Alarm (ALRM) AI Stock Analysis

• Market Cap: $2.90B
• Dividend Yield: N/A
• Average Volume (3M): 372.03K
• Price to Earnings (P/E): 25.6
• Beta (1Y): 1.15
• Revenue Growth: 6.59%
• EPS Growth: 53.89%
• Country: US
• Employees: 2,010
• Sector: Technology
• Sector Strength: 45
• Industry: Software
• EPS (TTM): 2.28
• Shares Outstanding: 49,646,942
• 10 Day Avg. Volume: 395,296
• 30 Day Avg. Volume: 372,032
• PEG Ratio: 0.47
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.08
• Price to Cash Flow (P/CF): 12.90
• P/FCF Ratio: 13.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $77.40
• Price Target Upside: 31.59% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

Alarm's strong financial performance, characterized by robust revenue growth and profitability, is its primary strength. However, technical indicators suggest a bearish trend, and valuation remains moderate. Earnings call insights and recent corporate events provide a mixed outlook, with positive growth prospects tempered by partnership challenges and leadership changes.

Positive Factors

Financial performance

The company's 4Q24 results exceeded expectations with SaaS and license revenue of $165.7 million, marking a 12% year-over-year increase.

Guidance

Management has introduced favorable 2025 SaaS guidance relative to the initial outlook, with a midpoint guidance of $671.5 million, reflecting a 6.4% year-over-year increase.

Negative Factors

Competitive pressures

The proliferation of 'plug-and-play' or DIY safety solutions, including offerings from Amazon and Google, creates less demand for service provider–installed solutions.

Customer transition

ADT, Alarm.com's largest customer, is beginning to bring customers onto its proprietary platform, rather than Alarm.com's as it had done historically.

Alarm Business Overview & Revenue Model

Company Description

Alarm.com Holdings, Inc. engages in the provision of wireless and web-enabled security system technology. The company offers security, video monitoring, and energy management solutions. It operates through the Alarm.com and Other segments. The Alarm.com segment represents cloud-based platform for the connected home and related connected home solutions. The Other segment focuses on the research and development of home and commercial automation, as well as energy management products and services. The company was founded by Jean-Paul Martin and Alison J. Slavin in 2000 and is headquartered in Tysons, VA.

How the Company Makes Money

Alarm.com generates revenue primarily through the sale of its subscription-based cloud services and software as a service (SaaS) platform. The company earns from service providers who offer these solutions to their end customers, creating a steady and recurring revenue stream. In addition to subscription fees, Alarm.com also derives revenue from the sale of hardware devices that complement its software services, such as cameras and sensors. The company's business model leverages partnerships with security dealers, service providers, and other channel partners to expand its market reach and increase adoption of its services. These partnerships are pivotal in driving growth, as they facilitate the distribution and integration of Alarm.com's solutions across various markets.

Alarm Financial Statement Overview

Summary

Alarm has demonstrated strong revenue growth and improved profitability margins, supported by a solid balance sheet and impressive cash flow generation. However, the increasing debt levels require monitoring.

Income Statement

Alarm has demonstrated strong revenue growth with a consistent increase in total revenue over the years, reaching $939.8 million in 2024 from $502.4 million in 2019. The gross profit margin has improved significantly, indicating better cost management, while the net profit margin also shows an upward trend. EBIT and EBITDA margins have been solid, contributing to strong profitability. These factors highlight Alarm's robust financial performance and growth trajectory.

Balance Sheet

Alarm's balance sheet reflects a healthy equity position with a steadily increasing stockholders' equity. The debt-to-equity ratio is manageable, and the equity ratio is stable, indicating financial stability. However, the total debt has increased over the years, which could pose potential risks if not managed well. Overall, the balance sheet shows strength with some caution required on leverage.

Cash Flow

The company has shown impressive free cash flow growth, supported by strong operating cash flows. The operating cash flow to net income ratio indicates efficient cash generation from operations. Despite some fluctuations in capital expenditures, Alarm maintains a solid cash position, enhancing its ability to invest in growth opportunities and manage financial obligations effectively.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
939.83M	881.68M	842.56M	748.97M	618.00M
	Gross Profit
613.68M	556.52M	499.98M	443.07M	390.57M
	EBIT
108.55M	66.83M	51.04M	61.57M	82.76M
	EBITDA
196.29M	145.38M	102.47M	102.67M	111.16M
	Net Income Common Stockholders
124.12M	81.04M	56.34M	52.26M	77.85M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.22B	696.98M	622.16M	710.62M	253.46M
	Total Assets
2.04B	1.44B	1.33B	1.23B	731.69M
	Total Debt
1.06B	526.03M	529.91M	468.27M	157.67M
	Net Debt
-163.99M	-170.96M	-92.26M	-242.35M	-95.79M
	Total Liabilities
1.27B	714.71M	706.53M	605.96M	253.24M
	Stockholders Equity
726.55M	688.55M	598.86M	613.17M	467.75M
Cash Flow		Free Cash Flow
196.28M	121.79M	28.26M	87.73M	81.59M
	Operating Cash Flow
206.41M	135.97M	56.90M	103.16M	102.08M
	Investing Cash Flow
-24.68M	-25.97M	-68.32M	-20.36M	-20.27M
	Financing Cash Flow
346.43M	-31.86M	-76.32M	374.37M	52.02M

Alarm Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 58.82
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALRM, the sentiment is Negative. The current price of 58.82 is below the 20-day moving average (MA) of 59.99, below the 50-day MA of 60.82, and below the 200-day MA of 60.95, indicating a bearish trend. The MACD of -0.88 indicates Positive momentum. The RSI at 40.93 is Neutral, neither overbought nor oversold. The STOCH value of 45.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALRM.

Alarm Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADT	78 Outperform	$6.64B	14.79	14.41%	2.91%	-13.19%	10.03%
VIV	77 Outperform	$13.63B	13.51	7.95%	2.78%	-0.47%	1.69%
ALRM	73 Outperform	$2.90B	25.60	17.54%	―	6.59%	53.89%
HUBB	71 Outperform	$18.27B	23.49	25.26%	1.50%	4.76%	2.27%
REZI	66 Neutral	$2.63B	25.15	3.83%	―	8.31%	-49.90%
Sector *	58 Neutral	$21.35B	9.98	-18.95%	2.37%	5.03%	-22.66%
SSP	51 Neutral	$123.50M	―	-15.64%	―	1.66%	60.23%

Alarm Corporate Events

Alarm Announces CFO Steve Valenzuela’s Retirement

On February 17, 2025, Alarm.com announced the retirement of CFO Steve Valenzuela, effective June 2, 2025, emphasizing that his departure was amicable and unrelated to company disagreements. The company reported significant financial growth for the year 2024, with a notable increase in SaaS and license revenue and GAAP net income. The acquisition of CHeKT expanded its remote video monitoring offerings, reinforcing its industry position and enhancing solutions for commercial and residential markets.