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what it is
Alarm.com runs the software behind connected home and business security systems, from alarms and cameras to locks and energy controls.
how it gets paid
Last year Alarm Hldgs made $1.0B in revenue. SaaS and license was the main engine at $685M, or 68% of sales.
why it's growing
Revenue grew 7.6% last year. Growth this calendar year has been primarily driven by software-as-a-service and licensing revenue expansion.
what just happened
Alarm.com just posted a 20% earnings beat, with actual EPS of $0.72 versus a $0.60 estimate.
At a glance
B+ balance sheet — decent shape, but not bulletproof
50/100 earnings predictability — expect surprises
21.6x trailing p/e — priced about right
9.0% return on capital — nothing to write home about
xvary composite: 64/100 — average
What they do
Alarm.com runs the software behind connected home and business security systems, from alarms and cameras to locks and energy controls.
The sticky part is simple. Once your alarm, cameras, locks, garage door, and app all work together, leaving means replacing the system you use every day. That is why management expects about $685 million of 2025 SaaS and license revenue, up 9% vs. prior year. Recurring revenue → monthly software fees → so what: you get a customer base that tends to stay put.
How they make money
$1.0B
annual revenue · their business grew +7.6% last year
SaaS and license
$685M
+9.0%
Hardware
$180M
+5.0%
Professional services
$75M
+4.0%
Energy management
$35M
+8.0%
Commercial and other
$25M
+6.0%
The products that matter
recurring security software subscriptions
SaaS and license platform
~$685M target · +9% guide
management expects roughly $685M here this year, up 9%. That's the part of the business you want getting bigger because recurring software revenue is stickier than one-time hardware.
the key segment
connected devices and system hardware
Hardware and devices
$180M · ~18% of ~$1.0B FY
this line is on the revenue bridge as Hardware (~$180M). the market still cares less about gadget volume by itself than how much hardware converts into long-term SaaS.
front door
commercial monitoring and access control
Commercial security stack
Everon · commercial wedge
~$250M per quarter is only ~$1B FY ÷ 4 — a rough whole-company quarterly scale, not Everon’s revenue run rate. the partnership matters if commercial adds meaningfully on top of the SaaS core.
next lever
Key numbers
21.6x
trailing p/e
P/E → stock price divided by yearly profit → so what: you are paying 21.6 times trailing earnings for a business expected to grow sales 14.5%.
$64
18-month target
The published 18-month target is $64 versus a $51.82 stock price, or about 24% upside. Contrast that with the $42 low end, which implies about 19% downside.
19.5%
operating margin
Operating margin → profit after running the business → so what: keeping nearly 20 cents from each sales dollar gives this company room to invest and still earn.
9.0%
return on capital
Return on capital → profit versus money tied up in the business → so what: 9.0% is decent, but it is not the kind of number that forgives execution mistakes.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 65 / 100
- long-term debt $489M (16% of capital)
- net profit margin 13.5% — keeps 14 cents of every dollar in revenue
- return on equity 12% — $0.12 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in ALRM 3 years ago → it's now worth $10,400.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Alarm.com just posted a 20% earnings beat, with actual EPS of $0.72 versus a $0.60 estimate.
The latest reported quarter beat expectations on profit, while annual revenue reached $1.0 billion, up 7.6% vs. prior year. Full-year 2025 EPS was $2.40, up from $2.29 in 2024.
$1.0B
revenue (FY)
$0.72
eps (Q)
20.0%
eps surprise
the number that mattered
The 20.0% EPS surprise matters because this is a company priced for steady execution, and beats like that buy management time to prove growth can reaccelerate.
-
alarm.com should report solid fourth-quarter 2025 financial results.
-
we expect earnings from the home security and intelligent software provider to clock in around $0.60 per share, up 7% from the same year-ago period, on sales that increased 3%, to $250 million.growth this calendar year has been primarily driven by software-as-a-service (SaaS) and licensing revenue expansion.
-
management expects full-year SaaS and license revenue of roughly $685 million, reflecting an increase of 9% from a year ago.additionally, strategic partnerships in the company’s international and commercial markets should continue to bolster momentum throughout 2026.
-
the company is launching its first full stack security solution.to accomplish this, alarm.com has partnered with everon, a leading security integrator and provider of commercial security, video, and life safety solutions. the strategic partnership is intended to deliver a unified console for everon customers to manage integrated intrusion protection, access control, remote video monitoring, and business management solutions. the partnership reflects the growing demand for integrated commercial security platforms that can easily connect with existing infrastructure while providing remote management capabilities. management believes working with everon will enable a scalable solution that meets the sophisticated requirements of a broader range of commercial customers, from small businesses to multi-location enterprises.
-
alarm.com is entering the next phase of its growth strategy.the company continues to expand beyond traditional residential security into higher-value verticals, such as commercial property monitoring, enterprise access control, and smart-multifamily solutions. as consumer and commercial customers increasingly adopt cloud-managed devices, alarm.com’s integrated ecosystem and recurring SaaS revenue model should provide a foundation for durable long-term growth.
source: company earnings report, 2026
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What could go wrong
the #1 risk is saaS and license growth slipping below the roughly $685M target.
med
recurring revenue loses momentum
management is pointing to roughly $685M of SaaS and license revenue, up 9%. If that growth slows, the market is left valuing a $1.0B blended hardware-plus-software company without the software narrative doing much work.
this would hit the exact part of the business investors are paying attention to
med
DIY platforms and big tech keep pressure on residential
ring, nest, and other consumer-first systems make basic home security feel like a gadget purchase instead of a monitored service relationship. ALRM's dealer channel helps, but scale players can make customer acquisition and retention harder.
if price pressure shows up, 12.9% net margin and 18.0% operating margin stop looking comfortable
med
commercial expansion stays interesting but small
the Everon launch gives ALRM a path into bigger commercial accounts. It does not guarantee adoption. If the new stack fails to gain traction, the company is still mostly arguing the same residential-plus-recurring story it already had.
that would make it harder to justify upside from a $51.82 stock toward the $64 midpoint target
a miss on recurring growth would pressure the highest-quality part of the model, while the rest of the $1.0B revenue base is not growing fast enough to hide it.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
saaS and license revenue
roughly $685M is the guide. If that number slips, the premium-software argument starts looking optimistic.
earnings
next quarter setup
the page points to expectations around $0.60 per share on about $250M in sales. That is your next proof point on whether the model is holding steady.
trend
commercial contribution
watch whether the Everon partnership becomes a real growth lever or just a nice press release with no visible financial impact.
risk
institutional selling
three straight quarters of net selling is not catastrophic, but it means the stock is still waiting for bigger investors to care again.
Analyst rankings
short-term outlook
top 20%
momentum score 2 — in human-speak, analysts think the stock has better-than-average 12-month performance potential.
risk profile
average
stability score 3 — this is neither especially safe nor especially wild.
chart momentum
below average
technical score 4 — the chart is not doing the company any favors right now.
earnings predictability
50 / 100
earnings are only moderately predictable, which means quarterly reactions can be jumpier than the underlying business.
source: institutional data
Institutional activity
institutions have been net selling for 3 consecutive quarters — 147 buyers vs. 152 sellers in 3q2025. total institutional holdings: 47.8M shares. net selling for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$42
$86
$52
current price
$64
target midpoint · +24% from current · 3-5yr high: $100 (+95% · 18% ann'l return)
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