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Alarm.com Reports Fourth Quarter and Full Year 2023 Results

-- Fourth quarter SaaS and license revenue increased to $148.3 million, compared to $134.6 million for the fourth quarter of 2022 --

-- Fourth quarter GAAP net income attributable to common stockholders increased to $31.3 million, compared to $18.1 million for the fourth quarter of 2022--

-- Full year 2023 SaaS and license revenue increased to $569.2 million, compared to $520.4 million for 2022 --

-- Full year 2023 GAAP net income attributable to common stockholders increased to $81.0 million, compared to $56.3 million for 2022 --

-- Full year 2023 non-GAAP adjusted EBITDA increased to $154.0 million, compared to $146.8 million for 2022 --

Alarm.com Holdings, Inc. (Nasdaq: ALRM), the leading platform for the intelligently connected property, today reported financial results for its fourth quarter and full year ended December 31, 2023. Alarm.com also provided its financial outlook for SaaS and license revenue for the first quarter of 2024 and guidance for the full year 2024.

“We are pleased to report solid results for the quarter and the year,” said Steve Trundle, CEO of Alarm.com. “During the year, we drove growth on a global basis through our increasingly diverse suite of connected property solutions and delivered best-in-class technology and support for our service provider partners. The Alarm.com team also continued to efficiently execute our long-term strategy for expanding our market opportunities through our growth initiatives."

Fourth Quarter 2023 Financial Results as Compared to Fourth Quarter 2022

  • SaaS and license revenue increased 10.3% to $148.3 million, compared to $134.6 million.
  • Total revenue increased 8.7% to $226.2 million, compared to $208.1 million.
  • GAAP net income attributable to common stockholders increased to $31.3 million, or $0.58 per diluted share, compared to $18.1 million, or $0.34 per diluted share.
  • Non-GAAP adjusted EBITDA(*) increased to $45.6 million, compared to $39.0 million.
  • Non-GAAP adjusted net income attributable to common stockholders(*) increased to $33.9 million, or $0.62 per diluted share, compared to $28.7 million, or $0.53 per diluted share.

Full Year 2023 Financial Results as Compared to Full Year 2022

  • SaaS and license revenue increased 9.4% to $569.2 million, compared to $520.4 million.
  • Total revenue increased 4.6% to $881.7 million, compared to $842.6 million.
  • GAAP net income attributable to common stockholders increased to $81.0 million, or $1.53 per diluted share, compared to $56.3 million, or $1.07 per diluted share.
  • Non-GAAP adjusted EBITDA(*) increased to $154.0 million, compared to $146.8 million.
  • Non-GAAP adjusted net income attributable to common stockholders(*) increased to $113.2 million, or $2.07 per diluted share, compared to $106.9 million, or $1.95 per diluted share.

Balance Sheet and Cash Flow

  • Total cash and cash equivalents increased to $697.0 million as of December 31, 2023, compared to $622.2 million as of December 31, 2022. During the year ended December 31, 2023, we repurchased 487,918 shares of Alarm.com common stock at an average price of $55.95 for $27.3 million.
  • For the quarter ended December 31, 2023, cash flows from operations was $39.9 million, compared to $34.4 million for the quarter ended December 31, 2022. For the quarter ended December 31, 2023, non-GAAP free cash flow(*) was $37.7 million, compared to $33.9 million for the quarter ended December 31, 2022. For the year ended December 31, 2023, cash flows from operations was $136.0 million, compared to $56.9 million for the year ended December 31, 2022. For the year ended December 31, 2023, non-GAAP free cash flow(*) was $128.4 million, compared to $28.3 million for the year ended December 31, 2022.

(*) Reconciliations of the non-GAAP measures are set forth at the end of this press release.

Recent Business Highlights

  • Introduced Property Actions to Alarm Response Software: During an alarm event, Alarm.com’s monitoring station partners can now respond by unlocking doors and turning on lights at the affected property. The new controls can facilitate property access for first responders and keep property owners safer during emergencies. The new controls augment Alarm.com’s expanding range of AI-powered alarm verification capabilities, which include Enhanced Visual Verification, Person On-Site Indicator and Escalated Events. Robust privacy controls give subscribers tight control over which devices a monitoring agent can access and real-time visibility into all actions taken by the operator.
  • Launched New Video Analytics Rule for Privacy Control: Vacation Watch allows subscribers to schedule video monitoring start and end times providing continuous protection during extended absences. Cameras automatically disable recording based on the subscriber’s return schedule, reinforcing privacy, and preventing unwarranted monitoring escalations. Vacation Watch works with Alarm.com’s Escalated Events capability to automatically forward video-triggered events to the monitoring station for assessment and possible intervention.
  • EnergyHub Announces Record-Setting Program Launch: Ontario Canada's Independent Electricity System Operator (IESO) partnered with EnergyHub to launch its Save on Energy Peak Perks™ demand side management program. In its first six months, the program enrolled more than 100,000 homes, creating Canada’s largest residential virtual power plant. It is also the fastest-growing program in EnergyHub’s decade-plus experience.
  • Settled All Vivint Litigation and Entered into New License Agreement: Alarm.com resolved all outstanding litigation with Vivint and entered into a long-term intellectual property license agreement under which Alarm.com will license to Vivint its intellectual property portfolio.

Financial Outlook

Alarm.com is providing its outlook for SaaS and license revenue for the first quarter of 2024 and its guidance for the full year 2024 based upon current management expectations.

For the first quarter of 2024:

  • SaaS and license revenue is expected to be in the range of $148.6 million to $148.8 million.

For the full year 2024:

  • SaaS and license revenue is expected to be in the range of $622.5 million to $623.5 million.
  • Total revenue is expected to be in the range of $912.5 million to $933.5 million, which includes anticipated hardware and other revenue in the range of $290.0 million to $310.0 million.
  • Non-GAAP adjusted EBITDA is expected to be in the range of $160.0 million to $164.0 million.
  • Non-GAAP adjusted net income attributable to common stockholders is expected to be in the range of $116.0 million to $118.1 million, based on an estimated tax rate of 21.0%.
  • Based on an expected 55.2 million weighted average diluted shares outstanding, non-GAAP adjusted net income attributable to common stockholders is expected to be $2.10 to $2.14 per diluted share.

The 2024 guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below. The guidance provided above is based on expectations as of the date of this press release and Alarm.com undertakes no obligation to update guidance after such date.

Conference Call and Webcast Information

Alarm.com will host a conference call to discuss its fourth quarter and full year 2023 financial results and its outlook for the first quarter and full year 2024. A live audio webcast is scheduled to begin at 4:30 p.m. ET on February 22, 2024. To participate on the live call, analysts and investors should pre-register to obtain a dial-in number and individual passcode by visiting: https://register.vevent.com/register/BI4d251344f3314a96af594eb467efb941. Alarm.com will also offer a live and archived webcast of the conference call accessible on Alarm.com’s Investor Relations website at http://investors.alarm.com. The information contained on any referenced website is not incorporated herein.

About Alarm.com Holdings, Inc.

Alarm.com is the leading platform for the intelligently connected property. Millions of consumers and businesses depend on Alarm.com's technology to manage and control their property from anywhere. Our platform integrates with a growing variety of Internet of Things devices through our apps and interfaces. Our security, video, access control, intelligent automation, energy management, and wellness solutions are available through our network of thousands of professional service providers in North America and around the globe. Alarm.com's common stock is traded on Nasdaq under the ticker symbol ALRM. For more information, please visit www.alarm.com.

Non-GAAP Financial Measures

To supplement our consolidated selected financial data presented on a basis consistent with GAAP, this press release contains certain non-GAAP financial measures, including non-GAAP adjusted EBITDA, non-GAAP adjusted income before income taxes, non-GAAP adjusted net income, non-GAAP adjusted income attributable to common stockholders before income taxes, non-GAAP adjusted net income attributable to common stockholders, non-GAAP adjusted net income attributable to common stockholders per share, non-GAAP free cash flow, non-GAAP adjusted SaaS and license revenue and non-GAAP adjusted SaaS and license revenue growth rate. We have included non-GAAP measures in this press release because they are financial, operating or liquidity measures used by our management to (i) understand and evaluate our core operating performance and trends and generate future operating plans, (ii) make strategic decisions regarding the allocation of capital and investments in initiatives that are focused on cultivating new markets for our solutions and (iii) provide useful information to management about the amount of cash generated by the business after necessary capital expenditures. We also use non-GAAP adjusted EBITDA as a performance measure under our executive bonus plan. Further, we believe that these non-GAAP measures of our financial results provide useful information to investors and others in understanding and evaluating our results of operations, business trends and financial condition. While we believe the use of these non-GAAP measures provides useful information to investors and management in analyzing our financial performance, non-GAAP measures have inherent limitations in that they do not reflect all of the amounts and transactions that are included in our financial statements prepared in accordance with GAAP. Non-GAAP measures do not serve as an alternative to GAAP nor do we consider our non-GAAP measures in isolation. Accordingly, we present non-GAAP financial measures only in connection with GAAP results. We urge investors to consider non-GAAP measures only in conjunction with our GAAP financials and to review the reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measures, which are included in this press release.

We consider non-GAAP free cash flow to be a liquidity measure, which we define as cash flows from operating activities less purchases of property and equipment.

With respect to our expectations under “Financial Outlook” above, reconciliation of non-GAAP adjusted EBITDA and non-GAAP adjusted net income attributable to common stockholders guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures. In particular, non-ordinary course litigation expense, acquisition-related expense and tax windfall adjustments can have unpredictable fluctuations based on unforeseen activity that is out of our control and/or cannot reasonably be predicted. We expect the above charges to have a significant and potentially highly variable impact on our future GAAP financial results.

We exclude one or more of the following items from non-GAAP financial and operating measures:

Interest expense: We record interest expense primarily related to the January 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes. We exclude interest expense in calculating our non-GAAP adjusted EBITDA. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, we do not exclude interest expense other than the interest expense related to the amortization of debt issuance costs and debt discount related to the 2026 Notes as discussed below.

Interest income and certain activity within other income / (expense), net: We exclude interest income as well as certain activity within other income / (expense), net including gains, losses or impairments on investments and other assets, gains on settlement fees as well as losses on the early extinguishment of the debt, when applicable, from our non-GAAP financial measures because we do not consider it part of our ongoing results of operations.

Provision for / (benefit from) income taxes: We exclude the impact related to our provision for / (benefit from) income taxes from our non-GAAP adjusted EBITDA calculation. We do not consider this tax adjustment to be part of our ongoing results of operations.

Amortization expense: 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 amortization of intangibles from our non-GAAP financial measures because we do not consider amortization expense when we evaluate our ongoing business operations, nor do we factor amortization expense into our evaluation of potential acquisitions, or our measurement of the performance of those acquisitions. We believe that the exclusion of amortization expense enables the comparison of our performance to other companies in our industry as other companies may be more or less acquisitive than us and therefore, amortization expense may vary significantly by company based on their acquisition history. Although we exclude amortization of acquired intangible assets from our non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

Depreciation expense: We record depreciation primarily for investments in property and equipment. We exclude depreciation in calculating non-GAAP adjusted EBITDA because we do not consider depreciation when we evaluate our ongoing business operations. For non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, we do not exclude depreciation.

Amortization of debt issuance costs and debt discount: We record amortization of debt issuance costs and previously recorded amortization of debt discount related to the 2026 Notes as interest expense. We exclude amortization of debt issuance costs and debt discount from our non-GAAP adjusted net income, non-GAAP adjusted net income attributable to common stockholders and non-GAAP adjusted net income attributable to common stockholders per share, basic and diluted, because we believe that the exclusion of this non-cash interest expense will provide for more meaningful information about our financial performance.

Stock-based compensation expense: We exclude stock-based compensation expense, which relates to restricted stock units and other forms of equity incentives primarily awarded to employees of Alarm.com, because they are non-cash charges that we do not consider when assessing the operating performance of our business. Additionally, the determination of stock-based compensation expense can be calculated using various methodologies and is dependent upon subjective assumptions and other factors that vary on a company-by-company basis. Therefore, we believe that excluding stock-based compensation expense from our non-GAAP financial measures improves the comparability of our results to the results of other companies in our industry.

Acquisition-related expense: Included in operating expenses are incremental costs directly related to business and asset acquisitions as well as changes in the fair value of contingent consideration liabilities, when applicable. We exclude acquisition-related expense from our non-GAAP financial measures because we believe that the exclusion of this expense allows us to better provide meaningful information about our operating performance, facilitates comparisons to our historical operating results, improves the comparability of our results to the results of other companies in our industry, and ultimately, we believe helps investors better understand the acquisition-related expense and the effects of the transaction on our results of operations.

Litigation expense: We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred and received in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes, particularly costs incurred in ongoing intellectual property litigation, to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses, including those expenses resulting from maintaining and enforcing our intellectual property portfolio and license agreements.

Vivint license revenue: We excluded Vivint license revenue from our non-GAAP adjusted SaaS and license revenue and non-GAAP adjusted SaaS and license revenue growth rate because we believe that this exclusion will provide more meaningful information about our financial performance on a comparable basis, given that we were not recording Vivint license revenue effective beginning in the fourth quarter of 2022 and through December 31, 2023. 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.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by their use of terms and phrases such as “anticipate,” “believe,” “continue,” “designed,” “enable,” “ensure,” “expect,” “intend,” “will,” and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding the Company’s opportunities, positioning, the benefits of recently launched offerings, acquisitions and investments, and the Company’s guidance for the first quarter and full year 2024 described under “Financial Outlook” above and key assumptions related thereto. The events described in these forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: impact of the global economic uncertainty and financial market conditions caused by significant worldwide events, including public health crises, geopolitical upheaval, such as Russia’s incursion into Ukraine and the war between Israel and Hamas, supply chain disruptions, interest rates and inflation (collectively, Macroeconomic Conditions); impact of Macroeconomic Conditions and their economic effects on demand for the Company's products; the reliability of the Company’s network operations centers; the Company’s ability to retain service provider partners and residential and commercial subscribers and sustain its growth rate; the Company’s ability to manage growth and execute on its business strategies; the effects of increased competition and evolving technologies; the Company’s ability to integrate acquired assets and businesses and to manage service provider partners, customers and employees; consumer demand for interactive security, video monitoring, intelligent automation, energy management and wellness solutions; the Company’s reliance on its service provider network to attract new customers and retain existing customers; the Company's dependence on its suppliers; the potential loss of any key supplier or the inability of a key supplier to deliver their products to us on time or at the contracted price; the reliability of the Company’s hardware and wireless network suppliers and enhanced United States tax, tariff, import/export restrictions, or other trade barriers, particularly tariffs from China; and other risks and uncertainties discussed in the “Risk Factors” section of the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2023 and other subsequent filings the Company makes with the Securities and Exchange Commission from time to time, including its Form 10-K for the year ended December 31, 2023. In addition, the forward-looking statements included in this press release represent the Company’s views and expectations as of the date hereof and are based on information currently available to the Company. The Company anticipates that subsequent events and developments may cause the Company’s views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so except as required by law. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof.

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Operations

(in thousands, except share and per share data)

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

 

 

SaaS and license revenue

$

148,347

 

 

$

134,551

 

 

$

569,200

 

 

$

520,377

 

 

$

460,372

 

Hardware and other revenue

 

77,890

 

 

 

73,588

 

 

 

312,482

 

 

 

322,182

 

 

 

288,597

 

Total revenue

 

226,237

 

 

 

208,139

 

 

 

881,682

 

 

 

842,559

 

 

 

748,969

 

Cost of revenue(1):

 

 

 

 

 

 

 

 

 

Cost of SaaS and license revenue

 

22,822

 

 

 

19,878

 

 

 

85,898

 

 

 

73,897

 

 

 

66,758

 

Cost of hardware and other revenue

 

58,393

 

 

 

59,694

 

 

 

239,261

 

 

 

268,684

 

 

 

239,141

 

Total cost of revenue

 

81,215

 

 

 

79,572

 

 

 

325,159

 

 

 

342,581

 

 

 

305,899

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Sales and marketing

 

25,948

 

 

 

23,566

 

 

 

100,226

 

 

 

92,748

 

 

 

86,664

 

General and administrative

 

24,177

 

 

 

25,374

 

 

 

112,930

 

 

 

106,688

 

 

 

87,406

 

Research and development

 

61,274

 

 

 

57,408

 

 

 

245,114

 

 

 

218,635

 

 

 

177,713

 

Amortization and depreciation

 

7,943

 

 

 

7,747

 

 

 

31,424

 

 

 

30,870

 

 

 

29,715

 

Total operating expenses

 

119,342

 

 

 

114,095

 

 

 

489,694

 

 

 

448,941

 

 

 

381,498

 

Operating income

 

25,680

 

 

 

14,472

 

 

 

66,829

 

 

 

51,037

 

 

 

61,572

 

Interest expense

 

(828

)

 

 

(788

)

 

 

(3,429

)

 

 

(3,144

)

 

 

(15,956

)

Interest income

 

8,709

 

 

 

4,697

 

 

 

29,801

 

 

 

8,759

 

 

 

587

 

Other income / (expense), net

 

5,838

 

 

 

(101

)

 

 

4,624

 

 

 

(59

)

 

 

(134

)

Income before income taxes

 

39,399

 

 

 

18,280

 

 

 

97,825

 

 

 

56,593

 

 

 

46,069

 

Provision for / (benefit from) income taxes

 

8,228

 

 

 

490

 

 

 

17,485

 

 

 

962

 

 

 

(5,106

)

Net income

 

31,171

 

 

 

17,790

 

 

 

80,340

 

 

 

55,631

 

 

 

51,175

 

Net loss attributable to redeemable noncontrolling interests

 

133

 

 

 

295

 

 

 

703

 

 

 

707

 

 

 

1,084

 

Net income attributable to common stockholders

$

31,304

 

 

$

18,085

 

 

$

81,043

 

 

$

56,338

 

 

$

52,259

 

 

 

 

 

 

 

 

 

 

 

Per share information attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

$

0.63

 

 

$

0.36

 

 

$

1.63

 

 

$

1.13

 

 

$

1.05

 

Diluted

$

0.58

 

 

$

0.34

 

 

$

1.53

 

 

$

1.07

 

 

$

1.01

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

49,924,910

 

 

 

49,781,756

 

 

 

49,818,448

 

 

 

49,926,236

 

 

 

49,869,857

 

Diluted

 

54,711,605

 

 

 

54,534,956

 

 

 

54,625,434

 

 

 

54,932,757

 

 

 

51,919,902

 

______________________________

(1) Exclusive of amortization and depreciation shown in operating expenses below.

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense data:

Three Months Ended

December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

2021

Cost of hardware and other revenue

$

2

 

 

$

 

 

$

5

 

 

$

 

 

$

 

Sales and marketing

 

744

 

 

 

861

 

 

 

3,522

 

 

 

4,342

 

 

 

4,432

 

General and administrative

 

3,155

 

 

 

3,902

 

 

 

13,028

 

 

 

15,037

 

 

 

9,941

 

Research and development

 

6,959

 

 

 

9,838

 

 

 

30,728

 

 

 

33,275

 

 

 

24,321

 

Total stock-based compensation expense

$

10,860

 

 

$

14,601

 

 

$

47,283

 

 

$

52,654

 

 

$

38,694

 

 

ALARM.COM HOLDINGS, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

December 31,

 

2023

 

2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

696,983

 

 

$

622,165

 

Accounts receivable, net of allowance for credit losses of $3,864 and $2,835, and net of allowance for product returns of $2,279 and $1,551, as of December 31, 2023 and 2022, respectively

 

130,626

 

 

 

124,283

 

Inventory

 

96,140

 

 

 

115,584

 

Other current assets, net

 

33,031

 

 

 

29,056

 

Total current assets

 

956,780

 

 

 

891,088

 

Property and equipment, net

 

54,164

 

 

 

57,172

 

Intangible assets, net

 

78,564

 

 

 

82,458

 

Goodwill

 

154,498

 

 

 

148,183

 

Deferred tax assets

 

131,815

 

 

 

84,185

 

Operating lease right-of-use assets

 

24,242

 

 

 

28,933

 

Other assets, net of allowance for credit losses of $5 and $2 as of December 31, 2023 and 2022, respectively

 

39,500

 

 

 

37,356

 

Total assets

$

1,439,563

 

 

$

1,329,375

 

Liabilities, redeemable noncontrolling interests and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable, accrued expenses and other current liabilities

$

124,475

 

 

$

119,657

 

Accrued compensation

 

28,626

 

 

 

25,582

 

Deferred revenue

 

10,193

 

 

 

7,540

 

Operating lease liabilities

 

12,043

 

 

 

12,157

 

Total current liabilities

 

175,337

 

 

 

164,936

 

Deferred revenue

 

12,692

 

 

 

10,792

 

Convertible senior notes, net

 

493,515

 

 

 

490,370

 

Operating lease liabilities

 

20,468

 

 

 

27,380

 

Other liabilities

 

12,697

 

 

 

13,050

 

Total liabilities

 

714,709

 

 

 

706,528

 

Redeemable noncontrolling interests

 

36,308

 

 

 

23,988

 

Stockholders’ equity

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2023 and 2022

 

 

 

 

 

Common stock, $0.01 par value, 300,000,000 shares authorized; 51,888,838 and 50,985,454 shares issued; and 49,868,175 and 49,452,709 shares outstanding as of December 31, 2023 and 2022, respectively

 

519

 

 

 

510

 

Additional paid-in capital

 

531,734

 

 

 

497,199

 

Treasury stock, at cost; 2,020,663 and 1,532,745 shares as of December 31, 2023 and 2022, respectively

 

(111,291

)

 

 

(83,993

)

Accumulated other comprehensive income

 

1,398

 

 

 

 

Retained earnings

 

266,186

 

 

 

185,143

 

Total stockholders’ equity

 

688,546

 

 

 

598,859

 

Total liabilities, redeemable noncontrolling interests and stockholders’ equity

$

1,439,563

 

 

$

1,329,375

 

 

ALARM.COM HOLDINGS, INC.

Consolidated Statements of Cash Flows

(in thousands)

 

 

Year Ended December 31,

Cash flows from operating activities:

2023

 

2022

 

2021

Net income

$

80,340

 

 

$

55,631

 

 

$

51,175

 

Adjustments to reconcile net income to net cash flows from operating activities:

 

 

 

 

 

Provision for / (recovery of) credit losses on accounts receivable

 

1,508

 

 

 

1,156

 

 

 

(775

)

Reserve for product returns

 

4,399

 

 

 

4,746

 

 

 

2,494

 

Provision for / (recovery of) credit losses on notes receivable

 

3

 

 

 

(78

)

 

 

(9

)

Inventory write-down

 

1,420

 

 

 

 

 

 

448

 

Amortization on patents and tooling

 

1,213

 

 

 

1,359

 

 

 

1,240

 

Amortization and depreciation

 

31,424

 

 

 

30,870

 

 

 

29,715

 

Amortization of debt issuance costs and debt discount

 

3,145

 

 

 

3,126

 

 

 

15,823

 

Amortization of operating leases

 

11,484

 

 

 

10,499

 

 

 

9,692

 

Deferred income taxes

 

(47,730

)

 

 

(55,039

)

 

 

(10,115

)

Change in fair value of contingent liability

 

68

 

 

 

 

 

 

 

Stock-based compensation

 

47,283

 

 

 

52,654

 

 

 

38,694

 

(Gain on) / impairment of investment or intangible assets

 

 

 

 

(140

)

 

 

86

 

Loss on early extinguishment of debt

 

 

 

 

 

 

 

185

 

Changes in operating assets and liabilities (net of business acquisitions):

 

 

 

 

 

Accounts receivable

 

(10,536

)

 

 

(24,346

)

 

 

(23,941

)

Inventory

 

20,961

 

 

 

(40,308

)

 

 

(31,443

)

Other current and non-current assets

 

(1,338

)

 

 

(8,952

)

 

 

(11,912

)

Accounts payable, accrued expenses and other current liabilities

 

4,613

 

 

 

32,938

 

 

 

39,418

 

Deferred revenue

 

4,553

 

 

 

3,428

 

 

 

2,308

 

Operating lease liabilities

 

(13,947

)

 

 

(12,723

)

 

 

(11,809

)

Other liabilities

 

(2,898

)

 

 

2,080

 

 

 

1,883

 

Cash flows from operating activities

 

135,965

 

 

 

56,901

 

 

 

103,157

 

Cash flows used in investing activities:

 

 

 

 

 

Business acquisition, net of cash acquired

 

(9,696

)

 

 

(31,730

)

 

 

 

Additions to property and equipment

 

(7,517

)

 

 

(28,640

)

 

 

(11,062

)

Issuances of notes receivable

 

(450

)

 

 

(3,000

)

 

 

 

Capitalized software development costs

 

(743

)

 

 

 

 

 

 

Receipt of payments on notes receivable

 

55

 

 

 

61

 

 

 

59

 

Purchase of investment in unconsolidated entity

 

(1,700

)

 

 

(5,150

)

 

 

(5,000

)

Proceeds from sale of investment

 

 

 

 

140

 

 

 

 

Purchases of developed technology and other assets

 

(5,915

)

 

 

 

 

 

(4,362

)

Cash flows used in investing activities

 

(25,966

)

 

 

(68,319

)

 

 

(20,365

)

Cash flows (used in) / from financing activities:

 

 

 

 

 

Repayments of credit facility

 

 

 

 

 

 

 

(110,000

)

Proceeds from issuance of convertible senior notes

 

 

 

 

 

 

 

500,000

 

Payments of debt issuance costs

 

 

 

 

 

 

 

(15,698

)

Payments of deferred consideration for acquisitions

 

(1,672

)

 

 

(1,500

)

 

 

(1,160

)

Purchases of treasury stock, including transaction costs

 

(27,298

)

 

 

(78,844

)

 

 

 

Purchases of redeemable noncontrolling interest

 

(832

)

 

 

 

 

 

 

Payments of acquired debt

 

(3,040

)

 

 

 

 

 

 

Payments of tax withholdings related to vesting of restricted stock units

 

(2,621

)

 

 

 

 

 

(4,476

)

Issuances of common stock from equity-based plans

 

3,598

 

 

 

4,020

 

 

 

5,704

 

Cash flows (used in) / from financing activities

 

(31,865

)

 

 

(76,324

)

 

 

374,370

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

66

 

 

 

 

 

 

 

Net increase / (decrease) in cash, cash equivalents and restricted cash

 

78,200

 

 

 

(87,742

)

 

 

457,162

 

Cash, cash equivalents and restricted cash at beginning of the period

 

622,879

 

 

 

710,621

 

 

 

253,459

 

Cash, cash equivalents and restricted cash at end of the period

$

701,079

 

 

$

622,879

 

 

$

710,621

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

Cash and cash equivalents

$

696,983

 

 

$

622,165

 

 

$

710,621

 

Restricted cash included in other current assets and other assets

 

4,096

 

 

 

714

 

 

 

 

Total cash, cash equivalents and restricted cash

$

701,079

 

 

$

622,879

 

 

$

710,621

 

 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures

(in thousands)

(unaudited)

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

2021

Non-GAAP adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Net income

$

31,171

 

 

$

17,790

 

 

$

80,340

 

 

$

55,631

 

 

$

51,175

 

Adjustments:

 

 

 

 

 

 

 

 

 

Interest expense, interest income and certain activity within other income / (expense), net

 

(13,738

)

 

 

(3,909

)

 

 

(32,229

)

 

 

(5,768

)

 

 

15,503

 

Provision for / (benefit from) income taxes

 

8,228

 

 

 

490

 

 

 

17,485

 

 

 

962

 

 

 

(5,106

)

Amortization and depreciation expense

 

7,943

 

 

 

7,747

 

 

 

31,424

 

 

 

30,870

 

 

 

29,715

 

Stock-based compensation expense

 

10,860

 

 

 

14,601

 

 

 

47,283

 

 

 

52,654

 

 

 

38,694

 

Acquisition-related expense

 

45

 

 

 

331

 

 

 

621

 

 

 

1,059

 

 

 

29

 

Litigation expense

 

1,075

 

 

 

1,904

 

 

 

9,043

 

 

 

11,440

 

 

 

12,462

 

Total adjustments

 

14,413

 

 

 

21,164

 

 

 

73,627

 

 

 

91,217

 

 

 

91,297

 

Non-GAAP adjusted EBITDA

$

45,584

 

 

$

38,954

 

 

$

153,967

 

 

$

146,848

 

 

$

142,472

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

2021

Non-GAAP adjusted net income:

 

 

 

 

 

 

 

 

 

Net income, as reported

$

31,171

 

 

$

17,790

 

 

$

80,340

 

 

$

55,631

 

 

$

51,175

 

Provision for / (benefit from) income taxes

 

8,228

 

 

 

490

 

 

 

17,485

 

 

 

962

 

 

 

(5,106

)

Income before income taxes

 

39,399

 

 

 

18,280

 

 

 

97,825

 

 

 

56,593

 

 

 

46,069

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and certain activity within other income / (expense), net

 

(14,566

)

 

 

(4,697

)

 

 

(35,658

)

 

 

(8,912

)

 

 

(453

)

Amortization expense

 

5,195

 

 

 

4,782

 

 

 

20,271

 

 

 

18,706

 

 

 

17,347

 

Amortization of debt issuance costs and debt discount

 

788

 

 

 

784

 

 

 

3,145

 

 

 

3,126

 

 

 

15,817

 

Stock-based compensation expense

 

10,860

 

 

 

14,601

 

 

 

47,283

 

 

 

52,654

 

 

 

38,694

 

Acquisition-related expense

 

45

 

 

 

331

 

 

 

621

 

 

 

1,059

 

 

 

29

 

Litigation expense

 

1,075

 

 

 

1,904

 

 

 

9,043

 

 

 

11,440

 

 

 

12,462

 

Non-GAAP adjusted income before income taxes

 

42,796

 

 

 

35,985

 

 

 

142,530

 

 

 

134,666

 

 

 

129,965

 

Income taxes 1

 

(8,987

)

 

 

(7,557

)

 

 

(29,931

)

 

 

(28,280

)

 

 

(27,293

)

Non-GAAP adjusted net income

$

33,809

 

 

$

28,428

 

 

$

112,599

 

 

$

106,386

 

 

$

102,672

 

 

1 Income taxes are calculated using a rate of 21.0% for each of the years ended December 31, 2023, 2022 and 2021 as well as the three months ended December 31, 2023 and 2022. The 21.0% effective tax rates for each of the years ended December 31, 2023, 2022 and 2021 as well as the three months ended December 31, 2023 and 2022 exclude the income tax effect on the non-GAAP adjustments and reflect the estimated long-term corporate tax rate.

 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

2021

Non-GAAP adjusted net income attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders, as reported

$

31,304

 

 

$

18,085

 

 

$

81,043

 

 

$

56,338

 

 

$

52,259

 

Provision for / (benefit from) income taxes

 

8,228

 

 

 

490

 

 

 

17,485

 

 

 

962

 

 

 

(5,106

)

Income attributable to common stockholders before income taxes

 

39,532

 

 

 

18,575

 

 

 

98,528

 

 

 

57,300

 

 

 

47,153

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and certain activity within other income / (expense), net

 

(14,566

)

 

 

(4,697

)

 

 

(35,658

)

 

 

(8,912

)

 

 

(453

)

Amortization expense

 

5,195

 

 

 

4,782

 

 

 

20,271

 

 

 

18,706

 

 

 

17,347

 

Amortization of debt issuance costs and debt discount

 

788

 

 

 

784

 

 

 

3,145

 

 

 

3,126

 

 

 

15,817

 

Stock-based compensation expense

 

10,860

 

 

 

14,601

 

 

 

47,283

 

 

 

52,654

 

 

 

38,694

 

Acquisition-related expense

 

45

 

 

 

331

 

 

 

621

 

 

 

1,059

 

 

 

29

 

Litigation expense

 

1,075

 

 

 

1,904

 

 

 

9,043

 

 

 

11,440

 

 

 

12,462

 

Non-GAAP adjusted income attributable to common stockholders before income taxes

 

42,929

 

 

 

36,280

 

 

 

143,233

 

 

 

135,373

 

 

 

131,049

 

Income taxes 1

 

(9,015

)

 

 

(7,618

)

 

 

(30,079

)

 

 

(28,428

)

 

 

(27,520

)

Non-GAAP adjusted net income attributable to common stockholders

$

33,914

 

 

$

28,662

 

 

$

113,154

 

 

$

106,945

 

 

$

103,529

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

2021

Non-GAAP adjusted net income attributable to common stockholders per share:

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders per share - basic, as reported

$

0.63

 

 

$

0.36

 

 

$

1.63

 

 

$

1.13

 

 

$

1.05

 

Provision for / (benefit from) income taxes

 

0.16

 

 

 

0.01

 

 

 

0.35

 

 

 

0.02

 

 

 

(0.10

)

Income attributable to common stockholders before income taxes

 

0.79

 

 

 

0.37

 

 

 

1.98

 

 

 

1.15

 

 

 

0.95

 

Adjustments:

 

 

 

 

 

 

 

 

 

Less: interest income and certain activity within other income / (expense), net

 

(0.29

)

 

 

(0.09

)

 

 

(0.72

)

 

 

(0.18

)

 

 

(0.01

)

Amortization expense

 

0.10

 

 

 

0.10

 

 

 

0.41

 

 

 

0.37

 

 

 

0.35

 

Amortization of debt issuance costs and debt discount

 

0.02

 

 

 

0.02

 

 

 

0.06

 

 

 

0.06

 

 

 

0.32

 

Stock-based compensation expense

 

0.22

 

 

 

0.28

 

 

 

0.95

 

 

 

1.05

 

 

 

0.77

 

Acquisition-related expense

 

 

 

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

 

 

Litigation expense

 

0.02

 

 

 

0.04

 

 

 

0.18

 

 

 

0.24

 

 

 

0.25

 

Non-GAAP adjusted income attributable to common stockholders before income taxes

 

0.86

 

 

 

0.73

 

 

 

2.87

 

 

 

2.71

 

 

 

2.63

 

Income taxes 1

 

(0.18

)

 

 

(0.15

)

 

 

(0.60

)

 

 

(0.57

)

 

 

(0.55

)

Non-GAAP adjusted net income attributable to common stockholders per share - basic

$

0.68

 

 

$

0.58

 

 

$

2.27

 

 

$

2.14

 

 

$

2.08

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted net income attributable to common stockholders per share - diluted

$

0.62

 

 

$

0.53

 

 

$

2.07

 

 

$

1.95

 

 

$

1.99

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic, as reported

 

49,924,910

 

 

 

49,781,756

 

 

 

49,818,448

 

 

 

49,926,236

 

 

 

49,869,857

 

Diluted, as reported

 

54,711,605

 

 

 

54,534,956

 

 

 

54,625,434

 

 

 

54,932,757

 

 

 

51,919,902

 

 

1 Income taxes are calculated using a rate of 21.0% for each of the years ended December 31, 2023, 2022 and 2021 as well as the three months ended December 31, 2023 and 2022. The 21.0% effective tax rates for each of the years ended December 31, 2023, 2022 and 2021 as well as the three months ended December 31, 2023 and 2022 exclude the income tax effect on the non-GAAP adjustments and reflect the estimated long-term corporate tax rate.

 

ALARM.COM HOLDINGS, INC.

Reconciliation of Non-GAAP Measures - continued

(dollars in thousands)

(unaudited)

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

2021

Non-GAAP free cash flow:

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

$

39,872

 

 

$

34,446

 

 

$

135,965

 

 

$

56,901

 

 

$

103,157

 

Additions to property and equipment

 

(2,168

)

 

 

(556

)

 

 

(7,517

)

 

 

(28,640

)

 

 

(11,062

)

Non-GAAP free cash flow

$

37,704

 

 

$

33,890

 

 

$

128,448

 

 

$

28,261

 

 

$

92,095

 

 

Three Months Ended

December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

2021

Non-GAAP adjusted SaaS and license revenue:

 

 

 

 

 

 

 

 

 

SaaS and license revenue

$

148,347

 

$

134,551

 

$

569,200

 

$

520,377

 

 

$

460,372

 

License revenue from Vivint

 

 

 

 

 

 

 

 

 

 

(16,631

)

 

 

(20,200

)

Non-GAAP adjusted SaaS and license revenue

$

148,347

 

 

$

134,551

 

 

$

569,200

 

 

$

503,746

 

 

$

440,172

 

Full Year 2023 as Compared to Full Year 2022:

Year Ended

December 31, 2023

SaaS and license revenue growth rate

9.4

%

Adjustment to SaaS and license revenue growth rate for Vivint license revenue

3.6

 

Non-GAAP adjusted SaaS and license revenue growth rate

13.0

%

 

Contacts

Investor & Media Relations:

Matthew Zartman

Alarm.com

ir@alarm.com

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