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The Alarm.com platform enables our service provider partners to deploy our interactive security, video monitoring, intelligent automation, energy management and wellness solutions as stand-alone offerings or as combined solutions to address the needs of a broad range of customers.
−Removed: Highlights of Second Quarter Results
+Added: Highlights of Third Quarter Results
We primarily generate SaaS and license revenue, our largest source of revenue, through our service provider partners who resell our services and pay us monthly fees.
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We derive a portion of our revenue from licensing our intellectual property to third parties on a per customer basis.
−Removed: SaaS and license revenue represented 60% and 61% of our revenue during the three and six months ended June 30, 2021, respectively, as compared to 68% and 64% in the same periods in the prior year.
+Added: SaaS and license revenue represented 61% of our revenue during each of the three and nine months ended September 30, 2021, respectively, as compared to 63% and 64% in the same periods in the prior year.
We also generate SaaS and license revenue from monthly fees charged to service providers on a per subscriber basis for access to our non-hosted software platform, or 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.
−Removed: Software license revenue represented 4% and 5% of our revenue during the three and six months ended June 30, 2021, respectively, as compared to 7% for the same periods in the prior year.
+Added: Software license revenue represented 4% of our revenue during each of the three and nine months ended September 30, 2021, as compared to 6% for the same periods in the prior year.
We also generate revenue from the sale of many types of hardware, including video cameras, video recorders, cellular radio modules, thermostats, image sensors, gunshot detection sensors and other peripherals, that enable our solutions.
1 unchanged sentence
Our hardware and other revenue also 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.
−Removed: Hardware and other revenue represented 40% and 39% of our revenue during the three and six months ended June 30, 2021, respectively, as compared to 32% and 36% in the same periods in the prior year.
+Added: Hardware and other revenue represented 39% of our revenue during the three and nine months ended September 30, 2021, respectively, as compared to 37% and 36% in the same periods in the prior year.
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 Quarterly Report include:
−Removed: • SaaS and license revenue increased 18% to $113.2 million in the three months ended June 30, 2021 from $95.7 million in the three months ended June 30, 2020.
−Removed: SaaS and license revenue increased 18% to $220.6 million in the six months ended June 30, 2021 from $187.7 million in the six months ended June 30, 2020.
−Removed: Included in SaaS and license revenue was software license revenue, which decreased to $8.3 million in the three months ended June 30, 2021 from $9.8 million in the three months ended June 30, 2020.
−Removed: Included in SaaS and license revenue was software license revenue, which decreased to $17.0 million in the six months ended June 30, 2021 from $19.5 million in the six months ended June 30, 2020.
−Removed: • Total revenue increased 33% to $188.9 million in the three months ended June 30, 2021 from $141.6 million in the three months ended June 30, 2020.
−Removed: Total revenue increased 23% to $361.4 million in the six months ended June 30, 2021 from $293.6 million in the six months ended June 30, 2020.
−Removed: • Net income decreased to $14.5 million in the three months ended June 30, 2021, as compared to $16.6 million in the three months ended June 30, 2020.
−Removed: Net income increased to $29.0 million in the six months ended June 30, 2021, as compared to $25.2 million in the six months ended June 30, 2020.
−Removed: Net income attributable to common stockholders decreased to $14.7 million in the three months ended June 30, 2021, as compared to $17.0 million in the three months ended June 30, 2020.
−Removed: Net income attributable to common stockholders increased to $29.6 million in the six months ended June 30, 2021, as compared to $25.8 million in the six months ended June 30, 2020.
−Removed: • Adjusted EBITDA, a non-GAAP measurement of operating performance, increased to $38.0 million in the three months ended June 30, 2021 from $29.2 million in the three months ended June 30, 2020.
−Removed: Adjusted EBITDA increased to $73.6 million in the six months ended June 30, 2021 from $58.4 million in the six months ended June 30, 2020.
−Removed: Please see Non-GAAP Measures below in this section of this Quarterly Report for a discussion of the limitations of Adjusted EBITDA (a non-GAAP measure) and a reconciliation of Adjusted EBITDA to net income, the most comparable measurement in accordance with accounting principles generally accepted in the United States, or GAAP, for the three and six months ended June 30, 2021 and 2020.
+Added: • SaaS and license revenue increased 18% to $118.1 million in the three months ended September 30, 2021 from $100.1 million in the three months ended September 30, 2020.
+Added: SaaS and license revenue increased 18% to $338.6 million in the nine months ended September 30, 2021 from $287.8 million in the nine months ended September 30, 2020.
+Added: Included in SaaS and license revenue was software license revenue, which decreased to $7.9 million in the three months ended September 30, 2021 from $9.5 million in the three months ended September 30, 2020.
+Added: Software license revenue decreased to $24.9 million in the nine months ended September 30, 2021 from $29.0 million in the nine months ended September 30, 2020.
+Added: • Total revenue increased 21% to $192.3 million in the three months ended September 30, 2021 from $158.9 million in the three months ended September 30, 2020.
+Added: Total revenue increased 22% to $553.7 million in the nine months ended September 30, 2021 from $452.4 million in the nine months ended September 30, 2020.
+Added: • Net income decreased to $13.3 million in the three months ended September 30, 2021, as compared to $35.8 million in the three months ended September 30, 2020.
+Added: Net income decreased to $42.3 million in the nine months ended September 30, 2021, as compared to $61.0 million in the nine months ended September 30, 2020.
+Added: Net income attributable to common stockholders decreased to $13.5 million in the three months ended September 30, 2021, as compared to $36.1 million in the three months ended September 30, 2020.
+Added: Net income attributable to common stockholders decreased to $43.1 million in the nine months ended September 30, 2021, as compared to $61.9 million in the nine months ended September 30, 2020.
+Added: • Adjusted EBITDA, a non-GAAP measurement of operating performance, increased to $37.6 million in the three months ended September 30, 2021 from $34.5 million in the three months ended September 30, 2020.
+Added: Adjusted EBITDA increased to $111.2 million in the nine months ended September 30, 2021 from $92.9 million in the nine months ended September 30, 2020.
+Added: Please see Non-GAAP Measures below in this section of this Quarterly Report for a discussion of the limitations of Adjusted EBITDA (a non-GAAP measure) and a reconciliation of Adjusted EBITDA to net income, the most comparable measurement in accordance with accounting principles generally accepted in the United States, or GAAP, for the three and nine months ended September 30, 2021 and 2020.
Recent Developments
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In addition, the COVID-19 pandemic resulted in a global slowdown of economic activity and a recession in the United States and the economic situation remains fluid as parts of the economy appear to be recovering while others continue to struggle.
−Removed: While vaccines have been approved for use in the United States and in many other countries, and vaccination efforts are underway, it remains difficult to assess or predict the ultimate duration and economic impact of the COVID-19 pandemic.
−Removed: The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2021, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the COVID-19 pandemic.
+Added: While vaccines have been approved for use in the United States and in many other countries, and vaccination efforts are underway, it remains difficult to assess or predict the ultimate duration and economic impact of the COVID-19 pandemic due to a resurgence of COVID-19 and the emergence and severity of COVID-19 variants.
+Added: The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2021, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the COVID-19 pandemic.
Prolonged uncertainty with respect to COVID-19 could cause further economic slowdown or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.
−Removed: While our business and those of our service providers showed some resiliency beginning in 2020 and continuing into 2021, if the economy fails to fully recover or there are additional shutdowns of non-essential businesses due to a resurgence of COVID-19 and the emergence and severity of COVID-19 variants, our SaaS and license revenue growth rate may be lower in future periods, with a corresponding reduction in hardware revenue, if some consumers or small businesses defer or cancel
−Removed: previously anticipated purchases.
+Added: While our business and those of our service providers showed some resiliency beginning in 2020 and continuing into 2021, if the economy fails to fully recover or there are additional shutdowns of non-essential businesses due to a resurgence of COVID-19 and the emergence and severity of COVID-19 variants, our SaaS and license revenue growth rate may be lower in future periods, with a corresponding reduction in hardware revenue, if some consumers or small businesses defer or cancel previously anticipated purchases.
The challenges posed by COVID-19 on our business continue to evolve rapidly and we will continue to evaluate our business and operations in light of future developments.
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Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2021 2020 2021 2020
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Twelve Months Ended
+Added: September 30,
SaaS and license revenue renewal rate 96 % 94 %
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Adjusted EBITDA
−Removed: Adjusted EBITDA is a non-GAAP measure that represents our net income before interest expense, interest income, other income / (expense), net, benefit from income taxes, amortization and depreciation expense, stock-based compensation expense, secondary offering expense, acquisition-related (benefit) / expense and legal costs and settlement fees incurred in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
+Added: Adjusted EBITDA is a non-GAAP measure that represents our net income before interest expense, interest income, other income / (expense), net, provision for / (benefit from) income taxes, amortization and depreciation expense, stock-based compensation expense, secondary offering expense, acquisition-related (benefit) / expense and legal costs and settlement fees incurred in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
We do not consider these items to be indicative of our core operating performance.
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Adjusted EBITDA is not a measure calculated in accordance with GAAP and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
−Removed: Please see Non-GAAP Measures in this section for a discussion of the limitations of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP measurement, for the three and six months ended June 30, 2021 and 2020.
+Added: Please see Non-GAAP Measures in this section for a discussion of the limitations of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP measurement, for the three and nine months ended September 30, 2021 and 2020.
SaaS and License Revenue Renewal Rate
1 unchanged sentence
We measure our SaaS and license revenue renewal rate on a trailing 12-month basis by dividing (a) the total SaaS and license revenue recognized during the trailing 12-month period from our subscribers on our Alarm.com platform who were subscribers on the first day of the period, by (b) total SaaS and license revenue we would have recognized during the period from those same subscribers assuming no terminations, or service level upgrades or downgrades.
−Removed: The SaaS and license revenue renewal rate represents both residential and commercial properties.
+Added: The SaaS and license revenue renewal rate represents both residential and commercial
Our SaaS and license revenue renewal rate is expressed as an annualized percentage and it is calculated across our entire subscriber base on the Alarm.com platform excluding subscribers of service providers that may use one of our other platforms as a substitute for the Alarm.com platform.
Our service provider partners, who resell our services to our subscribers, have indicated that they typically have three to five-year service contracts with our subscribers.
−Removed: Our SaaS and license revenue
−Removed: renewal rate is calculated across our entire subscriber base on the Alarm.com platform, including subscribers whose contract with their service provider reached the end of its contractual term during the measurement period, as well as subscribers whose contract with their service provider has not reached the end of its contractual term during the measurement period, and is not intended to estimate the rate at which our subscribers renew their contracts with our service provider partners.
+Added: Our SaaS and license revenue renewal rate is calculated across our entire subscriber base on the Alarm.com platform, including subscribers whose contract with their service provider reached the end of its contractual term during the measurement period, as well as subscribers whose contract with their service provider has not reached the end of its contractual term during the measurement period, and is not intended to estimate the rate at which our subscribers renew their contracts with our service provider partners.
We believe that 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.
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These emergency measures remain in place to varying degrees.
−Removed: We have seen and anticipate we may continue to see disruption to our hardware supply chain, including limited inventory availability, increased lead times, and shipping delays, due to the impact of COVID-19 on manufacturing, production and global transportation, as well as to our sales channels due to restrictions on our service providers’ ability to meet with residential and commercial property owners who use our solutions, reluctance of service providers and property owners to meet even where such restrictions have been lifted and general economic conditions.
−Removed: In addition, the COVID-19 pandemic has resulted in a global slowdown of economic activity and a recession in the
−Removed: United States and the economic situation remains fluid as parts of the economy appear to be recovering while others continue to struggle.
−Removed: While vaccines have been approved for use in the United States and in many other countries, and vaccination efforts are underway, it remains difficult to assess or predict the ultimate duration and economic impact of the COVID-19 pandemic.
+Added: We have seen and anticipate we may continue to see disruption to our hardware supply chain, including limited inventory availability, increased lead times, and shipping delays, due to
+Added: the impact of COVID-19 on manufacturing, production and global transportation, as well as to our sales channels due to restrictions on our service providers’ ability to meet with residential and commercial property owners who use our solutions, reluctance of service providers and property owners to meet even where such restrictions have been lifted and general economic conditions.
+Added: In addition, the COVID-19 pandemic has resulted in a global slowdown of economic activity and a recession in the United States and the economic situation remains fluid as parts of the economy appear to be recovering while others continue to struggle.
+Added: While vaccines have been approved for use in the United States and in many other countries, and vaccination efforts are underway, it remains difficult to assess or predict the ultimate duration and economic impact of the COVID-19 pandemic due to a resurgence of COVID-19 and the emergence and severity of COVID-19 variants.
As the future impact on global supply chains from COVID-19 is difficult to predict, the full extent to which COVID-19 may negatively affect our hardware revenue is uncertain;
21 unchanged sentences
We include stock-based compensation expense in connection with the grant of stock options and other forms of equity compensation, including equity compensation with performance conditions, in the applicable operating expense category based on the respective equity award recipient’s function (sales and marketing, general and administrative or research and development).
−Removed: We grew from 1,317 employees as of June 30, 2020 to 1,421 employees as of June 30, 2021, and we expect to continue to hire new employees to support the projected future growth of our business.
+Added: We grew from 1,361 employees as of September 30, 2020 to 1,482 employees as of September 30, 2021, and we expect to continue to hire new employees to support the projected future growth of our business.
Sales and Marketing Expense.
1 unchanged sentence
Our sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.
−Removed: The number of employees in sales and marketing functions increased from 441 as of June 30, 2020 to 456 as of June 30, 2021 and slightly decreased from 457 as of March 31, 2021.
+Added: The number of employees in sales and marketing functions increased from 450 as of September 30, 2020 to 476 as of September 30, 2021 and increased from 456 as of June 30, 2021.
We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally.
1 unchanged sentence
General and Administrative Expense .
−Removed: General and administrative expense consists primarily of personnel and related expenses for our administrative, legal, human resources, finance and accounting personnel, including salaries, bonuses, stock-based compensation, benefits and other personnel costs.
+Added: General and administrative expense consists primarily of personnel and related expenses for our administrative, legal, human resources, finance and accounting personnel, including salaries, bonuses, stock-
+Added: based compensation, benefits and other personnel costs.
Additional expenses included in this category are legal costs, including those that are incurred to defend and license our intellectual property, as well as non-personnel costs, such as travel related expenses, rent, subcontracting and professional fees, audit fees, tax services, and insurance expenses.
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.
−Removed: The number of employees in general and administrative functions increased from 155 as of June 30, 2020 to 173 as of June 30, 2021 and increased from 160 as of March 31, 2021.
+Added: The number of employees in general and administrative functions increased from 161 as of September 30, 2020 to 187 as of September 30, 2021 and increased from 173 as of June 30, 2021.
Excluding intellectual property litigation and acquisition-related expense, we expect general and administrative costs to increase prospectively as our business grows.
5 unchanged sentences
Also included are non-personnel costs such as consulting and professional fees paid to third-party development resources as well as acquisition costs of IPR&D with no alternative future use.
−Removed: The number of employees in research and development functions increased from 721 as of June 30, 2020 to 792 as of June 30, 2021 and slightly decreased from 797 as of March 31, 2021.
+Added: The number of employees in research and development functions increased from 750 as of September 30, 2020 to 819 as of September 30, 2021 and increased from 792 as of June 30, 2021.
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.
−Removed: We will also continue to invest in efforts to extend our platforms to adjacent markets and internationally to maintain our leadership position in the development of intelligently connected property technology, and continued enhancement of our Enterprise Tools platform for our service provider partners.
+Added: We will also continue to invest in efforts to extend our platforms to adjacent markets and internationally to maintain our leadership position in the development of intelligently connected property technology, and continued enhancement of our Partner Services Platform, a comprehensive suite of enterprise-grade business management solutions for our service provider partners.
Amortization and Depreciation .
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Other Income / (Expense), Net
−Removed: Other income / (expense), net primaril y cons ists of non-operating and miscellaneous expense and income, including the $0.2 million loss on the early extinguishment of the 2017 Facility during the three months ended March 31, 2021.
−Removed: Benefit from Income Taxes
+Added: Other income / (expense), net primarily consists of gains earned on the sale of our investments and non-operating and miscellaneous expense and income, including the $24.7 million gain on the sale of an investment in one of our platform partners during the three and nine months ended September 30, 2020, and the $0.2 million loss on the early extinguishment of the 2017 Facility during the nine months ended September 30, 2021.
+Added: Provision for / (Benefit from) Income Taxes
We are subject to U.S.
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Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2021 2020 2021 2020
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Income before income taxes 15,081 8 42,371 27 39,470 7 66,492 15
−Removed: Benefit from income taxes (1,738) (1) (2,277) (2) (4,651) (1) (1,075) (1)
+Added: Provision for / (benefit from) income taxes 1,787 1 6,546 4 (2,864) (1) 5,471 2
Net income $ 13,294 7 % $ 35,825 23 % $ 42,334 8 % $ 61,021 13 %
3 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2021 2020 2021 2020
6 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2021 2020 2021 2020
3 unchanged sentences
Total cost of revenue as a percentage of total revenue 42 39 40 37
−Removed: Comparison of the Three and Six Months Ended June 30, 2021 to June 30, 2020
+Added: Comparison of the Three and Nine Months Ended September 30, 2021 to September 30, 2020
The following tables in this section set forth our selected condensed consolidated statements of operations (in thousands), data for the percentage change and data as a percentage of revenue for the periods presented.
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
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Total revenue $ 192,324 $ 158,851 21 % $ 553,679 $ 452,427 22 %
−Removed: The $47.2 million increase in total revenue for the three months ended June 30, 2021 as compared to the same period in the prior year was primarily the result of a $29.7 million, or 65%, increase in our hardware and other revenue and a $17.5 million, or 18%, increase in our SaaS and license revenue.
−Removed: Our software license revenue included within SaaS and license revenue decreased $1.5 million to $8.3 million during the three months ended June 30, 2021 as compared to $9.8 million during the same period in the prior year, which decreased primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
−Removed: The $16.0 million increase in our Alarm.com segment SaaS and license revenue for the three months ended June 30, 2021 was primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2020.
−Removed: The increase in hardware and other revenue for the three months ended June 30, 2021 as compared to the same period in the prior year was from the Alarm.com segment and was due to an increase in the volume of video cameras and video recorders sold as well as the increased revenue from our acquisition of Shooter Detection Systems, LLC, or SDS, on December 14, 2020.
−Removed: The $1.5 million increase in SaaS and license revenue for our Other segment for the three months ended June 30, 2021, as compared to the same period in the prior year was due to an increase in sales of our energy management and demand response solutions.
−Removed: Hardware and other revenue, net of intersegment eliminations, for the three months ended June 30, 2021 in our Other segment decreased $0.3 million, or 12%, as compared to the same period in the prior year, primarily due to a decrease in sales related to our property management solution.
−Removed: The $67.8 million increase in total revenue for the six months ended June 30, 2021 as compared to the same period in the prior year was primarily the result of a $34.9 million, or 33%, increase in our hardware and other revenue and a $32.9 million, or 18%, increase in our SaaS and license revenue.
−Removed: Our software license revenue included within SaaS and license revenue decreased $2.5 million to $17.0 million during the six months ended June 30, 2021, as compared to $19.5 million during the same period in the prior year, which decreased primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
−Removed: The $29.8 million increase in our Alarm.com segment SaaS and license revenue for the six months ended June 30, 2021 was primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2020.
−Removed: The increase in hardware and other revenue for the six months ended June 30, 2021, as compared to the same period in the prior year was primarily from the Alarm.com segment and was due to an increase in the volume of video cameras and video recorders sold, as well as the increased revenue from our acquisition of SDS on December 14, 2020.
−Removed: The $3.1 million increase in SaaS and license revenue for our Other segment for the six months ended June 30, 2021, as compared to the same period in the prior year was due to an increase in sales of our energy management and demand response solutions.
−Removed: Hardware and other revenue, net of intersegment eliminations, for the six months ended June 30, 2021 in our Other segment decreased $1.8 million, or 34%, as compared to the same period in the prior year, primarily due to a decrease in sales related to our property management solution.
+Added: The $33.5 million increase in total revenue for the three months ended September 30, 2021 as compared to the same period in the prior year was primarily the result of a $17.9 million, or 18%, increase in our SaaS and license revenue and a $15.6 million, or 26%, increase in our hardware and other revenue.
+Added: Our software license revenue included within SaaS and license revenue decreased $1.6 million to $7.9 million during the three months ended September 30, 2021 as compared to $9.5 million during the same period in the prior year, which decreased primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
+Added: The $16.3 million increase in our Alarm.com segment SaaS and license revenue for the three months ended September 30, 2021 as compared to the same period in the prior year was primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2020.
+Added: The $1.6 million increase in SaaS and license revenue for our Other segment for the three months ended September 30, 2021 as compared to the same period in the prior year was due to an increase in sales of our energy management and demand response solutions.
+Added: The increase in hardware and other revenue for the three months ended September 30, 2021 as compared to the same period in the prior year was from the Alarm.com segment and was due to an increase in the volume of video cameras and video recorders sold as well as the increased revenue from our acquisition of Shooter Detection Systems, LLC, or SDS, on December 14, 2020.
+Added: Hardware and other revenue, net of intersegment eliminations, for the three months ended September 30, 2021 in our Other segment increased $0.2 million, or 16%, as compared to the same period in the prior year, primarily due to the timing of sales of our HVAC solution.
+Added: The $101.3 million increase in total revenue for the nine months ended September 30, 2021 as compared to the same period in the prior year was primarily the result of a $50.9 million, or 18%, increase in our SaaS and license revenue and a $50.4 million, or 31%, increase in our hardware and other revenue.
+Added: Our software license revenue included within SaaS and license revenue decreased $4.1 million to $24.9 million during the nine months ended September 30, 2021, as compared to $29.0 million during the same period in the prior year, which decreased primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
+Added: The $46.2 million increase in our Alarm.com segment SaaS and license revenue for the nine months ended September 30, 2021 as compared to the same period in the prior year was primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2020.
+Added: The $4.7 million increase in SaaS and license revenue for our Other segment for the nine months ended September 30, 2021 as compared to the same period in the prior year was due to an increase in sales of our energy management and demand response solutions.
+Added: The increase in hardware and other revenue for the nine months ended September 30, 2021, as compared to the same period in the prior year was primarily from the Alarm.com segment and was due to an increase in the volume of video cameras and video recorders sold, as well as the increased revenue from our acquisition of SDS on December 14, 2020.
+Added: Hardware and other revenue, net of intersegment eliminations, for the nine months ended September 30, 2021 in our Other segment decreased $1.6 million, or 23%, as compared to the same period in the prior year, primarily due to a decrease in sales related to our property management solution.
Cost of Revenue
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
6 unchanged sentences
(1) Excludes amortization and depreciation shown in operating expenses.
−Removed: The $28.4 million increase in cost of revenue for the three months ended June 30, 2021 as compared to the same period in the prior year was the result of a $24.2 million, or 67%, increase in cost of hardware and other revenue and a $4.2 million, or 32%, increase in cost of SaaS and license revenue.
−Removed: Our cost of software license revenue included within cost of SaaS and license revenue was $0.3 million for each of the three months ended June 30, 2021 and 2020.
−Removed: The increase in cost of Alarm.com segment hardware and other revenue related primarily to an increase in the number of hardware units shipped and an increase in costs for freight shipments during the three months ended June 30, 2021 as compared to the same period in the prior year.
+Added: The $19.2 million increase in cost of revenue for the three months ended September 30, 2021 as compared to the same period in the prior year was the result of a $16.1 million, or 34%, increase in cost of hardware and other revenue and a $3.1 million, or 21%, increase in cost of SaaS and license revenue.
+Added: Our cost of software license revenue included within cost of SaaS and license revenue was $0.3 million for each of the three months ended September 30, 2021 and 2020.
+Added: The increase in cost of Alarm.com segment hardware and other revenue related primarily to an increase in the number of hardware units shipped and an increase in costs for freight shipments during the three months ended September 30, 2021 as compared to the same period in the prior year.
The increase in cost of Alarm.com segment SaaS and license revenue related primarily to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
−Removed: Cost of hardware and other revenue as a percentage of hardware and other revenue was 80% for the three months ended June 30, 2021 and 78% for the same period in the prior year.
−Removed: Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 15% for the three months ended June 30, 2021 and 14% for the same period in the prior year.
−Removed: Cost of software license revenue as a percentage of software license revenue was 4% for the three months ended June 30, 2021 and 3% for the same period in the prior year.
−Removed: The increase in cost of hardware and other revenue as a percentage of hardware and other revenue for the three months ended June 30, 2021 as compared to the same period in the prior year is a reflection of the mix of product sales during the periods as well as the increase in costs for freight shipments.
−Removed: The increase in cost of SaaS and license revenue as a percentage of SaaS and license revenue for the three months ended June 30, 2021 as compared to the same period in the prior year is a reflection of the mix of sales of services during the periods.
−Removed: The $36.1 million increase in cost of revenue for the six months ended June 30, 2021 as compared to the same period in the prior year was the result of a $29.1 million, or 36%, increase in cost of hardware and other revenue and a $7.0 million, or 28%, increase in cost of SaaS and license revenue.
−Removed: Our cost of software license revenue included within cost of SaaS and license revenue was $0.7 million for each of the six months ended June 30, 2021 and 2020.
−Removed: The increase in cost of Alarm.com segment hardware and other revenue related primarily to an increase in the number of hardware units shipped and an increase in costs for freight shipments during the six months ended June 30, 2021 as compared to the same period in the prior year.
+Added: Cost of hardware and other revenue as a percentage of hardware and other revenue was 85% for the three months ended September 30, 2021 and 80% for the same period in the prior year.
+Added: Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 15% for the three months ended September 30, 2021 and 14% for the same period in the prior year.
+Added: Cost of software license revenue as a percentage of software license revenue was 4% for the three months ended September 30, 2021 and 3% for the same period in the prior year.
+Added: The increase in cost of hardware and other revenue as a percentage of hardware and other revenue for the three months ended September 30, 2021 as compared to the same period in the prior year is a reflection of the mix of product sales during the periods as well as the increase in costs for freight shipments and inventory component costs.
+Added: The increase in cost of SaaS and license revenue as a percentage of SaaS and license revenue for the three months ended September 30, 2021 as compared to the same period in the prior year is a reflection of the mix of sales of services during the periods.
+Added: The $55.3 million increase in cost of revenue for the nine months ended September 30, 2021 as compared to the same period in the prior year was the result of a $45.2 million, or 35%, increase in cost of hardware and other revenue and a $10.1 million, or 25%, increase in cost of SaaS and license revenue.
+Added: Our cost of software license revenue included within cost of SaaS and license revenue was $1.0 million for each of the nine months ended September 30, 2021 and 2020.
+Added: The increase in cost of Alarm.com segment hardware and other revenue related primarily to an increase in the number of hardware units shipped and an increase in costs for freight shipments during the nine months ended September 30, 2021 as compared to the same period in the prior year.
The increase in cost of Alarm.com segment SaaS and license revenue related primarily to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
−Removed: Cost of hardware and other revenue as a percentage of hardware and other revenue was 79% for the six months ended June 30, 2021 and 77% for the same period in the prior year.
−Removed: Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 15% for the six months ended June 30, 2021 and 13% for the same period in the prior year.
−Removed: Cost of software license revenue as a percentage of software license revenue was 4% for each of the six months ended June 30, 2021 and 2020.
−Removed: The increase in cost of hardware and other revenue as a percentage of hardware and other revenue for the six months ended June 30, 2021, as compared to the same period in the prior year, is a reflection of the mix of product sales during the periods as well as the increase in costs for freight shipments.
−Removed: The increase in cost of SaaS and license revenue as a percentage of SaaS and license revenue for the six months ended June 30, 2021 as compared to the same period in the prior year is a reflection of the mix of sales of services during the periods.
+Added: Cost of hardware and other revenue as a percentage of hardware and other revenue was 81% for the nine months ended September 30, 2021 and 78% for the same period in the prior year.
+Added: Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 15% for the nine months ended September 30, 2021 and 14% for the same period in the prior year.
+Added: Cost of software license revenue as a percentage of software license revenue was 4% for the nine months ended September 30, 2021 and 3% for the same period in the prior year.
+Added: The increase in cost of hardware and other revenue as a percentage of hardware and other revenue for the nine months ended September 30, 2021, as compared to the same period in the prior year, is a reflection of the mix of product sales during the periods as well as the increase in costs for freight shipments and inventory component costs.
+Added: The increase in cost of SaaS and license revenue as a percentage of SaaS and license revenue for the nine months ended September 30, 2021 as compared to the same period in the prior year is a reflection of the mix of sales of services during the periods.
Sales and Marketing Expense
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
1 unchanged sentence
% of total revenue 12 % 12 % 11 % 12 %
−Removed: The $3.6 million increase in sales and marketing expense for the three months ended June 30, 2021 as compared to the same period in the prior year was primarily due to a $2.5 million increase in personnel and related costs for our Alarm.com segment, including salary, benefits, stock-based compensation and travel expenses, attributable in part to increases in the headcount for our sales team and our service provider partner support team to support our growth.
−Removed: Additionally, the increase in sales and marketing expense for the three months ended June 30, 2021 as compared to the same period in the prior year was due to a $0.4 million increase in marketing costs for our Alarm.com segment due to an increase in advertising.
−Removed: Sales and marketing expense from our Other segment increased $0.4 million for the three months ended June 30, 2021 as compared to the same period in the prior year, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team.
−Removed: The $5.5 million increase in sales and marketing expense for the six months ended June 30, 2021 as compared to the same period in the prior year was primarily due to a $3.0 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team and our service provider partner support team to support our growth, net of decreased travel expenses of $0.6 million as a result of the COVID-19 pandemic.
−Removed: Additionally, the increase in sales and marketing expense for the six months ended June 30, 2021 as compared to the same period in the prior year was due to a $1.2 million increase in marketing costs for our Alarm.com segment due to an increase in advertising.
−Removed: Sales and marketing expense from our Other segment increased $0.9 million for the six months ended June 30, 2021, as compared to the same period in the prior year, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team.
−Removed: The number of employees in sales and marketing functions increased from 441 as of June 30, 2020 to 456 as of June 30, 2021.
+Added: The $4.1 million increase in sales and marketing expense for the three months ended September 30, 2021 as compared to the same period in the prior year was primarily due to a $2.5 million increase in personnel and related costs for our Alarm.com segment, including salary, benefits, stock-based compensation and travel expenses, attributable in part to increases in the headcount for our sales team and our service provider partner support team to support our growth.
+Added: Additionally, the increase in sales and marketing expense for the three months ended September 30, 2021 as compared to the same period in the prior year was due to a $1.1 million increase in marketing conference costs for our Alarm.com segment.
+Added: Sales and marketing expense from our Other segment increased $0.3 million for the three months ended September 30, 2021 as compared to the same period in the prior year, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team.
+Added: The $9.7 million increase in sales and marketing expense for the nine months ended September 30, 2021 as compared to the same period in the prior year was primarily due to a $5.4 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team and our service provider partner support team to support our growth.
+Added: Additionally, the increase in sales and marketing expense for the nine months ended September 30, 2021 as compared to the same period in the prior year was due to a $0.9 million increase in advertising costs and a $1.1 million increase in marketing conference costs for our Alarm.com segment.
+Added: Sales and marketing expense from our Other segment increased $1.2 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to increases in personnel and related costs, attributable in part to increases in the headcount for our sales team.
+Added: The number of employees in sales and marketing functions increased from 450 as of September 30, 2020 to 476 as of September 30, 2021.
General and Administrative Expense
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
1 unchanged sentence
% of total revenue 9 % 11 % 12 % 12 %
−Removed: The $5.9 million increase in general and administrative expense for the three months ended June 30, 2021 as compared to the same period in the prior year was primarily due to a $2.2 million increase in personnel and related costs for our Alarm.com segment due in part to an increase in employee headcount to support our operational growth.
−Removed: The increase in general and administrative expense was also due to a $1.7 million decrease to the contingent consideration liability from our acquisition of 85% of the issued and outstanding capital stock of OpenEye on October 21, 2019 within our Alarm.com segment during the three months ended June 30, 2020 which did not occur during the three months ended June 30, 2021 as well as a $1.3 million decrease in the provision for credit losses for our Alarm.com segment for the three months ended June 30, 2020 as compared to a $0.1 million decrease in the provision for credit losses for our Alarm.com segment for the three months ended June 30, 2021.
−Removed: Additionally, costs for external consultants increased $0.9 million within our Alarm.com segment for the three months ended June 30, 2021 as compared to the same period in the prior year.
−Removed: General and administrative expenses from our Other segment decreased by $0.3 million for the three months ended June 30, 2021 as compared to the same period in the prior year, primarily due to a decrease in the provision for credit losses.
−Removed: The $7.9 million increase in general and administrative expense for the six months ended June 30, 2021 as compared to the same period in the prior year was primarily due to a $3.1 million increase in legal expenses within our Alarm.com segment resulting from intellectual property litigation during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020.
−Removed: Additionally, the increase in general and administrative expense for the six months ended June 30, 2021 as compared to the same period in the prior year was due to a $3.0 million increase in personnel and related costs for our Alarm.com segment due in part to an increase in employee headcount to support our operational growth as well as a $2.3 million decrease to the contingent consideration liability from our acquisition of 85% of the issued and outstanding capital stock of OpenEye on October 21, 2019 within our Alarm.com segment incurred during the six months ended June 30, 2020 which did not occur during the six months ended June 30, 2021.
−Removed: General and administrative expenses from our Other segment decreased $0.5 million for the six months ended June 30, 2021 as compared to the same period in the prior year, primarily due to a decrease in the provision for credit losses.
−Removed: The number of employees in general and administrative functions increased from 155 as of June 30, 2020 to 173 as of June 30, 2021.
+Added: The $1.3 million increase in general and administrative expense for the three months ended September 30, 2021 as compared to the same period in the prior year was primarily due to a $0.9 million increase in personnel and related costs for our Alarm.com segment due in part to an increase in employee headcount to support our operational growth.
+Added: The increase in general and administrative expense was also due to $0.9 million decrease in the provision for credit losses for our Alarm.com segment for the three months ended September 30, 2020 as compared to a $0.4 million decrease in the provision for credit losses for our Alarm.com segment for the three months ended September 30, 2021.
+Added: Additionally, there was a $0.3 million decrease to the contingent consideration liability from our acquisition of 85% of the issued and outstanding capital stock of OpenEye on October 21, 2019 within our Alarm.com segment during the three months ended September 30, 2020 which did not occur during the three months ended September 30, 2021.
+Added: General and administrative expenses from our Other segment decreased by $0.5 million for the three months ended September 30, 2021 as compared to the same period in the prior year, primarily due to a decrease in personnel and related costs.
+Added: The $9.2 million increase in general and administrative expense for the nine months ended September 30, 2021 as compared to the same period in the prior year was primarily due to a $4.0 million increase in personnel and related costs for our Alarm.com segment due in part to an increase in employee headcount to support our operational growth as well as a $2.6 million decrease to the contingent consideration liability from our acquisition of 85% of the issued and outstanding capital stock of OpenEye on October 21, 2019 within our Alarm.com segment incurred during the nine months ended September 30, 2020 which did not occur during the nine months ended September 30, 2021.
+Added: Additionally, the increase in general and administrative expense for the nine months ended September 30, 2021 as compared to the same period in the prior year was due to a $2.4 million increase in legal expenses within our Alarm.com segment resulting from intellectual property litigation.
+Added: General and administrative expenses from our Other segment decreased $1.0 million for the nine months ended September 30, 2021 as compared to the same period in the prior year, primarily due to a decrease in personnel and related costs.
+Added: The number of employees in general and administrative functions increased from 161 as of September 30, 2020 to 187 as of September 30, 2021.
Research and Development Expense
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
1 unchanged sentence
% of total revenue 23 % 23 % 24 % 25 %
−Removed: The $6.9 million increase in research and development expense for the three months ended June 30, 2021 as compared to the same period in the prior year was primarily due to a $5.3 million increases 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.
−Removed: Research and development expense from our Other segment increased $1.8 million for the three months ended June 30, 2021 as compared to the same period in the prior year, primarily due to a $0.9 million increase in expenses for external consultants and an increase of $0.8 million in personnel and related costs, including salary, benefits and stock-based compensation.
−Removed: The $9.6 million increase in research and development expense for the six months ended June 30, 2021 as compared to the same period in the prior year was primarily due to a $10.4 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 $0.8 million increase in our expenses for external consultants.
−Removed: These increases were partially offset by $4.4 million of in-process research and development we acquired during the six months ended June 30, 2020, which did not occur during the six months ended June 30, 2021.
−Removed: Research and development expense from our Other segment increased $3.2 million for the six months ended June 30, 2021 as compared to the same period in the prior year, primarily due to personnel and related costs, including salary, benefits and stock-based compensation.
−Removed: The number of employees in research and development functions increased from 721 as of June 30, 2020 to 792 as of June 30, 2021.
+Added: The $7.2 million increase in research and development expense for the three months ended September 30, 2021 as compared to the same period in the prior year was primarily due to a $4.3 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 $0.5 million increase in our expenses for external consultants.
+Added: Research and development expense from our Other segment increased $2.0 million for the three months ended September 30, 2021 as compared to the same period in the prior year, primarily due to a $1.0 million increase in expenses for external consultants and an increase of $0.9 million in personnel and related costs, including salary, benefits and stock-based compensation.
+Added: The $16.8 million increase in research and development expense for the nine months ended September 30, 2021 as compared to the same period in the prior year was primarily due to a $14.6 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 $1.3 million increase in our expenses for external consultants.
+Added: These increases were partially offset by $4.4 million of in-
+Added: process research and development we acquired during the nine months ended September 30, 2020, which did not occur during the nine months ended September 30, 2021.
+Added: Research and development expense from our Other segment increased $5.2 million for the nine months ended September 30, 2021 as compared to the same period in the prior year, primarily due to a $2.9 million increase in our personnel and related costs, including salary, benefits and stock-based compensation and a $2.0 million increase in expense for external consultants.
+Added: The number of employees in research and development functions increased from 750 as of September 30, 2020 to 819 as of September 30, 2021.
Amortization and Depreciation
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
1 unchanged sentence
% of total revenue 4 % 4 % 4 % 5 %
−Removed: Amortization and depreciation increased $0.8 million and $1.7 million for the three and six months ended June 30, 2021, respectively, as compared to the same periods in the prior year, primarily due to the intangible assets that were acquired in connection with the purchase of SDS on December 14, 2020.
+Added: Amortization and depreciation increased $0.6 million and $2.3 million for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in the prior year, primarily due to the intangible assets that were acquired in connection with the purchase of SDS on December 14, 2020.
Interest Expense
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
1 unchanged sentence
% of total revenue (2) % — % (2) % — %
−Removed: Interest expense increased $3.3 million and $6.0 million for the three and six months ended June 30, 2021, respectively, as compared to the same periods in the prior year, primarily due to the amortization of the debt discount and debt issuance costs related to the 2026 Notes.
+Added: Interest expense increased $3.6 million and $9.6 million for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in the prior year, primarily due to the amortization of the debt discount and debt issuance costs related to the 2026 Notes.
Interest Income
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
1 unchanged sentence
% of total revenue — % — % — % — %
−Removed: Interest income remained relatively consistent for the three months ended June 30, 2021 as compared to the same period in the prior year.
−Removed: Interest income decreased $0.3 million for the six months ended June 30, 2021, as compared to the same period in the prior year, primarily due to a decrease in interest rates, partially offset by interest income earned on the cash from the proceeds of the 2026 Notes.
+Added: Interest income remained relatively consistent for the three months ended September 30, 2021 as compared to the same period in the prior year.
+Added: Interest income decreased $0.3 million for the nine months ended September 30, 2021, as compared to the same period in the prior year, primarily due to a decrease in interest rates, partially offset by interest income earned on the cash from the proceeds of the 2026 Notes.
Other Income / (Expense), Net
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
1 unchanged sentence
% of total revenue — % 16 % — % 6 %
−Removed: Other income / (expense), net remained relatively consistent for the three months ended June 30, 2021 as compared to the same period in the prior year.
−Removed: Other income / (expense), net changed by $0.3 million for the six months ended June 30, 2021 as compared to the same periods in the prior year.
−Removed: The change in other income / (expense), net is primarily due to the $0.2 million loss on the early extinguishment of the 2017 Facility during the six months ended June 30, 2021 which did not occur during the same period in the prior year.
−Removed: Benefit from Income Taxes
+Added: Other income, net decreased $24.7 million for the three months ended September 30, 2021 and other income / (expense), net changed by $25.0 million for the nine months ended September 30, 2021, as compared to the same periods in the prior year, primarily due to recording a gain on the sale of an investment in one of our platform partners of $24.7 million within our Alarm.com segment during the three and nine months ended September 30, 2020 which did not occur during the three and nine months ended September 30, 2021.
+Added: Provision for / (Benefit from) Income Taxes
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2021 2020 2021 2020
−Removed: Benefit from income taxes $ (1,738) $ (2,277) (24) % $ (4,651) $ (1,075) 333 %
+Added: Provision for / (benefit from) income taxes $ 1,787 $ 6,546 (73) % $ (2,864) $ 5,471 (152) %
% of total revenue 1 % 4 % (1) % 2 %
−Removed: The benefit from income taxes decreased by $0.5 million for the three months ended June 30, 2021 and increased by $3.6 million for the six months ended June 30, 2021, as compared to the same periods in the prior year.
−Removed: Our effective tax rate was
−Removed: (13.6)% and (19.1)% for the three and six months ended June 30, 2021, respectively, as compared to (15.9)% and (4.5)% for the same periods in the prior year.
−Removed: The increase in the benefit from income taxes for the six months ended June 30, 2021 was primarily due to increased tax windfall benefits from employee stock-based payment transactions during the six months ended June 30, 2021, as compared to the same period in the prior year.
−Removed: The increase in the benefit from income taxes was also due to changes in estimated research and development tax credits and taxable income.
+Added: The provision for income taxes decreased by $4.8 million for the three months ended September 30, 2021 and the provision for / (benefit from) income taxes changed by $8.3 million for the nine months ended September 30, 2021, as compared to the same periods in the prior year.
+Added: Our effective tax rate was 11.8% and (7.3)% for the three and nine months ended September 30, 2021, respectively, as compared to 15.4% and 8.2% for the same periods in the prior year.
+Added: The change in the provision for / (benefit from) income taxes for the nine months ended September 30, 2021 was primarily due to increased tax windfall benefits from employee stock-based payment transactions during the nine months ended September 30, 2021, as compared to the same period in the prior year.
+Added: The change in the provision for / (benefit from) income taxes was also due to changes in estimated research and development tax credits and taxable income.
Segment Information
1 unchanged sentence
Alarm.com and Other.
−Removed: Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 95% of our revenue for each of the three and six months ended June 30, 2021, respectively, as compared to 94% for the same periods in the prior year .
+Added: Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 94% and 95% of our revenue, net of intersegment eliminations, for the three and nine months ended September 30, 2021, respectively, as compared to 94% for the same periods in the prior year .
Our Other segment is focused on researching, developing and offering residential and commercial automation solutions and energy management products and services in adjacent markets.
The consolidated subsidiaries that make up our Other segment are in the investment stage and have incurred significant operating expenses relative to their revenue.
−Removed: Our Alarm.com segment increased from 1,218 employees as of June 30, 2020 to 1,297 employees as of June 30, 2021.
−Removed: Our Other segment increased from 99 employees as of June 30, 2020 to 124 employees as of June 30, 2021.
+Added: Our Alarm.com segment increased from 1,257 employees as of September 30, 2020 to 1,353 employees as of September 30, 2021.
+Added: Our Other segment increased from 104 employees as of September 30, 2020 to 129 employees as of September 30, 2021.
Inter-segment revenue includes sales of hardware between our segments.
1 unchanged sentence
Three Months Ended
+Added: September 30,
SaaS and license revenue Hardware and other revenue
6 unchanged sentences
Total $ 118,059 $ 74,265 $ 92,856 $ 100,126 $ 58,725 $ 79,612
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
SaaS and license revenue Hardware and other revenue
6 unchanged sentences
Total $ 338,628 $ 215,051 $ 279,354 $ 287,780 $ 164,647 $ 241,342
−Removed: Our SaaS and license revenue for the Alarm.com segment included software license revenue of $8.3 million and $17.0 million for the three and six months ended June 30, 2021, respectively, as compared to $9.8 million and $19.5 million for the same periods in the prior year.
−Removed: There was no software license revenue recorded for the Other segment during the three and six months ended June 30, 2021 and 2020.
+Added: Our SaaS and license revenue for the Alarm.com segment included software license revenue of $7.9 million and $24.9 million for the three and nine months ended September 30, 2021, respectively, as compared to $9.5 million and $29.0 million for
+Added: the same periods in the prior year.
+Added: There was no software license revenue recorded for the Other segment during the three and nine months ended September 30, 2021 and 2020.
Critical Accounting Policies and Significant Judgments and Estimates
3 unchanged sentences
Because of the use of estimates inherent in the financial reporting process in light of the continuing uncertainty arising from the COVID-19 pandemic, actual results could differ from those estimates and any such differences may be material.
−Removed: To the extent that there are
−Removed: differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
+Added: To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
Except as disclosed in Note 2 of our notes to the condensed consolidated financial statement and as disclosed below, there were no other material changes to our use of estimates or other critical accounting policies from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on February 25, 2021, or Annual Report.
3 unchanged sentences
The carrying amount of the equity component representing the conversion option is determined by deducting the fair value of the liability component from the par value of the notes as a whole.
−Removed: This difference represents a debt discount that is amortized to interest expense using the effective interest method over the term of the notes.
+Added: This difference between the aggregate principal amount and the liability component represents a debt discount that is amortized to interest expense using the effective interest method over the term of the notes.
Transaction costs attributable to the liability component are netted with the liability component and amortized to interest expense using the effective interest method over the term of the notes.
Transaction costs attributable to the equity component are netted with the equity component of the notes in additional paid-in capital in the condensed consolidated balance sheets.
−Removed: We did not make any material changes to the underlying assumptions used to separate the notes into liability and equity components for the three and six months ended June 30, 2021 and we do not expect any material changes in the near term to the underlying assumptions used to calculate the liability and equity components of our convertible senior notes for the three and six months ended June 30, 2021.
+Added: We did not make any material changes to the underlying assumptions used to separate the notes into liability and equity components for the three and nine months ended September 30, 2021 and we do not expect any material changes in the near term to the underlying assumptions used to calculate the liability and equity components of our convertible senior notes for the three and nine months ended September 30, 2021.
However, if changes in these assumptions occur, and, should those changes be significant, they could have a material impact on the liability and equity balances related to the convertible senior notes as well as interest expense.
4 unchanged sentences
The following table summarizes our cash and cash equivalents, accounts receivable, net and working capital, for the periods indicated (in thousands):
−Removed: June 30, 2021 December 31, 2020
+Added: September 30, 2021 December 31, 2020
Cash and cash equivalents $ 700,307 $ 253,459
2 unchanged sentences
We define working capital as current assets minus current liabilities.
−Removed: Our cash and cash equivalents as of June 30, 2021 are available for working capital purposes.
+Added: Our cash and cash equivalents as of September 30, 2021 are available for working capital purposes.
We do not enter into investments for trading purposes, and our investment policy is to invest any excess cash in short term, highly liquid investments that limit the risk of principal loss;
1 unchanged sentence
Liquidity and Capital Resources
−Removed: As of June 30, 2021, we had $662.7 million in cash and cash equivalents.
+Added: As of September 30, 2021, we had $700.3 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.
−Removed: To date, we have principally financed our operations through cash generated by operating activities and, to a lesser extent, through private and public equity and convertible senior note financings.
+Added: To date, we have
+Added: principally financed our operations through cash generated by operating activities and, to a lesser extent, through private and public equity and debt financings.
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 and received proceeds of $484.3 million, net of $15.7 million of transaction fees and other debt issuance costs.
4 unchanged sentences
We believe our existing cash and cash equivalents and our future cash flows from operating activities will be sufficient to meet our anticipated operating cash needs f or at least the next 12 months.
−Removed: Over the final six months of fiscal year 2021, we expect our capital expenditure requirements to be approximately $4.1 million, primarily related to the continued build out of our leased office space as well as purchases of computer software and equipment.
+Added: Over the final three months of fiscal year 2021, we expect our capital expenditure requirements to be approximately $1.3 million, primarily related to the continued build out of our leased office space as well as purchases of computer software and equipment.
Maturities of lease liabilities for our various office and equipment leases are as follows:
13 unchanged sentences
The convertible senior notes are di scussed in more detail below under “Debt Obligations.”
−Removed: We did not declare or pay dividends during the three and six months ended June 30, 2021 and 2020.
+Added: We did not declare or pay dividends during the three and nine months ended September 30, 2021 and 2020.
We cannot provide any assurance that we will declare or pay cash dividends on our common stock in the future.
5 unchanged sentences
During the three months ended March 31, 2020, we repurchased 147,153 shares of our common stock under the program that expired on November 29, 2020 in open market purchases for a total consideration of $5.1 million.
−Removed: No shares were repurchased under this program during the three months ended June 30, 2020.
−Removed: During the three and six months ended June 30, 2021, we did not repurchase any shares of our common stock under the program that expires on December 3, 2023.
+Added: No shares were repurchased under this program during the three months ended September 30, 2020.
+Added: During the three and nine months ended September 30, 2021, we did not repurchase any shares of our common stock under the program that expires on December 3, 2023.
+Added: Additionally, no shares of our common stock were repurchased under this program from December 3, 2020 to December 31, 2020.
Historical Cash Flows
The following table sets forth our cash flows for the periods indicated (in thousands):
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Cash flows from operating activities $ 83,194 $ 66,670
−Removed: Cash flows used in investing activities (12,376) (9,306)
+Added: Cash flows (used in) / from investing activities (13,897) 12,236
Cash flows from financing activities 377,551 48,641
1 unchanged sentence
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.
−Removed: For the six months ended June 30, 2021, cash flows from operating activities were $45.3 million, compared to $48.0 million for the same period in the prior year.
−Removed: This $2.7 million decrease in cash flows from operating activities was due to a $15.0 million decrease in cash from operating assets and liabilities, partially offset by a $8.5 million increase in non-cash and other reconciling items and a $3.8 million increase in net income.
−Removed: The $15.0 million decrease in cash from operating assets and liabilities was primarily due to differences in timing of collection of receipts and payments of disbursements and, to a lesser extent, increases in prepayments for long lead-time parts related to inventory and other assets during the six months ended June 30, 2021, as compared to the same period in the prior year.
−Removed: The $8.5 million increase in non-cash and other reconciling items was primarily due to a $7.3 million increase in amortization of the debt discount and debt issuance costs related to the convertible senior notes during the six months ended June 30, 2021 as well as a $4.5 million increase in stock-based compensation resulting from additional grants of stock options and restricted stock units during the six months ended June 30, 2021.
−Removed: These increases in non-cash and other reconciling items were partially offset by a $4.6 million change in deferred income taxes, primarily due to increased tax windfall benefits from employee stock-based payment transactions during the six months ended June 30, 2021, as compared to the same period in the prior year.
+Added: For the nine months ended September 30, 2021, cash flows from operating activities were $83.2 million, compared to $66.7 million for the same period in the prior year.
+Added: This $16.5 million increase in cash flows from operating activities was due to a $40.7 million increase in non-cash and other reconciling items, partially offset by a $18.7 million decrease in net income and a $5.5 million decrease in cash from operating assets and liabilities.
+Added: The $40.7 million increase in non-cash and other reconciling items was primarily due to a $24.7 million gain on the sale of an investment in one of our platform partners during the nine months ended September 30, 2020, which was reclassified from operating activities and presented as cash flows from investing activities, that did not occur during the nine months ended September 30, 2021.
+Added: Additionally, the increase in non-cash and other reconciling items was primarily due to $11.5 million increase in amortization of the debt discount and debt issuance costs related to the convertible senior notes during the nine months ended September 30, 2021 as well as a $6.5 million increase in stock-based compensation resulting from additional grants of stock options and restricted stock units during the nine months ended September 30, 2021.
+Added: These increases in non-cash and other reconciling items were partially offset by a $4.4 million change in deferred income taxes, primarily due to increased tax windfall benefits from employee stock-based payment transactions during the nine months ended September 30, 2021, as compared to the same period in the prior year.
+Added: The $5.5 million decrease in cash from operating assets and liabilities was primarily due to a $5.4 million change in inventory resulting from additional purchased inventory during the nine months ended September 30, 2021 as compared to the same period in the prior year, which is due in part to the impacts of the COVID-19 pandemic and the related uncertainty surrounding the potential disruption to our supply chain.
+Added: To a lesser extent, the decrease in cash from operating assets and liabilities was due to increases in prepayments for long lead-time parts related to inventory and other assets, partially offset by differences in timing of collection of receipts and payments of disbursements during the nine months ended September 30, 2021, as compared to the same period in the prior year.
Investing Activities
1 unchanged sentence
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.
−Removed: For the six months ended June 30, 2021, our cash flows used in investing activities was $12.4 million, as compared to $9.3 million for the same period in the prior year.
−Removed: The $3.1 million increase in cash flows used in investing activities was primarily due to the $5.0 million used to purchase 1,000,000 shares of Series B-2 Preferred Stock from one of our technology partners during the six months ended June 30, 2021 as well as a $2.0 million reduction in repayments of notes receivable during the six months ended June 30, 2021, as compared to the same period in the prior year.
−Removed: These increases in cash flows used in investing activities were partially offset by $3.3 million used to acquire in-process research and development during the six months ended June 30, 2020 that did not occur during the six months ended June 30, 2021.
+Added: For the nine months ended September 30, 2021, our cash flows used in investing activities was $13.9 million, as compared to cash flows from investing activities of $12.2 million for the same period in the prior year.
+Added: The $26.1 million decrease in cash flows from investing activities was primarily due to $25.7 million in proceeds received from the sale of an investment in one of our platform partners during the nine months ended September 30, 2020, which did not occur during the nine months ended
+Added: September 30, 2021 as well as $5.0 million used to purchase 1,000,000 shares of Series B-2 Preferred Stock from one of our technology partners during the nine months ended September 30, 2021.
+Added: Additionally, the decrease in cash flows from investing activities was due to a $2.0 million reduction in repayments of notes receivable during the nine months ended September 30, 2021, as compared to the same period in the prior year.
+Added: These decreases in cash flows from investing activities were partially offset by $3.3 million used to acquire in-process research and development during the nine months ended September 30, 2020 that did not occur during the nine months ended September 30, 2021.
Financing Activities
1 unchanged sentence
Cash used in financing activities typically includes repurchases of common stock and repayments of debt.
−Removed: For the six months ended June 30, 2021, cash flows from financing activities was $376.3 million, compared to $47.5 million for the same period in the prior year.
+Added: For the nine months ended September 30, 2021, cash flows from financing activities was $377.6 million, compared to $48.6 million for the same period in the prior year.
The $329.0 million increase in cash flows from financing activities was primarily due to $484.3 million in proceeds from the issuance of convertible senior notes, net of issuance costs paid.
−Removed: This increase in cash flows from financing activities was partially offset by the repayment of $110.0 million to terminate the 2017 Facility during the six months ended June 30, 2021 that did not occur during the same period in the prior year as well as the borrowing of $50.0 million under the 2017 Facility during the six months ended June 30, 2020 that did not occur during six months ended June 30, 2021.
+Added: This increase in cash flows from financing activities was partially offset by the repayment of $110.0 million to terminate the 2017 Facility during the nine months ended September 30, 2021 that did not occur during the same period in the prior year as well as the borrowing of $50.0 million under the 2017 Facility during the nine months ended September 30, 2020 that did not occur during nine months ended September 30, 2021.
Contractual Obligations
−Removed: As of June 30, 2021, there were no material changes in our contractual obligations and commitments from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report, other than the $500.0 million issuance of the 2026 Notes in January 2021 and the $110.0 million repayment to terminate the 2017 Facility on January 20, 2021.
+Added: As of September 30, 2021, there were no material changes in our contractual obligations and commitments from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report, other than the $500.0 million issuance of the 2026 Notes in January 2021 and the $110.0 million repayment to terminate the 2017 Facility on January 20, 2021.
Debt Obligations
16 unchanged sentences
On or after August 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2026 Notes, holders of the 2026 Notes may convert all or any portion of their 2026 Notes at any time, regardless of the foregoing conditions.
−Removed: 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.
+Added: Upon conversion, we may satisfy our conversion obligation by paying or delivering, as the
+Added: 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.
13 unchanged sentences
On January 20, 2021, we repaid the entire outstanding principal balance of $110.0 million of the 2017 Facility with proceeds from the 2026 Notes and the 2017 Facility was terminated.
−Removed: We recognized an extinguishment loss of $0.2 million in other income / (expense), net in our condensed consolidated statements of operations during the six months ended June 30, 2021 for previously capitalized debt issuance costs related to the 2017 Facility that were unamortized at the time of the termination of the 2017 Facility.
+Added: We recognized an extinguishment loss of $0.2 million in other income / (expense), net in our condensed consolidated statements of operations during the nine months ended September 30, 2021 for previously capitalized debt issuance costs related to the 2017 Facility that were unamortized at the time of the termination of the 2017 Facility.
The outstanding principal balance on the 2017 Facility accrued interest at a rate equal to, at our option, either (1) LIBOR, plus an applicable margin based on our consolidated leverage ratio, or (2) the highest of (a) the Wall Street Journal prime rate, (b) the Federal Funds rate plus 0.50%, or (c) LIBOR plus 1.00% plus an applicable margin based on our consolidated leverage ratio.
1 unchanged sentence
The 2017 Facility also carried an unused line commitment fee of 0.20%.
−Removed: For the six months ended June 30, 2020, the effective interest rate on the 2017 Facility was 3.42%.
−Removed: The carrying value of the 2017 Facility was zero and $110.0 million as of June 30, 2021 and December 31, 2020, respectively.
+Added: For the nine months ended September 30, 2020, the effective interest rate on the 2017 Facility was 2.92%.
+Added: The carrying value of the 2017 Facility was zero and $110.0 million as of September 30, 2021 and December 31, 2020, respectively.
The 2017 Facility included a variable interest rate that approximated market rates and, as such, we classified the liability as Level 2 within the fair value hierarchy and determined that the carrying amount of the 2017 Facility approximated its fair value as of December 31, 2020.
Non-GAAP Measures
−Removed: We define Adjusted EBITDA as our net income before interest expense, interest income, other income / (expense), net, benefit from income taxes, amortization and depreciation expense, stock-based compensation expense, secondary offering expense, acquisition-related (benefit) / expense and legal costs and settlement fees incurred in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
+Added: We define Adjusted EBITDA as our net income before interest expense, interest income, other income / (expense), net, provision for / (benefit from) income taxes, amortization and depreciation expense, stock-based compensation expense, secondary offering expense, acquisition-related (benefit) / expense and legal costs and settlement fees incurred in connection with non-ordinary course litigation and other disputes, particularly costs involved in ongoing intellectual property litigation.
We do not consider these items to be indicative of our core operating performance.
17 unchanged sentences
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2021 2020 2021 2020
2 unchanged sentences
Interest expense, interest income and other income / (expense), net 4,003 (24,315) 11,342 (23,575)
−Removed: Benefit from income taxes (1,738) (2,277) (4,651) (1,075)
+Added: Provision for / (benefit from) income taxes 1,787 6,546 (2,864) 5,471
Amortization and depreciation expense 7,467 6,878 22,329 20,023
6 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.