We believe we compete favorably with respect to each of these factors. Additionally, we believe our cloud-based software platforms, intelligently connected property solutions, and proven scalability help further differentiate us from competitors.
We believe we compete favorably with respect to each of these factors. Additionally, we believe our cloud-based software platforms, intelligently connected property solutions, and proven scalability help further differentiate us from competitors. Nevertheless, our competitors may have substantially greater financial, technical and other resources, greater brand recognition, larger sales and marketing budgets and broader distribution channels than we do.
We believe this scale of subscribers, connected devices and data operations makes us the leader in the connected property market. Our solutions are delivered through an established network of trusted service providers, who are experts at selling, installing and supporting our solutions.
We believe this scale of subscribers, connected devices and data operations makes us the leader in the connected property market. Alarm.com has established a global network of trusted service provider partners who distribute our solutions to their customers. Our service provider partners represent a diverse range of independent businesses, and are experts at selling, installing and supporting our technology.
To that end, subscribers occasionally reach us directly with support needs and we either assist the subscriber directly or, when appropriate, route the subscriber to the appropriate service provider partner for additional assistance. 15 We offer high-quality support to our service providers via phone, chat, web ticketing and email.
We primarily support our service provider partners. Our service provider partners, in turn, support their customers, who are our subscribers. To that end, subscribers occasionally reach us directly with support needs and we either assist the subscriber directly or, when appropriate, route the subscriber to the appropriate service provider partner for additional assistance.
We primarily generate SaaS and license revenue through our service provider partners, who resell these services and pay us monthly fees. These service provider contracts typically have an initial term of one year, with subsequent renewal terms of one year.
They depend on the Alarm.com platform for connected property technology and to operate and manage their businesses efficiently. Alarm.com primarily generates SaaS and license revenue through our service provider partners, who resell our services and pay us monthly fees. Contracts with our service provider partners typically have an initial term of one year, with subsequent renewal terms of one year.
We believe this acquisition will assist in the continued expansion of our international operations as well as benefit our supply chain operations.
We believe this acquisition will assist in the continued expansion of our international operations as well as benefit our supply chain operations. • On February 10, 2025, we acquired 81% of the issued and outstanding shares of capital stock of CHeKT, Inc., or CHeKT.
Our research and development of new products and services is a multidisciplinary effort across our product management, program management, software engineering, device engineering, quality engineering, configuration management and network operations teams. Service Provider Network Our trusted service provider partner network is key in driving the adoption of connected home and commercial solutions.
We expect to invest significantly in continued research and development efforts to expand the capabilities of our technology. Our research and development of new products and services is a multidisciplinary effort across our product management, program management, software engineering, device engineering, quality engineering, configuration management and network operations teams.
We also partnered with a company that provides various family care benefits, including access to a self-service, searchable database of providers for family care needs, including care for children, adult dependents, pets and tutoring. Governance Our corporate behavior and leadership practices are based on integrity and ethical decision-making.
We also partnered with a company that provides various family care benefits, including back-up care and access to a self-service, searchable database of providers for child, adult dependent and pet care needs.
Research and Development We invest substantial resources in research and development to enhance our platforms and applications, support our technology infrastructure, develop new capabilities and conduct quality assurance testing. We expect to invest significantly in continued research and development efforts to expand the capabilities of our technology.
Water Dragon is an easy-to-install option that clamps onto the main water line and uses ultrasonic technology to detect unexpected water activity. Research and Development We invest substantial resources in research and development to enhance our platforms and applications, support our technology infrastructure, develop new capabilities and conduct quality assurance testing.
The Alarm.com platform enables our service provider partners to deploy our interactive security, video monitoring, intelligent automation, access control, energy management and wellness solutions as stand-alone offerings or as combined solutions to address the needs of a broad range of customers. Subscriber Solutions Interactive Security Interactive security is the entry point for most of our smart home and business subscribers.
They can deploy interactive security, video monitoring, property automation, access control, energy management, gunshot detection, water management, vehicle and fleet management, and wellness and personal safety solutions as stand-alone offerings or as integrated solutions. 4 Residential Solutions Interactive Security Interactive security is the entry point for most of our smart home and business subscribers.

… 43 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

130 edited+26 added−18 removed391 unchanged
Biggest changeThe markets in which we participate are highly competitive and many companies, including large technology companies, broadband and security service providers and other managed service providers, are actively targeting the home and business automation, security monitoring, video monitoring and energy management markets. If we are unable to compete effectively with these companies, our sales and profitability could be adversely affected.
Biggest changeFurther, if these laws and regulations were to change or if we fail to comply with such laws and regulations as they exist today or in the future, our business, financial condition, cash flows and results of operations could be materially and adversely affected. 26 The markets in which we participate are highly competitive and many companies, including large technology companies, broadband and security service providers and other managed service providers, are actively targeting the home and business automation, security monitoring, video monitoring and energy management markets.
If any one of these risks materializes, our business, financial condition, cash flows or results of operations could be materially and adversely affected.
If any one of these risks materializes, our business, financial condition, cash flows or results of operations could be materially and adversely affected.
DPF may receive personal data from the UK and Gibraltar in reliance on the UK Extension to the EU-U.S. DPF.
DPF may receive personal data from the UK and Gibraltar in reliance on the UK Extension to the EU-U.S.
Any failure on our part to comply with encryption or other applicable export control requirements could result in financial penalties or other sanctions under the U.S. export regulations, including restrictions on future export activities, which could harm our business and operating results.
Any failure on our part to comply with encryption or other applicable export control requirements could result in financial penalties or other sanctions under the U.S. export regulations, including restrictions on future export activities, which could harm our business and operating results.
These acquisitions and any other acquisitions we may complete in the future will give rise to certain risks, including: • incurring higher than anticipated capital expenditures and operating expenses; • failing to assimilate and integrate the operations and personnel or failing to retain the key personnel of the acquired company or business; • failing to retain customers and service providers and other third-party business partners seeking to terminate or renegotiate their relationships with us; • failing to integrate the acquired technologies, or incurring significant expense to integrate acquired technologies into our platforms and solutions; • disrupting our ongoing business; • encountering complexities associated with managing a larger, more complex and growing business; • diverting our management’s attention and other company resources; • failing to maintain uniform standards, controls and policies; • incurring significant accounting charges; • impairing relationships with employees, service provider partners or subscribers; • finding that the acquired technology, asset or business does not further our business strategy, that we overpaid for the technology, asset or business or that we may be required to write off acquired assets or investments partially or entirely; • failing to realize the expected synergies of the transaction; • being exposed to unforeseen liabilities and contingencies that were not identified prior to acquiring the company; and • being unable to generate sufficient revenue and profits from acquisitions to offset the associated acquisition costs.
These acquisitions and any other acquisitions we may complete in the future will give rise to certain risks, including: • incurring higher than anticipated capital expenditures and operating expenses; 35 • failing to assimilate and integrate the operations and personnel or failing to retain the key personnel of the acquired company or business; • failing to retain customers and service providers and other third-party business partners seeking to terminate or renegotiate their relationships with us; • failing to integrate the acquired technologies, or incurring significant expense to integrate acquired technologies into our platforms and solutions; • disrupting our ongoing business; • encountering complexities associated with managing a larger, more complex and growing business; • diverting our management’s attention and other company resources; • failing to maintain uniform standards, controls and policies; • incurring significant accounting charges; • impairing relationships with employees, service provider partners or subscribers; • finding that the acquired technology, asset or business does not further our business strategy, that we overpaid for the technology, asset or business or that we may be required to write off acquired assets or investments partially or entirely; • failing to realize the expected synergies of the transaction; • being exposed to unforeseen liabilities and contingencies that were not identified prior to acquiring the company; and • being unable to generate sufficient revenue and profits from acquisitions to offset the associated acquisition costs.
Our overall leverage and certain obligations contained in the related documentation could adversely affect our financial health and business and future operations by, among other things: • making it more difficult to satisfy our obligations, including under the terms of the 2026 Notes; • limiting our ability to refinance our debt on terms acceptable to us or at all; • limiting our flexibility to plan for and adjust to changing business and market conditions and increasing our vulnerability to general adverse economic and industry conditions; • limiting our ability to use our available cash flow to fund future acquisitions, working capital, business activities, and other general corporate requirements; and • limiting our ability to obtain additional financing for working capital, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity.
Our overall leverage and certain obligations contained in the related documentation could adversely affect our financial health and business and future operations by, among other things: • making it more difficult to satisfy our obligations, including under the terms of the 2026 Notes and 2029 Notes; • limiting our ability to refinance our debt on terms acceptable to us or at all; • limiting our flexibility to plan for and adjust to changing business and market conditions and increasing our vulnerability to general adverse economic and industry conditions; • limiting our ability to use our available cash flow to fund future acquisitions, working capital, business activities, and other general corporate requirements; and • limiting our ability to obtain additional financing for working capital, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity.
Negative Macroeconomic Conditions in the general economy both in the United States and abroad, including conditions resulting from inflation, changes in gross domestic product growth, financial and credit market fluctuations, energy costs, international trade relations and other geopolitical tensions, the availability and cost of credit, rising interest rates and the global housing and mortgage markets could cause a decrease in consumer discretionary spending and business investment and diminish growth expectations in the U.S. economy and abroad.
Negative Macroeconomic Conditions in the general economy both in the United States and abroad, including conditions resulting from inflation, changes in gross domestic product growth, financial and credit market fluctuations, energy costs, international trade relations and other geopolitical tensions, the availability and cost of credit, fluctuations in interest rates and the global housing and mortgage markets could cause a decrease in consumer discretionary spending and business investment and diminish growth expectations in the U.S. economy and abroad.
If the market for connected home and commercial solutions grows more slowly than anticipated or if demand for connected home and commercial solutions does not grow as quickly as anticipated, whether as a result of competition, product obsolescence, technological change, unfavorable economic conditions, uncertain geopolitical environments, budgetary 31 constraints of our consumers or other factors, we may not be able to continue to increase our revenue and earnings and our stock price would decline.
If the market for connected home and commercial solutions grows more slowly than anticipated or if demand for connected home and commercial solutions does not grow as quickly as anticipated, whether as a result of competition, product obsolescence, technological change, unfavorable economic conditions, uncertain geopolitical environments, budgetary constraints of our consumers or other factors, we may not be able to continue to increase our revenue and earnings and our stock price would decline.
If one or more holders elect to convert their 2026 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If one or more holders elect to convert their 2026 Notes or 2029 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If a malfunction or security breach results in a wider or sustained disruption, it could have a material adverse effect on our reputation, business, financial condition, cash flows or results of operations. 27 Failure to maintain the security of our information and technology networks, including information relating to our service provider partners, subscribers and employees, could adversely affect us.
If a malfunction or security breach results in a wider or sustained disruption, it could have a material adverse effect on our reputation, business, financial condition, cash flows or results of operations. Failure to maintain the security of our information and technology networks, including information relating to our service provider partners, subscribers and employees, could adversely affect us.
Both provisions became effective on January 1, 2023. Current economic and political considerations make additional tax rules in the United States and other applicable jurisdictions subject to significant change, and changes in applicable tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our income tax expense and profitability.
Both provisions became effective on January 1, 2023. Economic and political considerations make additional tax rules in the United States and other applicable jurisdictions subject to significant change, and changes in applicable tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our income tax expense and profitability.
While the global shortage of semiconductors used in our video, cellular communicator, and other products has eased, shortages of 33 essential components of our products or significantly increased lead times for obtaining such components may lead to delays in our production, and we may be unable to fulfill orders for our hardware products on a timely basis or at all.
While the global shortage of semiconductors used in our video, cellular communicator, and other products has eased, shortages of essential components of our products or significantly increased lead times for obtaining such components may lead to delays in our production, and we may be unable to fulfill orders for our hardware products on a timely basis or at all.
Several U.S. states, such as Washington, Nevada, and Connecticut, have passed health privacy laws, which may increase the risk of regulatory actions or consumer class actions being brought against Alarm.com. These laws may also increase our costs of doing business as well as legal costs, and slow down our contracting process.
Several U.S. states, such 38 as Washington, Nevada, and Connecticut, have passed health privacy laws, which may increase the risk of regulatory actions or consumer class actions being brought against Alarm.com. These laws may also increase our costs of doing business as well as legal costs, and slow down our contracting process.
For example, certain cellular carriers shut down their 3G and CDMA wireless networks in 2022 which required our subscribers to upgrade to alternative and potentially 32 more expensive technologies. See “The technology we employ may become obsolete and we may need to incur significant capital expenditures to update our technology” below.
For example, certain cellular carriers shut down their 3G and CDMA wireless networks in 2022 which required our subscribers to upgrade to alternative and potentially more expensive technologies. See “The technology we employ may become obsolete and we may need to incur significant capital expenditures to update our technology” below.
If we are unable to meet the stated service level commitments for these service provider partners or suffer extended periods of service unavailability, we are or may be contractually obligated to provide these service provider partners with credits for future services, provide services at no cost or pay other penalties, which could adversely impact our revenue.
If we are unable to meet the stated service level commitments for these service provider partners or suffer extended periods of service unavailability, we are or may be contractually obligated to provide these service provider partners with credits for future services, provide services at no cost or 39 pay other penalties, which could adversely impact our revenue.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue preferred stock, without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; 48 • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent, and limit the ability of our stockholders to call special meetings; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; and • provide that vacancies on our board of directors may be filled only by the vote of a majority of directors then in office, even though less than a quorum.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue preferred stock, without further stockholder action and with voting liquidation, dividend and other rights superior to our common stock; 49 • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent, and limit the ability of our stockholders to call special meetings; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for director nominees; and • provide that vacancies on our board of directors may be filled only by the vote of a majority of directors then in office, even though less than a quorum.
To the extent we do not successfully avoid or overcome the risks or problems related to any such acquisitions, or fail to manage the acquired business or 35 execute our integration and growth strategy in an efficient and effective manner, our business, financial condition, cash flows and results of operations could be harmed.
To the extent we do not successfully avoid or overcome the risks or problems related to any such acquisitions, or fail to manage the acquired business or execute our integration and growth strategy in an efficient and effective manner, our business, financial condition, cash flows and results of operations could be harmed.
Additionally, Canary and other companies offer all in one video monitoring and awareness devices. In addition, 26 we may compete with other large and small technology companies that offer control capabilities among their products, applications and services, and have ongoing development efforts to address the broader connected home market.
Additionally, Canary and other companies offer all in one video monitoring and awareness devices. In addition, we may compete with other large and small technology companies that offer control capabilities among their products, applications and services, and have ongoing development efforts to address the broader connected home market.
Fluctuations in our results of operations may be due to a number of factors, including: • the portion of our revenue attributable to SaaS and license versus hardware and other sales; • our ability to manage the businesses we have acquired, and to integrate and manage any future acquisitions of businesses; • fluctuations in demand, including due to seasonality or broader economic factors, for our platforms and solutions; • changes in pricing by us in response to competitive pricing actions; • our ability to increase, retain and incentivize the service provider partners that market, sell, install and support our platforms and solutions; • the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient components and products to meet our demands; • the timing and success of introductions of new solutions, products or upgrades by us or our competitors and the entrance of new competitors; • changes in our business and pricing policies or those of our competitors; • the ability to accurately forecast revenue as we generally rely upon our service provider partner network to generate new revenue; • our ability to control costs, including our operating expenses and the costs of the hardware we purchase; 21 • changes in U.S. trade policies, including new or potential tariffs or penalties on imported products; • competition, including entry into the industry by new competitors and new offerings by existing competitors; • issues related to introductions of new or improved products such as supply chain disruptions or shortages of prior generation products or short-term decreased demand for next generation products; • perceived or actual problems with the security, privacy, integrity, reliability, quality or compatibility of our solutions, including those related to security breaches in our systems, our subscribers’ systems, unscheduled downtime, or outages; • the amount and timing of expenditures, including those related to expanding our operations, including through acquisitions, increasing research and development, introducing new solutions or paying litigation expenses; • the ability to effectively manage growth within existing and new markets domestically and abroad; • changes in the payment terms for our platforms and solutions; • collectibility of receivables due from service provider partners and other third parties; • the strength of regional, national and global economies; and • the impact of natural disasters such as earthquakes, hurricanes, fires, power outages, floods, epidemics, pandemics and public health crises, and other catastrophic events or man-made problems such as terrorism, civil unrest and actual or threatened armed conflict, or global or regional economic, political and social conditions.
Fluctuations in our results of operations may be due to a number of factors, including: • the portion of our revenue attributable to SaaS and license versus hardware and other sales; • our ability to manage the businesses we have acquired, and to integrate and manage any future acquisitions of businesses; • fluctuations in demand, including due to seasonality or broader economic factors, for our platforms and solutions; • changes in pricing by us in response to competitive pricing actions; • our ability to increase, retain and incentivize the service provider partners that market, sell, install and support our platforms and solutions; • the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient components and products to meet our demands; • the timing and success of introductions of new solutions, products or upgrades by us or our competitors and the entrance of new competitors; • changes in our business and pricing policies or those of our competitors; • the ability to accurately forecast revenue as we generally rely upon our service provider partner network to generate new revenue; • our ability to control costs, including our operating expenses and the costs of the hardware we purchase; 22 • changes in U.S. trade policies, including new or increased tariffs, sanctions or penalties on imported products; • competition, including entry into the industry by new competitors and new offerings by existing competitors; • issues related to introductions of new or improved products such as supply chain disruptions or shortages of prior generation products or short-term decreased demand for next generation products; • perceived or actual problems with the security, privacy, integrity, reliability, quality or compatibility of our solutions, including those related to security breaches in our systems, our subscribers’ systems, unscheduled downtime, or outages; • the amount and timing of expenditures, including those related to expanding our operations, including through acquisitions, increasing research and development, introducing new solutions or paying litigation expenses; • the ability to effectively manage growth within existing and new markets domestically and abroad; • changes in the payment terms for our platforms and solutions; • collectibility of receivables due from service provider partners and other third parties; • the strength of regional, national and global economies; and • the impact of natural disasters such as earthquakes, hurricanes, fires, power outages, floods, epidemics, pandemics and public health crises, and other catastrophic events or man-made problems such as terrorism, civil unrest and actual or threatened armed conflict, or global or regional economic, political and social conditions.
See “Evolving government and industry regulation and changes in applicable laws relating to the Internet and data 25 privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition” below.
See “Evolving government and industry regulation and changes in applicable laws relating to the Internet and data privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition” below.
If tariffs, trade restrictions, or trade barriers are expanded or interpreted by a court or governmental agency to apply to more of our products, then our exposure to future taxes and duties on such imported products and components could be significant and could have a material effect on our financial results.
If tariffs, sanctions, trade restrictions, or trade barriers are expanded or interpreted by a court or governmental agency to apply to more of our products, then our exposure to future taxes and duties on such imported products and components could be significant and could have a material effect on our financial results.
We believe that building and maintaining market awareness, brand recognition and goodwill in a cost-effective manner is important to our overall success in achieving widespread acceptance of our existing and future solutions and is an important element in attracting new service provider partners and subscribers.
We believe building and maintaining market awareness, brand recognition and goodwill in a cost-effective manner is important to our overall success in achieving widespread acceptance of our existing and future solutions and is an important element in attracting new service provider partners and subscribers.
Trade barriers, or the perception that any of them could be imposed, may 43 have a negative effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between these nations and the United States.
Trade barriers, or the perception that any of them could be imposed, may have a negative effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between these nations and the United States.
The overall management of cybersecurity risk involves coordination between Alarm.com and our acquired 28 businesses and subsidiaries, and data security risks in these entities may be heightened where the technology platform is less mature than the Alarm.com core platform.
The overall management of cybersecurity risk involves coordination between Alarm.com and our acquired businesses and subsidiaries, and data security risks in these entities may be heightened where the technology platform is less mature than the Alarm.com core platform.
If our products are deemed to be subject to additional duties and taxes as determined by a court or governmental agency, we may suffer additional hardware revenue margin erosion or be required to raise our prices on certain imported products.
If our products are deemed to be subject to additional duties and taxes as determined by a court or governmental agency, we may suffer additional hardware revenue margin erosion or be required to raise our prices on certain 44 imported products.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of 2026 Notes surrendered therefor or pay cash with respect to 2026 Notes being converted.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of 2026 Notes or 2029 Notes surrendered therefor or pay cash with respect to 2026 Notes or 2029 Notes being converted.
Increased competition could also result in price reductions and loss of market share, any of which could result in lower revenue and negatively affect our ability to grow our business. Aggressive business tactics by our competitors may reduce our revenue.
Increased 27 competition could also result in price reductions and loss of market share, any of which could result in lower revenue and negatively affect our ability to grow our business. Aggressive business tactics by our competitors may reduce our revenue.
The legal, regulatory and contractual environment surrounding information security, privacy and credit card fraud is constantly evolving and companies that collect and retain such information are under increasing attack by cyber-criminals around the world.
The legal, regulatory and contractual environment surrounding information security, privacy and credit card fraud is constantly evolving and companies that collect and retain such information are under increasing attack by cyber-criminals around 28 the world.
Our work adopting, implementing and complying with the changing legal landscape governing international data transfers slows down our contracting process and increases our legal and compliance costs (including an increase in exposure to substantial fines under EEA data protection laws, increasing requests from our customers for compliance-related product changes, as well as injunctions against processing or transferring personal data from the EEA), which could adversely affect our cash flows and financial condition.
DPF. 37 Our work adopting, implementing and complying with the changing legal landscape governing international data transfers slows down our contracting process and increases our legal and compliance costs (including an increase in exposure to substantial fines under EEA data protection laws, increasing requests from our customers for compliance-related product changes, as well as injunctions against processing or transferring personal data from the EEA), which could adversely affect our cash flows and financial condition.
Our failure to repurchase the 2026 Notes at a time when the repurchase is required by the Indenture or to pay any cash payable on future conversions of the 2026 Notes as required by the Indenture would constitute a default under the Indenture.
Our failure to repurchase the 2026 Notes or 2029 Notes at a time when the repurchase is required by the 2026 Indenture or 2029 Indenture or to pay any cash payable on future conversions of the 2026 Notes or 2029 Notes as required by the 2026 Indenture or 2029 Indenture would constitute a default under the 2026 Indenture or 2029 Indenture.
This undertaxed profits safe harbor transition rule will apply to us through our year ending December 31, 2025. 40 While we do not currently expect the Pillar Two minimum tax directive to have a material impact on our effective tax rate or operations, our analysis is ongoing as the OECD (and many countries) continue to release additional guidance and implement legislation.
This undertaxed profits safe harbor transition rule will apply to us through our year ending December 31, 2025. 41 While we do not currently expect the Pillar Two minimum tax directive to have a material impact on our effective tax rate or operations, our analysis is ongoing as the OECD (and many countries) continue to release additional guidance and implement legislation.
In addition, our ability to repurchase the 2026 Notes or to pay cash upon conversions of the 2026 Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
In addition, our ability to repurchase the 2026 Notes or 2029 Notes or to pay cash upon conversions of the 2026 Notes or 2029 Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
Upon conversion of the 2026 Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock.
Upon conversion of the 2026 Notes or 2029 Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock.
To the extent that any of the above results in delays or cancellations of orders, or delays in the manufacture, deployment or shipment of our platforms and solutions, our business, financial condition, cash flows and results of operations would be harmed. 23 Geopolitical conditions, including trade disputes and direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financial results.
To the extent that any of the above results in delays or cancellations of orders, or delays in the manufacture, deployment or shipment of our platforms and solutions, our business, financial condition, cash flows and results of operations would be harmed. 24 Geopolitical conditions, including trade disputes and direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financial results.
In addition, we currently have a 45 limited portfolio of issued patents compared to our larger competitors, and therefore may not be able to effectively utilize our intellectual property portfolio to assert defenses or counterclaims in response to patent infringement claims or litigation brought against us by third parties.
In addition, we currently have a 46 limited portfolio of issued patents compared to our larger competitors, and therefore may not be able to effectively utilize our intellectual property portfolio to assert defenses or counterclaims in response to patent infringement claims or litigation brought against us by third parties.
In addition, failure to comply with any such applicable laws or regulations could result in substantial fines or revocation of our operating permits and licenses, including in geographic areas where our services have substantial penetration, which could adversely affect our business, financial condition, cash flows and results of operations.
In addition, failure to comply with any such applicable executive orders, laws or regulations could result in substantial fines or revocation of our operating permits and licenses, including in geographic areas where our services have substantial penetration, which could adversely affect our business, financial condition, cash flows and results of operations.
A default under the Indenture governing the 2026 Notes or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
A default under the 2026 Indenture governing the 2026 Notes or the 2029 Indenture governing the 2029 Notes or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
In addition, changes in our platforms or solutions or changes in applicable export or import laws and regulations may create delays in the introduction and sale of our platforms and solutions in international markets, prevent our service provider partners with international operations from deploying our platforms and 41 solutions or, in some cases, prevent the export or import of our platforms and solutions to certain countries, governments or persons altogether.
In addition, changes in our platforms or solutions or changes in applicable export or import laws and regulations may create delays in the introduction and sale of our platforms and solutions in international markets, prevent our service provider partners with international operations from deploying our platforms and 42 solutions or, in some cases, prevent the export or import of our platforms and solutions to certain countries, governments or persons altogether.
Significant judgments, assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, stock-based compensation, business combinations, and income taxes. 44 Risks Related to Our Intellectual Property If we fail to protect our intellectual property and proprietary rights adequately, our business could be harmed.
Significant judgments, assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, stock-based compensation, business combinations, and income taxes. 45 Risks Related to Our Intellectual Property If we fail to protect our intellectual property and proprietary rights adequately, our business could be harmed.
This could harm our intellectual property position as well as our business, financial condition, cash flows and results of operations. 46 Risks Related to Ownership of Our Common Stock The market price of our common stock has been and will likely continue to be volatile.
This could harm our intellectual property position as well as our business, financial condition, cash flows and results of operations. 47 Risks Related to Ownership of Our Common Stock The market price of our common stock has been and will likely continue to be volatile.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the years ended December 31, 2023, 2022 and 2021.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the years ended December 31, 2024, 2023 and 2022.
Moreover, some holders of shares of our common 47 stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or our stockholders.
Moreover, some holders of shares of our common 48 stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or our stockholders.
Furthermore, because data back-up systems are susceptible to malfunctions and interruptions (including those due to equipment damage, power outages, human error, computer viruses, computer hacking, data corruption and a range of other hardware, software and network problems), we cannot guarantee that we will not experience data back-up failures in the future.
Furthermore, because data back-up systems are susceptible to malfunctions and interruptions (including those due to equipment damage, power outages, human error, system or software updates, computer viruses, computer hacking, data corruption and a range of other hardware, software and network problems), we cannot guarantee that we will not experience data back-up failures in the future.
Cyber-attacks from computer hackers and cyber criminals and other malicious Internet-based activity continue to increase generally, and perpetrators of cyber-attacks may be able to develop and deploy viruses, worms, ransomware, malware, DNS attacks, wireless network attacks, attacks on our cloud networks, phishing attempts, social engineering attempts, distributed denial of service attacks and other advanced persistent threats or malicious software programs that attack our products and services, our networks and network endpoints or otherwise exploit any security vulnerabilities of our products, services and networks.
Cyber-attacks from computer hackers and cyber criminals and other malicious Internet-based activity continue to increase generally, and perpetrators of cyber-attacks may be able to develop and deploy viruses, worms, ransomware, malware, DNS attacks, wireless network attacks, attacks on our cloud networks, phishing attempts, social engineering attempts, distributed denial of service attacks and other advanced persistent threats or malicious software programs that attack our products and services, our networks and network endpoints or otherwise exploit any security vulnerabilities of our products, services and networks, or those of our third-party service providers.
In connection with the amendment to the MSA, we agreed to provide ADT a license to use certain Alarm.com intellectual property following the termination or expiration of the initial term of the MSA for which ADT will pay us a monthly royalty for each subscriber to its ADT branded residential interactive security, automation and video service offerings that is covered by any of our licensed patents and not enabled by one of our software platforms.
In connection with the amendment to the MSA, we agreed to provide ADT a license to use certain Alarm.com intellectual property following the termination or expiration of the initial term of the MSA for which ADT pays us a monthly royalty 30 for each subscriber to its ADT branded residential interactive security, automation and video service offerings that is covered by any of our licensed patents and not enabled by one of our software platforms.
In addition, upon conversion of the 2026 Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the 2026 Notes being converted as defined in the Indenture.
In addition, upon conversion of the 2026 Notes or 2029 Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the 2026 Notes or 2029 Notes being converted as defined in the 2026 Indenture and 2029 Indenture.
In the future, we may require additional capital to respond to business opportunities, challenges, acquisitions or unforeseen circumstances and may determine to engage in equity or debt financings or enter into credit facilities for other reasons. For example, on January 20, 2021, we issued the 2026 Notes.
In the future, we may require additional capital to respond to business opportunities, challenges, acquisitions or unforeseen circumstances and may determine to engage in equity or debt financings or enter into credit facilities for other reasons. For example, on January 20, 2021, we issued the 2026 Notes and on May 31, 2024, we issued the 2029 Notes.
Furthermore, our business may be adversely affected by retaliatory trade measures taken by China and other countries, which could materially harm our business, financial condition and results of operations.
Furthermore, our business may be adversely affected by retaliatory tariffs or trade measures taken by China and other countries, which could materially harm our business, financial condition and results of operations.
In the event the conditional conversion feature of the 2026 Notes is triggered, holders of 2026 Notes will be entitled to convert the 2026 Notes at any time during specified periods at their option.
In the event the conditional conversion feature of the 2026 Notes or 2029 Notes is triggered, holders of 2026 Notes or 2029 Notes will be entitled to convert the 2026 Notes or 2029 Notes at any time during specified periods at their option.
Under the terms of the license, ADT will pay us a monthly royalty for each subscriber to its branded residential interactive security, automation and video service offerings that is covered by any of our licensed patents and not supported on our platforms.
Under the terms of the license, ADT pays us a monthly royalty for each subscriber to its branded residential interactive security, automation and video service offerings that is covered by any of our licensed patents and not supported on our platforms.
On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax rate of 15% on companies with revenues of at least 750.0 million Euros, which would go into effect in 2024, subject to certain transition rules.
On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax rate of 15% on companies with revenues of at least 750.0 million Euros, which went into effect in 2024, subject to certain transition rules.
These risks include: • localization of our solutions, including the addition of foreign languages and adaptation to new local practices, as well as certification, registration and other regulatory requirements; 42 • lack of experience in other geographic markets; • strong local competitors; • the cost and burden of complying with, lack of familiarity with, and unexpected changes in, foreign legal and regulatory requirements, including the development of policies and procedures for different countries when requirements under privacy regulations in such countries may conflict or be inconsistent with one another; • difficulties in managing and staffing international operations; • increased costs due to new or potential tariffs, penalties, trade restrictions and other trade barriers, which may increase our cost of hardware revenue and reduce our hardware revenue margins in the future; • fluctuations in currency exchange rates or restrictions on foreign currency; • potentially adverse tax consequences, including the complexities of transfer pricing, value added or other tax systems, double taxation and restrictions and/or taxes on the repatriation of earnings; • dependence on third parties, including commercial partners with whom we do not have extensive experience; • increased financial accounting and reporting burdens and complexities; • political, social, and economic instability, such as the ongoing military conflict between Russia and Ukraine and the war between Israel and Hamas, terrorist attacks, and security concerns in general; and • reduced or varied protection for intellectual property rights in some countries.
These risks include: • localization of our solutions, including the addition of foreign languages and adaptation to new local practices, as well as certification, registration and other regulatory requirements; • lack of experience in other geographic markets; • strong local competitors; • the cost and burden of complying with, lack of familiarity with, and unexpected changes in, foreign legal and regulatory requirements, including the development of policies and procedures for different countries when requirements under privacy regulations in such countries may conflict or be inconsistent with one another; • difficulties in managing and staffing international operations; • increased costs due to new or increased tariffs, sanctions, penalties, trade restrictions and other trade barriers, which may increase our cost of hardware revenue and reduce our hardware revenue margins in the future; • fluctuations in currency exchange rates or restrictions on foreign currency; • potentially adverse tax consequences, including the complexities of transfer pricing, value added or other tax systems, double taxation and restrictions and/or taxes on the repatriation of earnings; • dependence on third parties, including commercial partners with whom we do not have extensive experience; • increased financial accounting and reporting burdens and complexities; • political, social, and economic instability, such as the ongoing conflicts in Ukraine, and in Israel and surrounding areas, terrorist attacks, and security concerns in general; and • reduced or varied protection for intellectual property rights in some countries.
Conversion of the 2026 Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock. The conversion of some or all of the 2026 Notes may dilute the ownership interests of our stockholders.
Conversion of the 2026 Notes and 2029 Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock. The conversion of some or all of the 2026 Notes or 2029 Notes may dilute the ownership interests of our stockholders.
Further worsening, broadening or protracted extension of the economic downturn could have a negative impact on our business, revenue, results of operations and cash flows. 22 We sell security and life safety solutions and if our solutions fail for any reason, we could be subject to liability and our business could suffer.
Further worsening, broadening or protracted extension of an economic downturn could have a negative impact on our business, revenue, results of operations and cash flows. 23 We sell security and life safety solutions and if our solutions fail for any reason, we could be subject to liability and our business could suffer.
The nature of the solutions we provide, including our interactive security solutions, and new technologies and companies we may acquire, potentially exposes us to greater risks of liability for data privacy and security, employee acts or omissions, or technology or system failure than may be inherent in other businesses.
Risks of liability from our operations are significant. The nature of the solutions we provide, including our interactive security solutions, and new technologies and companies we may acquire, potentially exposes us to greater risks of liability for data privacy and security, employee acts or omissions, or technology or system failure than may be inherent in other businesses.
If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities or develop new solutions or enhancements to our existing solutions and we may fail to satisfy subscriber and service provider partner requirements, maintain the quality of our solutions, execute on our business plan or respond to competitive pressures, which could result in our financial results suffering and a decline in our stock price. 24 We have expanded our business rapidly in recent periods.
If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities or develop new solutions or enhancements to our existing solutions and we may fail to satisfy subscriber and service provider partner requirements, maintain the quality of our solutions, execute on our business plan or respond to competitive pressures, which could result in our financial results suffering and a decline in our stock price.
We cannot be certain that advances in cyber-capabilities or other developments will not compromise or breach the technology protecting the networks that access our platforms and solutions, and we can make no assurance that we will be able to detect, prevent, timely and adequately address or mitigate the negative effects of cyber-attacks or other security breaches.
We cannot be certain that advances in cyber-capabilities or other developments will not compromise or breach the technology protecting the networks that access our platforms and solutions, including the networks of our third-party service providers, and we can make no assurance that we will be able to detect, prevent, timely and adequately address or mitigate the negative effects of cyber-attacks or other security breaches.
While the CJEU did not 36 invalidate the use of SCCs as a valid mechanism for transferring personal data from the EEA to the United States, the CJEU required entities relying on SCCs to, among other things, verify on a case-by-case basis that the SCCs provide adequate protection of personal data under European Union, or EU, law by providing, where necessary, additional safeguards to those offered by the existing SCCs.
While the ruling did not invalidate the use of the European Commission’s Standard Contractual Clauses, or SCCs, as a valid mechanism for transferring personal data from the EEA to the United States, the CJEU required entities relying on SCCs to, among other things, verify on a case-by-case basis that the SCCs provide adequate protection of personal data under European Union, or EU, law by providing, where necessary, additional safeguards to those offered by the existing SCCs.
The introduction of AI technologies into our products and services may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks or other complications that could adversely affect our business, reputation or financial results.
The increased adoption of AI technologies in our products and services may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks or other complications that could adversely affect our business, reputation or financial results.
The development and deployment of AI systems involve inherent technical complexities and uncertainties, and our AI systems may encounter unexpected technical difficulties, limitations or errors, including inaccuracies in data processing or flawed algorithms, which could compromise the reliability and effectiveness of our products and services based on AI.
The use, development and deployment of AI systems or the AI systems of third-party AI vendors involve inherent technical complexities and uncertainties, and these AI systems may encounter unexpected technical difficulties, limitations or errors, including inaccuracies in data processing or flawed algorithms, which could compromise the reliability and effectiveness of our products and services based on AI.
If our security measures are breached, including any breaches caused by cyber-attacks, our reputation may be damaged, we may be exposed to significant liabilities under U.S. and foreign laws, and our business and results of operations may be adversely affected.
If our or our third-party service providers' security measures are breached, including any breaches caused by cyber-attacks, our reputation may be damaged, we may be exposed to significant liabilities under U.S. and foreign laws, and our business and results of operations may be adversely affected.
During the years ended December 31, 2023, 2022 and 2021, our 10 largest revenue service provider partners or distributors accounted for 50%, 49% and 47% of our revenue, respectively. ADT LLC, or ADT, represented greater than 15% but not more than 20% of our revenue in 2023, 2022 and 2021.
During the years ended December 31, 2024, 2023 and 2022, our 10 largest revenue service provider partners or distributors accounted for 46%, 50% and 49% of our revenue, respectively. ADT represented greater than 15% but not more than 20% of our revenue in 2024, 2023 and 2022.
If we are unsuccessful in developing and marketing our platforms and solutions into new markets, or if consumers do not perceive or value the benefits of our platforms and solutions, the market for our platforms and solutions might not continue to develop or might develop more slowly than we expect, either of which would harm our revenue and growth prospects. 34 Risks of liability from our operations are significant.
If we are unsuccessful in developing and marketing our platforms and solutions into new markets, or if consumers do not perceive or value the benefits of our platforms and solutions, the market for our platforms and solutions might not continue to develop or might develop more slowly than we expect, either of which would harm our revenue and growth prospects.
Our current competitors include providers of other technology platforms for the connected property with interactive security, including Alula (formed following the merger of ipDatatel, LLC and Resolution Products, LLC), Avigilon Corporation, Brivo Inc., Digital Monitoring Products Inc., Eagle Eye Networks Inc., Honeywell International Inc., Resideo Technologies Inc., SecureNet Technologies, LLC, Telular Corporation (acquired by AMETEK, Inc.), United Technologies Corporation, and Verkada Inc., which sell solutions to service providers, cable operators, technology retailers and other residential and commercial automation providers.
Our current competitors include providers of other technology platforms for the connected property with interactive security, including Alula (formed following the merger of ipDatatel, LLC and Resolution Products, LLC), Ajax Systems CH, Avigilon Corporation, Brivo Inc., Digital Monitoring Products Inc., Eagle Eye Networks Inc., Hangzhou Hikvision Digital Technology Co., Ltd., Honeywell International Inc., Napco Security Technologies, Inc., Resideo Technologies Inc., SecureNet Technologies, LLC, Telular Corporation (acquired by AMETEK, Inc.), and Verkada Inc., which sell solutions to service providers, cable operators, technology retailers and other residential and commercial automation providers.
These service provider partners work with consumers to design, install, update and maintain their connected home and commercial installations and manage the relationship with our subscribers.
We sell our solutions through service provider partners. These service provider partners work with consumers to design, install, update and maintain their connected home and commercial installations and manage the relationship with our subscribers.
For example, the SEC has proposed expansive rules requiring public companies to disclose information about the material impact of climate on their businesses, as well as information about companies’ governance, risk management and strategy related to climate risk. In certain jurisdictions, regulatory requirements may be more stringent than in the United States.
For example, the SEC has adopted expansive rules that, pending litigation, would require public companies to disclose information about the material impact of climate on their businesses, as well as information about companies’ governance, risk management and strategy related to climate risk. In certain jurisdictions, regulatory requirements may be more stringent than in the United States.
Security breaches of, or sustained attacks against, our networks and infrastructure could create system disruptions and shutdowns that could result in disruptions to our operations or unauthorized access to or loss of our data.
Security breaches of, or sustained attacks against, our networks and infrastructure or those of our third-party service providers could create system disruptions and shutdowns that could result in disruptions to our operations or unauthorized access to or loss of our data.
For example, on April 21, 2023, we acquired certain assets of Vintra, on January 18, 2023, we acquired 100% of the issued and outstanding shares of capital stock of EBS, on September 23, 2022, we acquired 85% of the issued and outstanding shares of capital stock of Noonlight, Inc., on October 21, 2019 , we acquired 85% of the issued and outstanding shares of capital stock of PC Open Incorporated, doing business as OpenEye, and on December 14, 2020 , we acquired Shooter Detection Systems, LLC.
For example, on February 10, 2025, we acquired 81% of the issued and outstanding shares of capital stock of CHeKT, on November 22, 2024, we acquired certain assets of Kapacity.io, on April 21, 2023, we acquired certain assets of Vintra, on January 18, 2023, we acquired 100% of the issued and outstanding shares of capital stock of EBS, on September 23, 2022, we acquired 85% of the issued and outstanding shares of capital stock of Noonlight, Inc., on October 21, 2019, we acquired 85% of the issued and outstanding shares of capital stock of PC Open Incorporated, doing business as OpenEye, and on December 14, 2020 , we acquired Shooter Detection Systems, LLC.
The regulatory landscape governing AI technologies is evolving rapidly, and changes in laws, regulations or enforcement practices may impose new compliance requirements, restrict certain AI applications or increase our regulatory obligations, which could negatively impact our business and results of operations.
Changes in laws, regulations or enforcement practices may impose new compliance requirements, restrict certain AI applications or increase our regulatory obligations, which could negatively impact our business and results of operations.
Revenue in countries outside of North America accounted for 4%, 4% and 3% of our total revenue for the years ended December 31, 2023, 2022 and 2021.
Revenue in countries outside of North America accounted for 6%, 4% and 4% of our total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
In addition, the existence of the 2026 Notes may encourage short selling by market participants because the conversion of the 2026 Notes could be used to satisfy short positions, or anticipated conversion of the 2026 Notes into shares of our common stock could depress the price of our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 50
In addition, the existence of the 2026 Notes or 2029 Notes may encourage short selling by market participants because the conversion of the 2026 Notes or 2029 Notes could be used to satisfy short positions, or anticipated conversion of the 2026 Notes or 2029 Notes into shares of our common stock could depress the price of our common stock.
Since we operate on a global basis, our operations could be disrupted by geopolitical conditions, trade disputes, international boycotts and sanctions, political and social instability, acts of war, terrorist activity or other similar events.
Since we operate on a global basis, our operations could be disrupted by geopolitical conditions, trade disputes, international boycotts and sanctions, political and social instability, acts of war (including the ongoing conflicts in Ukraine, and in Israel and surrounding areas), terrorist activity or other similar events.
We have several large hardware suppliers from which we procure hardware on a purchase order basis, including three key suppliers that supplied products and components of our inventory which collectively represented 45% of our hardware revenue for the year ended December 31, 2023 (21%, 13% and 11% of hardware revenue, respectively).
We have several large hardware suppliers from which we procure hardware on a purchase order basis, including three key suppliers that supplied products and components of our inventory which collectively represented 46% of our hardware revenue for the year ended December 31, 2024 (29%, 10% and 7% of hardware revenue, respectively).
We received proceeds from the issuance of the 2026 Notes of $484.3 million, net of $15.7 million of transaction fees and other debt issuance costs.
We received proceeds from the issuance of the 2026 Notes of $484.3 million, net of $15.7 million of transaction fees and other debt issuance costs. We received proceeds from the issuance of the 2029 Notes of $485.2 million, net of $14.8 million of transaction fees and 40 other debt issuance costs.
On July 16, 2020, the Court of Justice of the European Union, or CJEU, invalidated the EU-U.S. Privacy Shield framework, a program for transferring personal data from the EEA to the United States. The ruling also raised questions about whether one of the primary alternatives to the EU-U.S.
On July 16, 2020, the Court of Justice of the European Union, or CJEU, invalidated the EU-U.S. Privacy Shield framework, a program for transferring personal data from the EEA to the United States.
We may not sustain our growth rate and we may not be able to manage any future growth effectively. We have experienced significant growth and also have substantially expanded our operations in a short period of time. Our revenue increased from $618.0 million in 2020 to $881.7 million in 2023.
We may not sustain our growth rate and we may not be able to manage any future growth effectively. We have experienced significant growth and also have substantially expanded our operations in a short period of time. Our revenue increased from $749.0 million in 2021 to $939.8 million in 2024.
We are addressing the risks related to these imposed and announced tariffs, which have affected, or have the potential to affect, at least some of our imports from China. Between one-fifth to one-half of the hardware products that we sell to our customers are imported from China and could be subject to increased tariffs.
These imposed and announced tariffs have affected, or have the potential to affect, at least some of our imports from China. Less than one-third of the hardware products that we sell to our customers are imported from China and could be subject to increased tariffs.
The situations remain uncertain, and while it is difficult to predict the full impact of any of the foregoing, the conflicts and actions taken in response to the conflicts could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.
In addition, it is not possible to predict the broader consequences of the conflicts, and actions taken in response to the conflicts could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.
Due to the foregoing factors and the other risks discussed in this Annual Report, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance.
Fluctuations in our quarterly operating results may be particularly pronounced in the current economic environment. Due to the foregoing factors and the other risks discussed in this Annual Report, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance.
Our accounting policies are critical to the manner in which we present our results of operations and financial condition. Many of these policies are highly complex and involve many assumptions, estimates and judgments.
Our financial results may be adversely affected by changes in accounting principles applicable to us. Our accounting policies are critical to the manner in which we present our results of operations and financial condition. Many of these policies are highly complex and involve many assumptions, estimates and judgments.

… 94 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+1 added−1 removed8 unchanged
Biggest changeWe have established an Information Security team led by our Chief Information Officer, which is responsible for assessing, identifying and managing risks from cybersecurity threats. Managing cybersecurity risk has been integrated into our overall risk management system and is a priority that we monitor and review regularly with our Board of Directors.
Biggest changeManaging cybersecurity risk has been integrated into our overall risk management system and is a priority that we monitor and review regularly with our board of directors.
Among other things, the program includes controls designed to limit and monitor access to our systems, networks and data, prevent inappropriate or unauthorized access or modification, and monitor for threats or vulnerability. We maintain disaster recovery solutions and implement enhancements as necessary and also use technologies that assist in preventing theft and abuse of credentials and sensitive data.
Among other things, the program includes controls designed to limit and monitor access to our systems, networks and data, prevent inappropriate or unauthorized access or modification, and monitor for threats or vulnerability. We maintain disaster recovery solutions and implement enhancements as necessary and use technologies that assist in preventing theft and abuse of credentials and sensitive data.
The Information Security team works closely with our Legal team to make determinations whether a cybersecurity incident has occurred and whether the incident has materially impacted or is reasonably likely to materially impact us. If a cybersecurity incident is deemed material, the incident is communicated to various members of the Alarm.com leadership team and with the Board of Directors.
The Information Security team works closely with our Legal team to make determinations whether a cybersecurity incident has occurred and whether the incident has materially impacted or is reasonably likely to materially impact us. If a cybersecurity incident is deemed material, the incident would be communicated to various members of the Alarm.com leadership team and with the board of directors.
The Board of Directors oversees our overall risk management system, including cybersecurity risks. A member of the Information Security team presents at quarterly Board meetings and discusses specific risk areas, including those relating to cybersecurity.
The board of directors oversees our overall risk management system, including cybersecurity risks. The Chief Information Officer presents at quarterly Board meetings and discusses specific risk areas, including those relating to cybersecurity.
To date, there have not been any cybersecurity threats or incidents that have materially impacted or are reasonably likely to materially impact our business strategy, results of operations or financial condition. In the ordinary course of business, we have experienced and will continue to experience cyber threats and incidents of varying degrees. Refer to Item 1A.
To date, there have not been any cybersecurity threats or incidents that have materially impacted or are reasonably likely to materially impact our business strategy, results of operations or financial condition. Refer to Item 1A. “Risk Factors” for a discussion of risks related to data security and the associated risks to our business. 53
Removed
“Risk Factors” for a discussion of risks related to data security and the associated risks to our business. 51
Added
We have established an Information Security team led by our Chief Information Officer, who has over 30 years of experience in information technology and cloud operations. Our Information Security team is responsible for assessing, identifying and managing risks from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed3 unchanged
Biggest changeAs of December 31, 2023, we occupied 189,058 square feet of commercial space in our principal office under a lease we entered into in August 2014 that is scheduled to expire in 2026. This lease agreement has been periodically amended to expand our square footage as we have continued to grow.
Biggest changeAs of December 31, 2024, we occupied 210,657 square feet of commercial space in our principal office under a lease we entered into in August 2014 that is scheduled to expire in 2034. This lease agreement has been periodically amended to expand our square footage as we have continued to grow.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

10 edited+2 added−11 removed11 unchanged
Biggest changeDistrict Court, District of Oregon, alleging Alarm.com’s products and services directly and indirectly infringe five U.S. patents owned by EcoFactor. EcoFactor is seeking a permanent injunction, enhanced damages and attorneys' fees. EcoFactor had previously asserted two of the same patents against us in an October 2019 complaint with the U.S. International Trade Commission, or ITC.
Biggest changeITEM 3. LEGAL PROCEEDINGS On January 10, 2022, EcoFactor, Inc., or EcoFactor, filed a lawsuit against us in U.S. District Court, District of Oregon, alleging Alarm.com’s products and services directly and indirectly infringe five U.S. patents owned by EcoFactor. EcoFactor is seeking a permanent injunction, enhanced damages and attorneys' fees.
On August 27, 2021, the ITC instituted an investigation into Causam’s allegations naming Alarm.com Incorporated, Alarm.com Holdings, Inc., EnergyHub Inc. and others as respondents. We answered the complaint on October 4, 2021. Among other things, 52 we asserted defenses based on non-infringement and invalidity of the patents in question.
On August 27, 2021, the ITC instituted an investigation into Causam’s allegations naming Alarm.com Incorporated, Alarm.com Holdings, Inc., EnergyHub Inc. and others as respondents. We answered the complaint on October 4, 2021. Among other things, we asserted defenses based on non-infringement and invalidity of the patents in question.
In 2018, Ubiquitous Connectivity, LP, or Ubiquitous, brought suit against CSG in U.S. District Court, Northern District of Oklahoma, alleging infringement of two US patents. The case was stayed by agreement of the parties for several years while the patents in suit were challenged before the PTAB.
In 2018, 54 Ubiquitous Connectivity, LP, or Ubiquitous, brought suit against CSG in U.S. District Court, Northern District of Oklahoma, alleging infringement of two U.S. patents. The case was stayed by agreement of the parties for several years while the patents in suit were challenged before the PTAB.
For a description of our legal proceedings, see Note 13 to our consolidated financial statements for additional information. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 53 PART II.
For a description of our legal proceedings, see Note 13 to our consolidated financial statements for additional information. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 55 PART II.
Three of the asserted patents are in ex parte reexamination proceedings at the PTO, and ex parte reexamination of a fourth patent concluded on August 23, 2023 after the claims were amended. On April 18, 2022, all claims of a fifth patent were found unpatentable by the U.S.
The ex parte reexamination of a third patent is still ongoing, and ex parte reexamination of a fourth patent concluded on August 23, 2023 after the claims were amended. On April 18, 2022, all claims of a fifth patent were found unpatentable by the U.S.
Should Ubiquitous prevail on its infringement claims, we could be required to indemnify CSG for damages in the form of a reasonable royalty or of Ubiquitous’s lost profits.
A hearing on dispositive motions, including for summary judgment, is scheduled for April 15, 2026. A trial is scheduled for July 6, 2026. Should Ubiquitous prevail on its infringement claims, we could be required to indemnify CSG for damages in the form of a reasonable royalty or of Ubiquitous’s lost profits.
In addition to the matters described above, we may be required to provide indemnification to certain of our service provider partners for certain claims regarding our solutions. For example, we incurred costs associated with the indemnification of our service provider ADT, LLC.
In addition to the matters described above, we may be required to provide indemnification to certain of our service provider partners for certain claims regarding our solutions. For example, we incurred costs associated with the indemnification of our service provider Central Security Group – Nationwide, Inc. (d/b/a Alert 360), or CSG, in an ongoing patent litigation.
As a result, only four patent claims remain at issue and the Northern District of Oklahoma case is no longer stayed. A claim construction hearing is scheduled for December 12, 2024. A hearing on dispositive motions, including for summary judgment, is scheduled for April 15, 2026. A trial is scheduled for June 22, 2026.
As a result, only four patent claims remain at issue and the Northern District of Oklahoma case is no longer stayed. The case is currently in the discovery phase. The court held a claim construction hearing on December 12, 2024, but has not yet rendered a claim construction opinion.
Patent Trial and Appeal Board, or PTAB, in an inter partes review, and the parties expect that all claims of that patent will be canceled because EcoFactor's appeal of that PTAB decision was dismissed.
Patent Trial and Appeal Board, or PTAB, in inter partes review, and all claims were canceled on February 1, 2024.
On April 18, 2022, the district court stayed the case at the request of the parties pending the disposition of PTAB and other proceedings involving the asserted patents, and the parties filed a joint status report on January 2, 2024.
We moved to dismiss the Oregon case for failure to state a claim on March 28, 2022. On April 18, 2022, the district court stayed the case at the request of the parties pending the disposition of other proceedings involving the asserted patents. These proceedings include four ex parte reexamination proceedings at the U.S.
Removed
ITEM 3. LEGAL PROCEEDINGS On June 2, 2015, Vivint, Inc., or Vivint, filed a lawsuit against us in U.S. District Court, District of Utah, alleging that our technology directly and indirectly infringes six patents that Vivint purchased.
Added
EcoFactor had previously asserted two of the same patents against us in an October 2019 complaint with the U.S. International Trade Commission, or ITC. In July 2021, the ITC found in favor of Alarm.com. EcoFactor appealed the decision but withdrew its appeal in December 2021.
Removed
On October 27, 2022, we filed a demand for arbitration of a dispute arising under the Patent Cross License Agreement between Alarm.com and Vivint executed in November 2013. Vivint had stopped paying license fees to Alarm.com under the agreement.
Added
Patent and Trademark Office and one inter partes review. Two of the patents were found unpatentable in reexamination, and EcoFactor appealed the decision with respect to one of the patents to the United States Court of Appeals for the Federal Circuit on July 9, 2024, while its time to appeal the second decision has not yet expired.
Removed
As a result of Vivint’s refusal to pay license fees under the agreement, which began during the fourth quarter of 2022, SaaS and license revenue and total revenue through December 31, 2023 were lower by approximately $6.0 million on a quarterly basis.
Removed
Quarterly earnings and cash flow through December 31, 2023 were also impacted by the aforementioned $6.0 million, plus additional legal fees. We also filed a lawsuit against Vivint on January 4, 2023 in U.S. District Court, Eastern District of Texas, alleging that Vivint infringed 15 of our patents.
Removed
On March 8, 2023, Vivint filed counterclaims in the action alleging that Alarm.com’s products and services directly and indirectly infringed 14 patents owned by Vivint. Most of Vivint’s counterclaims also named our service provider ADT LLC as a defendant.
Removed
On December 21, 2023, Alarm.com and Vivint agreed to settle all outstanding litigation between the parties and to enter into a long-term intellectual property license agreement under which Alarm.com will license to Vivint its intellectual property portfolio. On January 10, 2022, EcoFactor, Inc., or EcoFactor, filed a lawsuit against us in U.S.
Removed
In July 2021, the ITC found in favor of Alarm.com. EcoFactor appealed the decision but withdrew its appeal in December 2021. We moved to dismiss the Oregon case for failure to state a claim on March 28, 2022.
Removed
On February 25, 2021, Vivint filed a lawsuit against ADT LLC a/k/a ADT LLC of Delaware d/b/a ADT Security Services in U.S. District Court, District of Utah, alleging that ADT Pulse, Control, and Blue each infringe one or more patents owned by Vivint. Vivint is seeking damages and attorneys’ fees. Vivint filed a second amended complaint on March 8, 2022.
Removed
Pursuant to the December 21, 2023 settlement agreement between Alarm.com and Vivint, the allegations regarding ADT Pulse and Control will be dismissed, ending Alarm.com’s indemnification obligations in this matter. We also incurred costs associated with the indemnification of our service provider Monitronics International, Inc. d/b/a Brinks in patent infringement suits.
Removed
On November 4, 2022, January 13, 2023 and April 18, 2023, IOT Innovations LLC, or IOT, sued Monitronics in U.S. District Court, Eastern District of Texas, alleging patent infringement of certain products and services sold by Monitronics. Together, IOT asserted infringement of 26 patents and sought permanent injunctions, enhanced damages and attorneys' fees.
Removed
On October 3, 2023, IOT filed a stipulation of dismissal of all three cases, ending the cases and the Company's involvement therein. We also incur costs associated with the indemnification of our service provider, Central Security Group – Nationwide, Inc. (d/b/a Alert 360), or CSG, in an ongoing patent litigation.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+3 added−4 removed6 unchanged
Biggest changeIn determining whether to authorize repurchases and the size of the repurchase program, our board of directors considers whether we have funds legally available to repurchase shares of common stock and various alternative uses for our cash and cash equivalents.
Biggest changeIn determining whether to authorize repurchases and the size of the repurchase program, our board of directors considers whether we have funds legally available to repurchase shares of common stock and various alternative uses for our cash and cash equivalents. 57 The stock repurchase program is designed to enable us to make both opportunistic repurchases based on market conditions at management’s discretion and consistent repurchases over time.
We relied on this exemption from registration based in part on representations made by the initial purchasers, including that such initial purchasers would only offer, sell or deliver the 2026 Notes to persons whom they reasonably believe to be qualified institutional buyers within the meaning of Rule 144A under the Securities Act.
We relied on this exemption from registration based in part on representations made by the initial purchasers, including that such initial purchasers would only offer, sell or deliver the 2029 Notes to persons whom they reasonably believe to be qualified institutional buyers within the meaning of Rule 144A under the Securities Act.
For more information related to the 2026 Notes, see Note 13 to our consolidated financial statements included in this Annual Report on Form 10-K. Use of Proceeds None.
For more information related to the 2029 Notes, see Note 13 to our consolidated financial statements included in this Annual Report on Form 10-K. Use of Proceeds None.
The offer and sale of the 2026 Notes to the initial purchasers for the 2026 Notes was made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
The offer and sale of the 2029 Notes to the initial purchasers for the 2029 Notes was made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
The following graph shows a comparison for the period from December 31, 2018 through December 31, 2023 of the cumulative total return for (i) our common stock, (ii) the Nasdaq Composite Index and (iii) Standard & Poor's 500 Index, or S&P 500 Index, assuming an initial investment of $100 on the last trading day for the fiscal year ended December 31, 2018 and reinvestment of all dividends.
The following graph shows a comparison for the period from December 31, 2019 through December 31, 2024 of the cumulative total return for (i) our common stock, (ii) the Nasdaq Composite Index and (iii) Standard & Poor's 500 Index, or S&P 500 Index, assuming an initial investment of $100 on the last trading day for the fiscal year ended December 31, 2019 and reinvestment of all dividends.
When applicable, the excise tax will be included as part of the cost basis of shares acquired and is presented within stockholders’ equity in the consolidated balance sheets and will be excluded from amounts presented above. ITEM 6. [RESERVED]
When applicable, the excise tax will be included as part of the cost basis of shares acquired and is presented within stockholders’ equity in the consolidated balance sheets and will be excluded from amounts presented for shares purchased. ITEM 6. [RESERVED]
On February 15, 2024, the closing price of our common stock on The Nasdaq Global Select Market was $71.00 per share. Holders As of February 15, 2024, there were 19 stockholders of record of our common stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
On February 13, 2025, the closing price of our common stock on The Nasdaq Global Select Market was $63.82 per share. Holders As of February 13, 2025, there were 20 stockholders of record of our common stock, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
The returns in the graph are not intended to forecast or be indicative of possible future performance of our common stock. 54 Recent Sales of Unregistered Securities In January 2021, we issued $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, in a private offering pursuant to Rule 144A under the Securities Act.
The returns in the graph are not intended to forecast or be indicative of possible future performance of our common stock. 56 Recent Sales of Unregistered Securities In May 2024, we issued $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029, in a private offering pursuant to Rule 144A under the Securities Act.
Stock repurchases may be made through a variety of methods, including open-market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, block trades, tender offers and by any combination of the foregoing.
Stock repurchases may be made through a variety of methods, including open-market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, block trades, tender offers and by any combination of the foregoing. No shares were repurchased under our stock repurchase program during the three months ended December 31, 2024.
We utilize our stock repurchase program in an effort to return surplus cash to stockholders efficiently. Our board of directors determines repurchase program amounts through an analysis of projected capital needs to sustain growth as well as to meet other investing and financing criteria.
Our board of directors determines repurchase program amounts through an analysis of projected capital needs to sustain growth as well as to meet other investing and financing criteria.
These withheld shares are not issued or considered common stock repurchases under our stock repurchase program and therefore, are excluded from our repurchase activity. As of January 1, 2023, we are subject to a 1.0% excise tax on the value of net corporate stock repurchases under the Inflation Reduction Act of 2022.
As of January 1, 2023, we are subject to a 1.0% excise tax on the value of net corporate stock repurchases under the Inflation Reduction Act of 2022.
Removed
The stock repurchase program is designed to enable us to make both opportunistic repurchases based on market conditions at management’s discretion and consistent repurchases over time.
Added
On May 24, 2024, our board of directors authorized the repurchase of our common stock in connection with the issuance of the 2029 Notes, the cancellation of the balance under the stock repurchase program ending February 23, 2025, and also authorized a stock repurchase program, effective May 31, 2024, under which we are authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending May 31, 2026.
Removed
Our Insider Trading and Trading Window Policy prohibits our directors, officers and other employees from trading in Alarm.com securities while they are aware of material nonpublic information about Alarm.com, which would include unannounced material stock repurchase plans.
Added
We utilize our stock repurchase program in an effort to return surplus cash to stockholders efficiently and to offset dilution related to the issuance of stock under our 2015 Equity Incentive Plan, or 2015 Plan, and our employee stock purchase plan.
Removed
The prohibition does not apply to trades made pursuant to a Rule 10b5-1 trading plan. 55 During the year ended December 31, 2023, we repurchased 487,918 shares of our common stock under our stock repurchase program for $27.3 million, which includes applicable commissions and fees.
Added
We withhold shares of common stock in connection with the vesting of restricted stock unit awards issued to employees to satisfy applicable tax withholding requirements. These withheld shares are not issued or considered common stock repurchases under our stock repurchase program and therefore, are excluded from our repurchase activity.
Removed
The following table contains information relating to the repurchases of our common stock made by us in the quarter ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as a Part of a Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1 to October 31, 2023 — $ — — $ 87,145,286 November 1 to November 30, 2023 248,378 58.15 248,378 72,701,660 December 1 to December 31, 2023 — — — 72,701,660 Total 248,378 $ 58.15 248,378 We withhold shares of common stock in connection with the vesting of restricted stock unit awards issued to employees to satisfy applicable tax withholding requirements.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data 77 Report of Independent Registered Public Accounting Firm 78 Consolidated Statements of Operations 80 Consolidated Statements of C omprehensive Income 81 Consolidated Balance Sheets 82 Consolidated Statements of Cash Flows 83 Consolidated Statements of Equity 85 Notes to the Consolidated Financial Statements 86 Schedule II. Valuation and Qualifying Accounts 124
Biggest changeFinancial Statements and Supplementary Data 82 Report of Independent Registered Public Accounting Firm 83 Consolidated Statements of Operations 85 Consolidated Statements of Comprehensive Income 86 Consolidated Balance Sheets 87 Consolidated Statements of Cash Flows 88 Consolidated Statements of Equity 90 Notes to the Consolidated Financial Statements 92 Schedule II. Valuation and Qualifying Accounts 133
Item 6. [Reserved] 56 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 56 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 76 Item 8.
Item 6. [Reserved] 58 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 58 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 81 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

148 edited+42 added−44 removed94 unchanged
Biggest changeWe recognize stock-based compensation tax shortfalls and excess tax windfall benefits on a discrete basis during the quarter in which they occur, and we anticipate our effective tax rate will vary from quarter to quarter depending on our stock price as well as the vesting and exercises of various forms of equity compensation under our equity incentive plans each period, including restricted stock units and stock options. 62 Results of Operations The following table sets forth our selected consolidated statements of operations (in thousands) and data as a percentage of revenue for the periods presented: Consolidated Statements of Operations Year Ended December 31, 2023 2022 2021 Revenue: SaaS and license revenue $ 569,200 65 % $ 520,377 62 % $ 460,372 61 % Hardware and other revenue 312,482 35 322,182 38 288,597 39 Total revenue 881,682 100 842,559 100 748,969 100 Cost of revenue (1) : Cost of SaaS and license revenue 85,898 10 73,897 9 66,758 9 Cost of hardware and other revenue 239,261 27 268,684 32 239,141 32 Total cost of revenue 325,159 37 342,581 41 305,899 41 Operating expenses: Sales and marketing (2) 100,226 11 92,748 11 86,664 11 General and administrative (2) 112,930 13 106,688 13 87,406 12 Research and development (2) 245,114 28 218,635 26 177,713 24 Amortization and depreciation 31,424 4 30,870 3 29,715 4 Total operating expenses 489,694 56 448,941 53 381,498 51 Operating income 66,829 7 51,037 6 61,572 8 Interest expense (3,429) — (3,144) — (15,956) (2) Interest income 29,801 3 8,759 1 587 — Other income / (expense), net 4,624 1 (59) — (134) — Income before income taxes 97,825 11 56,593 7 46,069 6 Provision for / (benefit from) income taxes 17,485 2 962 — (5,106) (1) Net income $ 80,340 9 % $ 55,631 7 % $ 51,175 7 % _______________ (1) Excludes amortization and depreciation shown in operating expenses below.
Biggest changeResults of Operations The following table sets forth our selected consolidated statements of operations (in thousands) and data as a percentage of revenue for the periods presented: Consolidated Statements of Operations Year Ended December 31, 2024 2023 2022 Revenue: SaaS and license revenue $ 631,198 67 % $ 569,200 65 % $ 520,377 62 % Hardware and other revenue 308,629 33 312,482 35 322,182 38 Total revenue 939,827 100 881,682 100 842,559 100 Cost of revenue (1) : Cost of SaaS and license revenue 89,512 10 85,898 10 73,897 9 Cost of hardware and other revenue 236,637 25 239,261 27 268,684 32 Total cost of revenue 326,149 35 325,159 37 342,581 41 Operating expenses: Sales and marketing (2) 111,242 12 100,226 11 92,748 11 General and administrative (2) 108,879 12 112,930 13 106,688 13 Research and development (2) 255,878 27 245,114 28 218,635 26 Amortization and depreciation 29,131 3 31,424 4 30,870 3 Total operating expenses 505,130 54 489,694 56 448,941 53 Operating income 108,548 11 66,829 7 51,037 6 Interest expense (11,426) (1) (3,429) — (3,144) — Interest income 47,359 5 29,801 3 8,759 1 Other (expense) / income, net (2,674) — 4,624 1 (59) — Income before income taxes 141,807 15 97,825 11 56,593 7 Provision for income taxes 19,294 2 17,485 2 962 — Net income $ 122,513 13 % $ 80,340 9 % $ 55,631 7 % _______________ (1) Excludes amortization and depreciation shown in operating expenses below.
Software License Revenue. Our SaaS and license revenue also includes our software license revenue from monthly fees charged to service providers on a per subscriber basis for access to our Software platform. The non-hosted software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center.
Our SaaS and license revenue also includes our software license revenue from monthly fees charged to service providers on a per subscriber basis for access to our Software platform. The non-hosted software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center.
Our hardware and other revenue also includes our revenue from the sale of perpetual licenses that provide our customers in the commercial market the right to use our video surveillance software for an indefinite period of time in exchange for a one-time license fee.
Our hardware and other revenue also includes our revenue from the sale of perpetual licenses that provide our customers in the commercial market the right to use our video surveillance software for an indefinite period of time in exchange for a one-time license fee.
If triggering events arise in the future that require changes in the underlying assumptions used in our assessment of our goodwill, and, should those changes be significant, they could have a material impact on our goodwill and potentially our other income / (expense), net, if those significant changes result in an impairment.
If triggering events arise in the future that require changes in the underlying assumptions used in our assessment of our goodwill, and, should those changes be significant, they could have a material impact on our goodwill and potentially our other (expense) / income, net, if those significant changes result in an impairment.
If triggering events arise in the future, depending on the significance of the underlying assumptions in the impairment analysis, they could have a material impact on our intangible assets and long-lived assets and potentially our other income / (expense), net, if those significant changes result in an impairment.
If triggering events arise in the future, depending on the significance of the underlying assumptions in the impairment analysis, they could have a material impact on our intangible assets and long-lived assets and potentially our other (expense) / income, net, if those significant changes result in an impairment.
Convertible Senior Notes On January 20, 2021, we issued $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026 in a private placement to qualified institutional buyers, or the 2026 Notes. The terms of the 2026 Notes are governed by an Indenture, or the Indenture, by and between Alarm.com Holdings, Inc. and U.S.
Convertible Senior Notes - 2026 On January 20, 2021, we issued $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, in a private placement to qualified institutional buyers, or the 2026 Notes. The terms of the 2026 Notes are governed by an Indenture, or the 2026 Indenture, by and between Alarm.com Holdings, Inc. and U.S.
Bank National Association, as trustee. The 2026 Notes are senior unsecured obligations that do not bear regular interest and the principal amount of the 2026 Notes will not accrete. The 2026 Notes may bear special interest under specified circumstances related to our failure to comply with our reporting obligations under the Indenture.
Bank National Association, as trustee. The 2026 Notes are senior unsecured obligations that do not bear regular interest and the principal amount of the 2026 Notes will not accrete. The 2026 Notes may bear special interest under specified circumstances related to our failure to comply with our reporting obligations under the 2026 Indenture.
The 2026 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding August 15, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2026 Notes on each applicable trading day; (2) during the five business day period immediately after any 10 consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2026 Notes for such trading day was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2026 Notes on each such trading day; (3) if we call any or all of the 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2026 Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events as set forth in the Indenture.
The 2026 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding August 15, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2026 Notes on each applicable trading day; (2) during the five business day period immediately after any 10 consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2026 Notes for such trading day was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2026 Notes on each such trading day; (3) if we call any or all of the 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2026 Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events as set forth in the 2026 Indenture.
The initial conversion rate for the 2026 Notes is 6.7939 shares of our common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of $147.19 per share of our common stock, subject to adjustment under certain circumstances in accordance with the terms of the Indenture.
The initial conversion rate for the 2026 Notes is 6.7939 shares of our common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of $147.19 per share of our common stock, subject to adjustment under certain circumstances in accordance with the terms of the 2026 Indenture.
If we undergo a fundamental change (as defined in the Indenture), subject to certain exceptions and except as described in the Indenture, holders may require us to repurchase for cash all or any portion of their 2026 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.
If we undergo a fundamental change (as defined in the 2026 Indenture), subject to certain exceptions and except as described in the 2026 Indenture, holders may require us to repurchase for cash all or any portion of their 2026 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.
The Indenture includes customary covenants and sets forth certain events of default after which the 2026 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the 2026 Notes become automatically due and payable.
The 2026 Indenture includes customary covenants and sets forth certain events of default after which the 2026 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the 2026 Notes become automatically due and payable.
We do not consider these items to be indicative of our core operating performance.
We do not consider these items to be indicative of our core operating performance.
We record uncertain tax positions in accordance with ASC 740-10 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that 69 the tax positions will be sustained based on the technical merits of the position, and (2) with respect to those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.
We record uncertain tax positions in accordance with ASC 740-10 on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and (2) with respect to those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.
Some of these limitations are: (a) although amortization and depreciation are non-cash charges, the assets being amortized and depreciated may have to be replaced in the future, and non-GAAP adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) non-GAAP adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) non-GAAP adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) non-GAAP adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate non-GAAP adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure. 75 Because of these and other limitations, you should consider non-GAAP adjusted EBITDA alongside our other GAAP-based financial performance measures, net income and our other GAAP financial results.
Some of these limitations are: (a) although amortization and depreciation are non-cash charges, the assets being amortized and depreciated may have to be replaced in the future, and non-GAAP adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) non-GAAP adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) non-GAAP adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) non-GAAP adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate non-GAAP adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure. 80 Because of these and other limitations, you should consider non-GAAP adjusted EBITDA alongside our other GAAP-based financial performance measures, net income and our other GAAP financial results.
No tax withholdings related to the 73 vesting of restricted stock units were paid during the year ended December 31, 2022. We also utilized the sell-to-cover method in which shares of our restricted stock unit awards were sold into the market on behalf of the employee upon vesting to cover tax withholding liabilities.
No tax withholdings related to the vesting of restricted stock units were paid during the year ended December 31, 2022. We also utilized the sell-to-cover method in which shares of our restricted stock unit awards were sold into the market on behalf of the employee upon vesting to cover tax withholding liabilities.
This valuation contains uncertainties and requires management to apply significant judgment in estimating the fair value of long-lived and intangible assets acquired, which involves the use of significant estimates and assumptions. 68 Significant estimates and assumptions in valuing certain acquired customer relationship intangible assets include estimates about future expected cash flows and discount rates.
This valuation contains uncertainties and requires management to apply significant judgment in estimating the fair value of long-lived and intangible assets acquired, which involves the use of significant estimates and assumptions. Significant estimates and assumptions in valuing certain acquired customer relationship intangible assets include estimates about future expected cash flows and discount rates.
The $42.3 million decrease in cash used in investing activities was primarily due to the $31.9 million paid to purchase 85% of the issued 74 and outstanding shares of capital stock of Noonlight and the $21.8 million paid for developable land during 2022, which did not occur during 2023.
The $42.3 million decrease in cash used in investing activities was primarily due to the $31.9 million paid to purchase 85% of the issued and outstanding shares of capital stock of Noonlight and the $21.8 million paid for developable land during 2022, which did not occur during 2023.
These Macroeconomic Conditions have and may continue to create supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment. It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions.
These Macroeconomic Conditions have and may continue to create tariffs, supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment. It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions.
Upon conversion, we may satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. It is 72 our current intent to settle the principal amount of the 2026 Notes with cash.
Upon conversion, we may satisfy our conversion obligation by paying or delivering, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. It is our current intent to settle the principal amount of the 2026 Notes with cash.
We believe our SaaS and license revenue renewal rate allows us to measure our ability to retain and grow our SaaS and license revenue and serves as an indicator of the lifetime value of our subscriber base. 59 Components of Operating Results Our fiscal year ends on December 31.
We believe our SaaS and license revenue renewal rate allows us to measure our ability to retain and grow our SaaS and license revenue and serves as an indicator of the lifetime value of our subscriber base. Components of Operating Results Our fiscal year ends on December 31.
Sales and marketing expense consists primarily of personnel and related expenses for our sales and marketing teams, including salaries, bonuses, stock-based compensation, benefits, travel, and commissions. Our sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.
Sales and marketing expense consists primarily of personnel and related expenses for our sales and marketing teams, including salaries, bonuses, stock-based compensation, benefits, travel, and commissions. Our 63 sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.
We primarily transfer hardware to our customers upon delivery to the customer, which corresponds with the time at which the customer obtains control of the hardware. We record a reserve against revenue for hardware returns based on historical returns.
We primarily transfer hardware to 62 our customers upon delivery to the customer, which corresponds with the time at which the customer obtains control of the hardware. We record a reserve against revenue for hardware returns based on historical returns.
We exclude the impact related to our provision for / (benefit from) income taxes from non-GAAP adjusted EBITDA because we do not consider this tax adjustment to be part of our ongoing results of operations. 58 GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed technology and trade names.
We exclude the impact related to our provision for income taxes from non-GAAP adjusted EBITDA because we do not consider this tax adjustment to be part of our ongoing results of operations. GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships, developed technology and trade names.
Non-GAAP Measures We define non-GAAP adjusted EBITDA as our net income before interest expense, interest income, certain activity within other income / (expense), net, provision for / (benefit from) income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
Non-GAAP Measures We define non-GAAP adjusted EBITDA as our net income before interest expense, interest income, certain activity within other (expense) / income, net, provision for income taxes, amortization and depreciation expense, stock-based compensation expense, acquisition-related expense, legal costs and settlement fees incurred and received in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
We record stock-based compensation expense related to performance-based restricted stock units based on management’s determination of the probable outcome of the performance conditions, which requires considerable judgment.
We record stock-based compensation expense related to performance-based restricted stock units based on 73 management’s determination of the probable outcome of the performance conditions, which requires considerable judgment.
For each of the years ended December 31, 2023, 2022 and 2021, our reserve against revenue for hardware returns was 1% of hardware and other revenue. We evaluate our hardware reserve on a quarterly basis or if there is an indication of significant changes in return experience. Historically, our returns of hardware have not significantly differed from our estimated reserve.
For each of the years ended December 31, 2024, 2023 and 2022, our reserve against revenue for hardware returns was 1% of hardware and other revenue. We evaluate our hardware reserve on a quarterly basis or if there is an indication of significant changes in return experience. Historically, our returns of hardware have not significantly differed from our estimated reserve.
The $49.3 million increase in cash from operating assets and liabilities was primarily due to a $61.3 million change in inventory resulting from a decrease in purchased inventory following prior year purchase activity to reduce risks and uncertainties in our supply chain as well as differences in the timing of disbursements and the collection of receipts in 2023 as compared to 2022.
The $49.3 million increase in cash from operating assets and liabilities was primarily due to a $61.3 million change in inventory resulting from a decrease in purchased inventory following 2022 purchase activity to reduce risks and uncertainties in our supply chain as well as differences in the timing of disbursements and the collection of receipts in 2023 as compared to 2022.
Please see Non-GAAP Measures in this section for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the years ended December 31, 2023, 2022 and 2021. SaaS and License Revenue Renewal Rate Our SaaS and license revenue renewal rate is an operating metric.
Please see Non-GAAP Measures in this section for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the years ended December 31, 2024, 2023 and 2022. SaaS and License Revenue Renewal Rate Our SaaS and license revenue renewal rate is an operating metric.
Qualitative factors we consider when we perform a qualitative analysis include, but are not limited to, macroeconomic conditions, industry and market conditions, company specific events, changes in circumstances and market capitalization. For our 2023 annual impairment review, we performed a qualitative assessment for our Alarm.com reporting unit, our only reporting unit with a goodwill balance.
Qualitative factors we consider when we perform a qualitative analysis include, but are not limited to, macroeconomic conditions, industry and market conditions, company specific events, changes in circumstances and market capitalization. For our 2024 annual impairment review, we performed a qualitative assessment for our Alarm.com reporting unit, our only reporting unit with a goodwill balance.
The non-cash items include amortization and depreciation expense, amortization of debt discount and debt issuance costs for the 2026 Notes included in interest expense and stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
The non-cash items include amortization and depreciation expense, amortization of debt issuance costs for the 2026 Notes and 2029 Notes included in interest expense, stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
Our cash and cash equivalents as of December 31, 2023 are available for working capital purposes. Our investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification and maturities of our investments to preserve capital, maintain liquidity and limit the amount of credit risk exposure.
Our cash and cash equivalents as of December 31, 2024 are available for working capital purposes. Our investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification and maturities of our investments to preserve capital, maintain liquidity and limit the amount of credit risk exposure.
We did not make any material changes to the underlying assumptions used to calculate deferred tax assets and liabilities as well as uncertain tax positions for the year ended December 31, 2023 and we do not expect any material changes in the near term to the underlying assumptions used to calculate deferred tax assets and liabilities as well as uncertain tax positions for the year ended December 31, 2023.
We did not make any material changes to the underlying assumptions used to calculate deferred tax assets and liabilities as well as uncertain tax positions for the year ended December 31, 2024, and we do not expect any material changes in the near term to the underlying assumptions used to calculate deferred tax assets and liabilities as well as uncertain tax positions for the year ended December 31, 2024.
However, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on our deferred tax assets and liabilities as well as our provision for / (benefit from) income taxes. Stock-Based Compensation We compensate our executive officers, board of directors and employees with stock-based compensation plans under our 2015 Equity Incentive Plan.
However, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on our deferred tax assets and liabilities as well as our provision for income taxes. Stock-Based Compensation We compensate our executive officers, board of directors and employees with stock-based compensation plans under our 2015 Plan.
The Section 174 impact on 2024 cash flows from operating activities will depend on, among other factors, our 2024 operating results and the level of 2024 research and development activity.
The Section 174 impact on 2025 cash flows from operating activities will depend on, among other factors, our 2025 operating results and the level of 2025 research and development activity.
In addition, in certain markets, our EnergyHub subsidiary sells its demand response service for an annual service fee, with pricing based on the number of subscribers or amount of aggregate electricity demand made available for a utility’s or market’s control.
In addition, in certain markets, our EnergyHub subsidiary sells its demand response service for an annual service fee, with pricing based on the number of subscribers or amount of aggregate electricity demand made available for a utility’s or market’s control. Software License Revenue .
There were no triggering events that occurred between our qualitative annual impairment test performed as of October 1, 2023 and December 31, 2023.
There were no triggering events that occurred between our qualitative annual impairment test performed as of October 1, 2024 and December 31, 2024.
Software license revenue represented 3%, 3% and 4% of our revenue in 2023, 2022 and 2021, respectively. We also generate revenue from the sale of many types of hardware, including video cameras, video recorders, cellular radio modules, smart thermostats, image sensors, gunshot detection sensors and other peripherals, that enable our solutions.
Software license revenue represented 2%, 3% and 3% of our revenue in 2024, 2023 and 2022, respectively. We also generate revenue from the sale of many types of hardware, including video cameras, video recorders, cellular radio modules, smart thermostats, image sensors, gunshot detection sensors and other peripherals, that enable our solutions.
These withheld shares are not issued or considered common stock repurchases under our stock repurchase program. We paid $2.6 million and $4.5 million of tax withholdings related to vesting of restricted stock units during the years ended December 31, 2023 and 2021, respectively.
These withheld shares are not issued or considered common stock repurchases under our stock repurchase program. We paid $3.4 million and $2.6 million of tax withholdings related to vesting of restricted stock units during the years ended December 31, 2024 and 2023, respectively.
The number of employees in research and development functions increased from 1,004 as of January 1, 2023 to 1,118 as of December 31, 2023. Our research and development efforts are focused on innovating new features and enhancing the functionality of our platforms and the solutions we offer to our service provider partners and subscribers.
The number of employees in research and development functions increased from 1,118 as of January 1, 2024 to 1,127 as of December 31, 2024. Our research and development efforts are focused on innovating new features and enhancing the functionality of our platforms and the solutions we offer to our service provider partners and subscribers.
Also included in general and administrative expenses are credit losses and acquisition-related expenses, which consist primarily of legal, accounting and professional service fees directly related to acquisitions and valuation gains or losses on acquisition-related contingent liabilities. 61 The number of employees in general and administrative functions increased from 218 as of January 1, 2023 to 229 as of December 31, 2023.
Also included in general and administrative expenses are credit losses and acquisition-related expenses, which consist primarily of legal, accounting and professional service fees directly related to acquisitions and valuation gains or losses on acquisition-related contingent liabilities. The number of employees in general and administrative functions increased from 229 as of January 1, 2024 to 237 as of December 31, 2024.
The number of employees in sales and marketing functions increased from 511 as of January 1, 2023 to 565 as of December 31, 2023. We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally and we expect to increase our marketing expense in 2024 as compared to 2023.
The number of employees in sales and marketing functions increased from 565 as of January 1, 2024 to 572 as of December 31, 2024. We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally and we expect to increase our marketing expense in 2025 as compared to 2024.
Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 93%, 94% and 95% of our revenue, net of intersegment eliminations, for the years ended December 31, 2023, 2022 and 2021, respectively.
Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 92%, 93% and 94% of our revenue, net of intersegment eliminations, for the years ended December 31, 2024, 2023 and 2022, respectively.
Additionally, our hardware and other revenue includes our revenue from the sale of licenses that provide our customers the right to use our gunshot detection solution in exchange for license fees. Hardware and other revenue represented 35%, 38% and 39% of our revenue in 2023, 2022 and 2021, respectively.
Additionally, our hardware and other revenue includes our revenue from the sale of licenses that provide our customers the right to use our gunshot detection solution in exchange for license fees. Hardware and other revenue represented 33%, 35% and 38% of our revenue in 2024, 2023 and 2022, respectively.
The SaaS and license revenue for our Other segment increased $12.3 million in 2023 as compared to 2022 primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.
The SaaS and license revenue for our Other segment increased $12.2 million in 2024 as compared to 2023 primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.
Our cloud-based platform offers an expansive suite of IoT solutions addressing opportunities in the residential, multi-family, small business and enterprise commercial markets. Alarm.com’s solutions include security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness and data-rich emergency response.
Our cloud-based platform offers an expansive suite of IoT solutions addressing global opportunities in the residential, multi-family, small business and enterprise commercial markets. Alarm.com’s solution suite includes security, video and video analytics, energy management, access control, electric utility grid management, indoor gunshot detection, water management, health and wellness, personal safety and data-rich emergency response.
Our capital expenditures have primarily been for general business use, including leasehold improvements as we have expanded our office space to accommodate our growth in headcount, computer equipment used internally and expansion of our network operations centers. For 2023, cash flows used in investing activities was $26.0 million, compared to $68.3 million in 2022.
Our capital expenditures have primarily been for general business use, including leasehold improvements as we have expanded our office space to accommodate our growth in headcount, computer equipment used internally and expansion of our network operations centers. For 2024, cash flows used in investing activities was $24.7 million, compared to $26.0 million in 2023.
We derive a portion of our revenue from licensing our intellectual property to third parties on a per customer basis. SaaS and license revenue represented 65%, 62% and 61% of our revenue in 2023, 2022 and 2021, respectively.
We derive a portion of our revenue from licensing our intellectual property to third parties on a per customer basis. SaaS and license revenue represented 67%, 65% and 62% of our revenue in 2024, 2023 and 2022, respectively.
Please see Non-GAAP Measures below in this section of this Annual Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measure, for the years ended December 31, 2023, 2022 and 2021.
Please see Non-GAAP Measures below in this section of this Annual Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable measurement in accordance with GAAP, for the years ended December 31, 2024, 2023 and 2022.
Approximately one-fifth to one-half of the hardware products that we sell to our service provider partners are imported from China and could be subject to increased tariffs. While the additional import duties resulted in an increase to our cost of hardware revenue, these import duties had a modest impact on hardware revenue margins.
Less than one-third of the hardware products that we sell to our service provider partners are imported from China and could be subject to increased tariffs. While the additional import duties resulted in an increase to our cost of hardware revenue, these import duties had a modest impact on hardware revenue margins.
Over the next 12 months, we expect our capital expenditure requirements to be between $4.5 million and $6.5 million, primarily related to purchases of computer software and equipment as well as the continued build out of our leased and owned office space.
Over the next 12 months, we expect our capital expenditure requirements to be between $12.0 million and $15.0 million, primarily related to purchases of computer software and equipment as well as the continued build out of our leased and owned office space.
Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 15% and 14% in 2023 and 2022, respectively. The increase in cost of SaaS and license revenue as a percentage of SaaS and license revenue in 2023 as compared to 2022 is a reflection of the mix of sales of services during the periods.
Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% and 15% in 2024 and 2023, respectively. The decrease in cost of SaaS and license revenue as a percentage of SaaS and license revenue in 2024 as compared to 2023 is a reflection of the mix of sales and services during the periods.
We exclude interest income and certain activity within other income / (expense), net including gains, losses or impairments on investments and other assets, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations.
We exclude interest income and certain activity within other (expense) / income, net including gains, losses or impairments on investments without readily determinable fair values and other assets, gains and losses from equity method investments, gains on settlement fees and losses on the early extinguishment of debt, when applicable, from non-GAAP adjusted EBITDA because we do not consider it part of our ongoing results of operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 24, 2023. Segment Information We have two reportable segments: Alarm.com and Other.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 22, 2024. Segment Information We have two reportable segments: Alarm.com and Other.
Based on information currently available to us, we estimate the increased 2024 Section 174 federal and state cash tax payable for our 2024 taxable income to be in the range of $35.0 million to $40.0 million if the requirement to capitalize and amortize research and development expenditures is not deferred, modified or repealed.
Based on information currently available to us, we estimate the 2025 Section 174 federal and state cash tax payable for our 2025 taxable income to be in the range of $25.0 million to $30.0 million if the requirement to capitalize and amortize research and development expenditures is not deferred, modified or repealed.
Our other business metrics may be calculated in a manner different from the way similar business metrics used by other companies are calculated and include the following (dollars in thousands): Year Ended December 31, 2023 2022 2021 SaaS and license revenue $ 569,200 $ 520,377 $ 460,372 Non-GAAP adjusted EBITDA 153,967 146,848 142,472 SaaS and license revenue renewal rate 94 % 94 % 94 % SaaS and License Revenue SaaS and license revenue is a GAAP measure that we use to measure our current performance and estimate our future performance.
Our other business metrics may be calculated in a manner different from the way similar business metrics used by other companies are calculated and include the following (dollars in thousands): Year Ended December 31, 2024 2023 2022 SaaS and license revenue $ 631,198 $ 569,200 $ 520,377 Non-GAAP adjusted EBITDA 176,239 153,967 146,848 SaaS and license revenue renewal rate 95 % 94 % 94 % SaaS and License Revenue SaaS and license revenue is a GAAP measure that we use to measure our current performance and estimate our future performance.
Comparison of Years Ended December 31, 2022 to December 31, 2021 A comparison of the years ended December 31, 2022 and 2021 has been omitted from this Form 10-K, but may be found in “Item 7.
Comparison of Years Ended December 31, 2023 to December 31, 2022 A comparison of the years ended December 31, 2023 and 2022 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
Beginning upon the first grant of options in 2022, the expected term for options granted is estimated using our historical experience, including information related to options we have granted. Recent Accounting Pronouncements See Note 2 of our consolidated financial statements for information related to recently issued accounting standards.
The expected term for options granted is estimated using our historical experience, including information related to options we have granted. Recent Accounting Pronouncements See Note 2 of our consolidated financial statements for information related to recently issued accounting standards.
The 2026 Notes are discussed in more detail above under “Convertible Senior Notes.” Dividends We did not declare or pay dividends during the years ended December 31, 2023, 2022 or 2021. We cannot provide any assurance that we will declare or pay cash dividends on our common stock in the future.
The 2029 Notes are discussed in more detail above under "Convertible Senior Notes - 2029 Notes." Dividends We did not declare or pay dividends during the years ended December 31, 2024, 2023 or 2022. We cannot provide any assurance that we will declare or pay cash dividends on our common stock in the future.
We typically expect hardware and other revenue to fluctuate as a percentage of total revenue. Highlights of our financial performance for the periods covered in this Annual Report include: • SaaS and license revenue increased 9% to $569.2 million in 2023 from $520.4 million in 2022.
We typically expect hardware and other revenue to fluctuate as a percentage of total revenue. Highlights of our financial performance for the periods covered in this Annual Report include: • SaaS and license revenue increased 11% to $631.2 million in 2024 from $569.2 million in 2023.
As of December 31, 2023, our cash and cash equivalents were primarily held in money market accounts. Liquidity and Capital Resources As of December 31, 2023, we had $697.0 million in cash and cash equivalents. We consider all highly liquid instruments purchased with an original maturity from the date of purchase of three months or less to be cash equivalents.
As of December 31, 2024, our cash and cash equivalents were primarily held in money market accounts. Liquidity and Capital Resources As of December 31, 2024, we had $1.22 billion in cash and cash equivalents. We consider all highly liquid instruments purchased with an original maturity from the date of purchase of three months or less to be cash equivalents.
The cost of SaaS and license revenue for the 64 Alarm.com segment increased $8.5 million in 2023 as compared to 2022 primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
The cost of SaaS and license revenue for the Alarm.com segment increased $0.3 million in 2024 as compared to 2023 primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
If we raise additional funds through the incurrence of indebtedness, such indebtedness would likely have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations.
If we raise additional funds through the incurrence of indebtedness, such indebtedness would likely have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. Any additional equity financing would be dilutive to our current stockholders.
We may redeem for cash, all or any portion of the 2026 Notes, at our option, on or after January 20, 2024, at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the 2026 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption.
We may redeem for cash, all or any portion of the 2029 Notes (subject to the partial redemption limitation described below), at our option, on or after June 7, 2027, at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the 2029 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending 76 on, and including, the trading day immediately preceding the date on which we provide notice of redemption.
The overall number of employees in our sales and marketing teams increased from 511 as of December 31, 2022 to 565 as of December 31, 2023.
The overall number of employees in our sales and marketing teams increased from 565 as of December 31, 2023 to 572 as of December 31, 2024.
Our software license revenue included within SaaS and license revenue decreased $3.6 million to $23.2 million in 2023 as compared to $26.8 million during 2022, primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
Our software license revenue included within SaaS and license revenue decreased $2.9 million to $20.3 million in 2024 as compared to $23.2 million during 2023, primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
Research and development expense from our Other segment increased by $4.5 million in 2023 as compared to 2022 primarily due to an increase in our personnel and related costs. The overall number of employees in research and development functions increased from 1,004 as of December 31, 2022 to 1,118 as of December 31, 2023.
Research and development expense from our Other segment increased by $3.3 million in 2024 as compared to 2023 primarily due to an increase in our personnel and related costs. The overall number of employees in research and development functions increased from 1,118 as of December 31, 2023 to 1,127 as of December 31, 2024.
(2) Operating expenses include stock-based compensation expense as follows (in thousands): Year Ended December 31, 2023 2022 2021 Stock-based compensation expense data: Cost of hardware and other revenue $ 5 $ — $ — Sales and marketing 3,522 4,342 4,432 General and administrative 13,028 15,037 9,941 Research and development 30,728 33,275 24,321 Total stock-based compensation expense $ 47,283 $ 52,654 $ 38,694 63 The following table sets forth the components of cost of revenue as a percentage of revenue: Year Ended December 31, 2023 2022 2021 Components of cost of revenue as a percentage of revenue: Cost of SaaS and license revenue as a percentage of SaaS and license revenue 15 % 14 % 15 % Cost of hardware and other revenue as a percentage of hardware and other revenue 77 83 83 Total cost of revenue as a percentage of total revenue 37 % 41 % 41 % Comparison of Years Ended December 31, 2023 to December 31, 2022 The following tables in this section set forth our selected consolidated statements of operations (in thousands), data for the percentage change and data as a percentage of revenue for the years ended December 31, 2023 and 2022.
(2) Operating expenses include stock-based compensation expense as follows (in thousands): 65 Year Ended December 31, 2024 2023 2022 Stock-based compensation expense data: Cost of hardware and other revenue $ 2 $ 5 $ — Sales and marketing 2,833 3,522 4,342 General and administrative 13,080 13,028 15,037 Research and development 25,327 30,728 33,275 Total stock-based compensation expense $ 41,242 $ 47,283 $ 52,654 The following table sets forth the components of cost of revenue as a percentage of revenue: Year Ended December 31, 2024 2023 2022 Components of cost of revenue as a percentage of revenue: Cost of SaaS and license revenue as a percentage of SaaS and license revenue 14 % 15 % 14 % Cost of hardware and other revenue as a percentage of hardware and other revenue 77 77 83 Total cost of revenue as a percentage of total revenue 35 % 37 % 41 % Comparison of Years Ended December 31, 2024 to December 31, 2023 The following tables in this section set forth our selected consolidated statements of operations (in thousands), data for the percentage change and data as a percentage of revenue for the years ended December 31, 2024 and 2023.
Sales and marketing expense from our Other segment increased $1.7 million in 2023 as compared to 2022, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team.
Sales and marketing expense from our Other segment increased $4.8 million in 2024 as compared to 2023, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team.
We did not make any material changes to the underlying assumptions used as of the acquisition date to calculate the purchase price of the business combinations that occurred during 2023 and 2022. We do not expect any material changes in the near term to the underlying assumptions used to calculate the purchase price of those business combinations.
We did not make any material changes to the underlying assumptions used as of the acquisition date to calculate the purchase price of the business combinations that occurred during 2023 and 2022.
If tariffs are increased or are expanded to apply to more of our products, such actions may increase our cost of hardware revenue and reduce our hardware revenue margins in the future. We continue to monitor the changes in tariffs.
If tariffs are increased or are expanded to apply to more of our products, such actions may increase our cost of hardware revenue and reduce our hardware revenue margins in the future. We continue to monitor the changes in tariffs. We currently expect our hardware revenue margins in 2025 to approximate the hardware revenue margins experienced during 2024.
Historical Cash Flows The following table sets forth our cash flows for the periods indicated (in thousands): Year Ended December 31, 2023 2022 2021 Cash flows from operating activities $ 135,965 $ 56,901 $ 103,157 Cash flows used in investing activities (25,966) (68,319) (20,365) Cash flows (used in) / from financing activities (31,865) (76,324) 374,370 Operating Activities Cash flows from operating activities have typically been generated from our net income and by changes in our operating assets and liabilities, particularly from accounts receivable and inventory, adjusted for non-cash expense items such as amortization and depreciation, deferred income taxes and stock-based compensation.
Historical Cash Flows The following table sets forth our cash flows for the periods indicated (in thousands): Year Ended December 31, 2024 2023 2022 Cash flows from operating activities $ 206,413 $ 135,965 $ 56,901 Cash flows used in investing activities (24,681) (25,966) (68,319) Cash flows from / (used in) financing activities 346,430 (31,865) (76,324) 78 Operating Activities Cash flows from operating activities have typically been generated from our net income and by changes in our operating assets and liabilities, particularly from accounts receivable, accounts payable and inventory, adjusted for non-cash expense items such as amortization and depreciation, deferred income taxes and stock-based compensation.
On February 15, 2023, our board of directors authorized the cancellation of the balance under the stock repurchase program ending December 3, 2023 and also authorized a stock repurchase program, effective February 23, 2023, under which we are authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending February 23, 2025.
Stock Repurchase Programs On February 15, 2023, our board of directors authorized a stock repurchase program, effective February 23, 2023, under which we were authorized to purchase up to an aggregate of $100.0 million of our outstanding common stock during the two-year period ending February 23, 2025.
While variable consideration assumptions and assumptions regarding the relative stand-alone selling price are specific to each contract, we did not make any material changes to these assumptions for the year ended December 31, 2023. We do not expect any material changes in the near term to the underlying assumptions used to recognize revenue during the year ended December 31, 2023.
While variable consideration assumptions are specific to each contract, we did not make any material changes to these assumptions for the year ended December 31, 2024. We do not expect any material changes in the near term to the underlying assumptions used to recognize revenue during the year ended December 31, 2024.
Research and Development Expense Year Ended December 31, % Change 2023 2022 2023 vs. 2022 Research and development $ 245,114 $ 218,635 12 % % of total revenue 28 % 26 % 65 The $26.5 million increase in research and development expense in 2023 as compared to 2022 was primarily due to a $20.2 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $1.8 million increase in our expenses for external consultants.
Research and Development Expense Year Ended December 31, % Change 2024 2023 2024 vs. 2023 Research and development $ 255,878 $ 245,114 4 % % of total revenue 27 % 28 % The $10.8 million increase in research and development expense in 2024 as compared to 2023 was primarily due to a $5.7 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $2.4 million increase in our expenses for external consultants.
Cost of software license revenue as a percentage of software license revenue was 3% and 2% in 2023 and 2022, respectively.
Cost of software license revenue as a percentage of software license revenue was 3% in 2024 and 2023.
It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions. 60 Cost of Revenue Our cost of SaaS and license revenue primarily includes the amounts paid to wireless network providers and, to a lesser extent, the costs of running our network operations centers which are expensed as incurred, as well as patent and royalty costs in connection with technology licensed from third-party providers and amounts paid to distributed energy resource providers.
Cost of Revenue Our cost of SaaS and license revenue primarily includes the amounts paid to wireless network providers and, to a lesser extent, the costs of running our network operations centers which are expensed as incurred, as well as patent and royalty costs in connection with technology licensed from third-party providers and amounts paid to distributed energy resource providers.
We expect in the near term that amortization and depreciation may fluctuate based on our acquisition activity, development of our platforms and capitalized expenditures. Interest Expense We record interest expense associated with our 2026 Notes and acquired debt. Interest expense in 2024 is expected to remain relatively consistent with the interest expense in 2023.
We expect in the near term that amortization and depreciation may fluctuate based on our acquisition activity, development of our platforms and capitalized expenditures. Interest Expense We record interest expense associated with our 2026 Notes, 2029 Notes and acquired debt. Interest expense in 2025 is expected to increase as compared to 2024 due to the issuance of the 2029 Notes.
The SaaS and license revenue for the Alarm.com segment increased $36.5 million in 2023 as compared to 2022 primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2022.
The SaaS and license revenue for the Alarm.com segment increased $49.8 million in 2024 as compared to 2023 primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023, as well as an increase in our license revenue.
These service provider contracts typically have an initial term of one year, with subsequent renewal terms of one year. Our service provider partners have indicated that they typically have three to five-year service contracts with residential and commercial property owners who use our solutions. We also generate hardware and other revenue, primarily from our service provider partners and distributors.
Contracts with our service provider partners typically have an initial term of one year, with subsequent renewal terms of one year. Our service provider partners have indicated that they typically have three to five-year service contracts with residential and commercial property owners who use our solutions.
The cost of SaaS and license revenue for the Other segment increased $3.5 million in 2023 as compared to 2022 primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.
The cost of SaaS and license revenue for the Other segment increased $3.3 million in 2024 as compared to 2023 primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.The cost of hardware and other revenue for the Alarm.com segment decreased $2.1 million in 2024 as compared to 2023 primarily due to a decrease in the number of hardware units shipped.

… 154 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed1 unchanged
Biggest changeWhile we have experienced inflationary pressures on our inventory component and freight costs, we implemented price increases on certain products in 2022 to partially offset these increases in costs. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
Biggest changeIf our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
If a significant portion of our revenue and operating expenses becomes denominated in currencies other than U.S. dollars, we may not be able to effectively manage this risk, and our business, financial condition and results of operations could be adversely affected by translation and by transactional foreign currency conversions. 76
If a significant portion of our revenue and operating expenses becomes denominated in currencies other than U.S. dollars, we may not be able to effectively manage this risk, and our business, financial condition and results of operations could be adversely affected by translation and by transactional foreign currency conversions. 81
Our inability or failure to do so could harm our business, financial condition and results of operations. Foreign Currency Exchange Risk Because substantially all of our revenue and operating expenses are denominated in U.S. dollars, we do not believe our exposure to foreign currency exchange risk is material to our business, financial condition or results of operations.
Foreign Currency Exchange Risk Because substantially all of our revenue and operating expenses are denominated in U.S. dollars, we do not believe our exposure to foreign currency exchange risk is material to our business, financial condition or results of operations.
However, the fair value of the 2026 Notes fluctuates when the market price of our common stock fluctuates. Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
We carry these instruments at face value less unamortized issuance costs. However, the fair values of the 2026 Notes and 2029 Notes fluctuate when the market price of our common stock fluctuates. Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
The uncertainty that exists with respect to the economic impact of the Macroeconomic Conditions continues to create significant volatility in the financial markets subsequent to the year ended December 31, 2023. Market Risk On January 20, 2021, we issued the 2026 Notes. We carry these instruments at face value less unamortized issuance costs.
The uncertainty that exists with respect to the economic impact of the Macroeconomic Conditions continues to create significant volatility in the financial markets subsequent to the year ended December 31, 2024. Market Risk On January 20, 2021, we issued the 2026 Notes. On May 31, 2024, we issued the 2029 Notes.

Other ALRM 10-K year-over-year comparisons