What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 322 added, 210 removed, 784 unchanged (40% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Interest income 2,903 140 4,062 446

Other income / (expense), net 105 32 118 ( 123 )

Other (expense) / income, net ( 76 ) 53 42 ( 70 )

Income before income taxes 18,356 15,081 38,313 39,470

1 unchanged sentence

Net income 18,110 13,294 37,841 42,334

Net loss attributable to redeemable noncontrolling interest 14 255 190 535

Net loss attributable to redeemable noncontrolling interests 222 244 412 779

Net income attributable to common stockholders $ 18,332 $ 13,538 $ 38,253 $ 43,113

12 unchanged sentences

(in thousands, except share and per share data)

September 30,

2022 December 31,

1 unchanged sentence

Cash and cash equivalents $ 621,347 $ 710,621

Accounts receivable, net of allowance for credit losses of $ 2,508 and $ 2,168 , and net of allowance for product returns of $ 1,231 and $ 1,181 as of June 30, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowance for credit losses of $ 3,536 and $ 2,168 , and net of allowance for product returns of $ 1,535 and $ 1,181 as of September 30, 2022 and December 31, 2021, respectively

118,833 105,548

Inventory 112,319 75,276

Other current assets, net of allowance for credit losses of $ 1 and $ 2 as of June 30, 2022 and December 31, 2021, respectively

Other current assets, net of allowance for credit losses of zero and $ 2 as of September 30, 2022 and December 31, 2021, respectively

27,498 26,175

5 unchanged sentences

Operating lease right-of-use assets 30,915 30,479

Other assets, net of allowance for credit losses of $ 1 and $ 78 as of June 30, 2022 and December 31, 2021, respectively

Other assets, net of allowance for credit losses of $ 3 and $ 78 as of September 30, 2022 and December 31, 2021, respectively

32,282 24,349

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Commitments and contingencies (Note 12)

Redeemable noncontrolling interest 16,127 12,888

Redeemable noncontrolling interests 23,029 12,888

Stockholders’ equity

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized;

no shares issued and outstanding as of June 30, 2022 and December 31, 2021

no shares issued and outstanding as of September 30, 2022 and December 31, 2021

Common stock, $ 0.01 par value, 300,000,000 shares authorized;

50,846,671 and 50,406,606 shares issued;

and 49,715,571 and 50,259,453 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

and 49,859,269 and 50,259,453 shares outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 483,225 498,979

Treasury stock, at cost;

981,807 and 147,153 shares as of June 30, 2022 and December 31, 2021, respectively

987,402 and 147,153 shares as of September 30, 2022 and December 31, 2021, respectively

( 57,015 ) ( 5,149 )

1 unchanged sentence

Total stockholders’ equity 593,776 613,167

Total liabilities, redeemable noncontrolling interest and stockholders’ equity $ 1,255,541 $ 1,232,015

Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 1,309,773 $ 1,232,015

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

1 unchanged sentence

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

Provision for credit losses on accounts receivable 547 150

Provision for / (recovery of) credit losses on accounts receivable 1,606 ( 238 )

Reserve for product returns 3,721 1,628

Recovery of credit losses on notes receivable ( 77 ) ( 10 )

Provision for excess and obsolete inventory — 374

Amortization on patents and tooling 1,037 947

6 unchanged sentences

Loss on early extinguishment of debt — 185

Changes in operating assets and liabilities:

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

Accounts receivable ( 18,321 ) ( 8,689 )

7 unchanged sentences

Cash flows used in investing activities:

Business acquisition, net of cash acquired ( 31,730 ) —

Additions to property and equipment ( 28,084 ) ( 8,939 )

2 unchanged sentences

Purchase of investment in unconsolidated entity — ( 5,000 )

Proceeds from investment 140 —

Proceeds from sale of investment 140 —

Cash flows used in investing activities ( 62,625 ) ( 13,897 )

12 unchanged sentences

Cash and cash equivalents $ 621,347 $ 700,307

Restricted cash included in other assets 533 —

Restricted cash included in other current assets and other assets 629 —

Total cash, cash equivalents and restricted cash $ 621,976 $ 700,307

3 unchanged sentences

(in thousands)

Redeemable Noncontrolling Interest Additional Paid-In Capital Retained Earnings Total Stockholders’ Equity

Redeemable Noncontrolling Interests Additional Paid-In Capital Retained Earnings Total Stockholders’ Equity

Preferred Stock Common Stock Treasury Stock

15 unchanged sentences

Balance as of June 30, 2022 $ 16,127 — $ — 50,697 $ 507 $ 468,698 982 $ ( 56,648 ) $ 148,726 $ 561,283

Common stock issued in connection with equity-based plans — — — 150 1 1,727 — — — 1,728

Purchase of treasury stock — — — — — — 5 ( 367 ) — ( 367 )

Stock-based compensation expense — — — — — 13,154 — — — 13,154

Noncontrolling interest assumed through acquisition 6,770 — — — — — — — — —

Accretion adjustments of redeemable noncontrolling interest to redemption value 354 — — — — ( 354 ) — — — ( 354 )

Net income / (loss) attributable to common stockholders ( 222 ) — — — — — — — 18,332 18,332

Balance as of September 30, 2022 $ 23,029 — $ — 50,847 $ 508 $ 483,225 987 $ ( 57,015 ) $ 167,058 $ 593,776

ALARM.COM HOLDINGS, INC.

1 unchanged sentence

(in thousands)

Redeemable Noncontrolling Interest Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Retained Earnings Total Stockholders’ Equity

Redeemable Noncontrolling Interests Preferred Stock Common Stock Additional Paid-In Capital Treasury Stock Retained Earnings Total Stockholders’ Equity

Shares Amount Shares Amount Shares Amount

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Balance as of June 30, 2021 $ 11,372 — $ — 50,041 $ 500 $ 481,937 147 $ ( 5,149 ) $ 96,149 $ 573,437

Common stock issued in connection with equity-based plans — — — 133 1 1,541 — — — 1,542

Stock-based compensation expense — — — — — 9,418 — — — 9,418

Accretion adjustments of redeemable noncontrolling interest to redemption value 761 — — — — ( 761 ) — — — ( 761 )

Net income / (loss) attributable to common stockholders ( 244 ) — — — — — — — 13,538 13,538

Balance as of September 30, 2021 $ 11,889 — $ — 50,174 $ 501 $ 492,135 147 $ ( 5,149 ) $ 109,687 $ 597,174

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements (Unaudited)

June 30, 2022 and 2021

September 30, 2022 and 2021

Alarm.com Holdings, Inc.

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In the opinion of management, these condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of the results of operations, financial position and cash flows for the periods presented.

However, the global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of significant worldwide events, including public health crises, such as the COVID-19 pandemic, and geopolitical upheaval, such as Russia’s incursion into Ukraine (collectively Macroeconomic Conditions).

These Macroeconomic Conditions have and may continue to create supply chain disruptions, inventory disruptions, and fluctuations in economic growth, including fluctuations in employment rates, inflation, energy prices and consumer sentiment.

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It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions including, the path of the COVID-19 pandemic, the evolution of COVID-19 variants or the emergence of other public health crises.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2022, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the Macroeconomic Conditions.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2022, which is increasingly true in periods of extreme uncertainty, such as the uncertainty caused by the Macroeconomic Conditions.

Prolonged uncertainties could cause further economic slowdown or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.

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Comprehensive Income

Our comprehensive income for the three and six months ended June 30, 2022 and 2021 was equal to our net income disclosed in the condensed consolidated statements of operations.

Our comprehensive income for the three and nine months ended September 30, 2022 and 2021 was equal to our net income disclosed in the condensed consolidated statements of operations.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

Significant Accounting Policies

Other than those disclosed herein, there have been no other material changes to our significant accounting policies during the three and six months ended June 30, 2022 from those disclosed in our Annual Report.

Other than those disclosed herein, there have been no other material changes to our significant accounting policies during the three and nine months ended September 30, 2022 from those disclosed in our Annual Report.

Restricted Cash

We consider all cash reserved for a specific use and not available for immediate or general business use to be restricted cash.

As of June 30, 2022, we had a total of $ 0.5 million of restricted cash.

As of September 30, 2022, we had a total of $ 0.6 million of restricted cash, of which less than $ 0.1 million was included in other current assets and $ 0.6 million was included in other assets within our condensed consolidated balance sheets.

We had no restricted cash as of December 31, 2021.

As of June 30, 2022, all restricted cash was included in other assets.

Redeemable Noncontrolling Interests

Noncontrolling interests with redemption features that are not solely within our control are considered redeemable noncontrolling interests.

Our redeemable noncontrolling interests relate to our 85 % equity ownership interest in PC Open Incorporated, a Washington corporation, doing business as OpenEye and our 85 % equity ownership interest in Noonlight, Inc., or Noonlight, a Delaware corporation (see Note 6).

The OpenEye and Noonlight stockholder agreements contain a put option that gives the minority stockholders the right to sell their shares to us based on the fair value of the shares and also contain a call option that gives us the right to purchase the remaining shares from the minority stockholders based on the fair value of the shares.

The put and call options related to OpenEye can each be exercised beginning in the first quarter of 2023.

The put and call options related to Noonlight can each be exercised beginning in the first quarter of 2026.

These redeemable noncontrolling interests are considered temporary equity and we report them between liabilities and stockholders’ equity in the consolidated balance sheets.

The amount of the net income or loss attributable to the redeemable noncontrolling interests are recorded in the consolidated statements of operations and the accretion of the redemption values are recorded as an adjustment to additional paid-in capital.

The aggregate redemption value of the noncontrolling interests was $ 23.0 million and $ 12.9 million as of September 30, 2022 and December 31, 2021.

Stock-Based Compensation

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The issuance costs are presented as a deduction from the outstanding principal balance of the convertible senior notes and are amortized to interest expense using the effective interest method over the contractual term of the convertible senior notes.

We also removed the temporary difference between the book and tax treatment of the debt discount and adjusted the temporary difference between the book and tax treatment of the debt issuance costs of the convertible senior notes.

We also removed the temporary difference between the book and tax treatment of the debt

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

discount and adjusted the temporary difference between the book and tax treatment of the debt issuance costs of the convertible senior notes.

The adoption resulted in the recording of the following increases / (decreases) on our condensed consolidated balance sheets (in thousands):

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Retained earnings 9,972

Our net income attributable to common stockholders increased $ 2.0 million and $ 4.0 million during the three and six months ended June 30, 2022, respectively, as a result of adopting ASU 2020-06 due to no longer recording non-cash interest expense related to the amortization of the debt discount associated with the previous equity component of the convertible senior notes.

Upon adoption of this guidance on January 1, 2022, we began using the if-converted method when calculating the dilutive impact

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

of the convertible senior notes on net income per share, which required us to increase our diluted weighted average common shares outstanding by 3,396,950 shares for the three and six months ended June 30, 2022.

The impact of ASU 2020-06 on net income attributable to common stockholders and weighted average diluted shares resulted in an increase to basic net income attributable to common stockholders of $ 0.04 and $ 0.08 per share and an increase to diluted net income attributable to common stockholders of $ 0.04 and $ 0.07 per share, during the three and six months ended June 30, 2022, respectively.

Our net income attributable to common stockholders increased $ 2.0 million and $ 6.0 million during the three and nine months ended September 30, 2022, respectively, as a result of adopting ASU 2020-06 due to no longer recording non-cash interest expense related to the amortization of the debt discount associated with the previous equity component of the convertible senior notes.

Upon adoption of this guidance on January 1, 2022, we began using the if-converted method when calculating the dilutive impact of the convertible senior notes on net income per share, which required us to increase our diluted weighted average common shares outstanding by 3,396,950 shares for the three and nine months ended September 30, 2022.

The impact of ASU 2020-06 on net income attributable to common stockholders and weighted average diluted shares resulted in an increase to basic net income attributable to common stockholders of $ 0.04 and $ 0.12 per share and an increase to diluted net income attributable to common stockholders of $ 0.03 and $ 0.10 per share, during the three and nine months ended September 30, 2022, respectively.

See Note 15 for details on the components of basic and diluted earnings per share.

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The guidance over disclosing current period gross write-offs by year of origination for financial receivables should be applied prospectively.

We adopted this guidance during the three months ended March 31, 2022 and there was no impact to the disclosures within the "Allowance for Credit Losses - Notes Receivable" section of Note 8 as there were no write-offs of notes receivable during each of the three and six months ended June 30, 2022.

Not Yet Adopted

On October 28, 2021, the FASB issued ASU 2021-08, " Business Combinations (Topic 606):

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Early adoption is permitted, including adoption in an interim period.

The guidance should be applied prospectively to business combinations occurring on or after the effective date of the amendment in this update.

We are currently assessing the impact this pronouncement may have on our condensed consolidated financial statements, which will be dependent on the nature and size of any potential future acquisitions.

We adopted this guidance during the three months ended September 30, 2022 and the adoption did not have a material impact on our condensed consolidated financial statements during the three and nine months ended September 30, 2022.

Any future financial impact will be dependent on the magnitude and nature of future business combinations.

Revenue from Contracts with Customers

8 unchanged sentences

O ur service provider partners have indicated that they typically have three to five-year service contracts with residential and commercial property owners who use our solutions.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

When determining the amount of consideration we expect to be entitled to for the sale of our hardware, we estimate the variable consideration associated with customer returns.

We record a reserve against revenue for hardware returns based on historical returns.

For the twelve months ended June 30, 2022 and 2021, our reserve against revenue for hardware returns was approximately 1 % of hardware and other revenue.

For the twelve months ended September 30, 2022 and 2021, our reserve against revenue for hardware returns was approximately 1 % of hardware and other revenue.

We evaluate our hardware reserve on a quarterly basis or if there is an indication of significant changes in return experience.

6 unchanged sentences

Accordingly, for licenses of functional intellectual property, revenue is recognized at the point-in-time when control has been transferred to the customer, which occurs once the software has been made available to the customer.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

Hardware and other revenue may also include activation fees charged to some of our service provider partners for activation of a new subscriber account on our platforms, as well as fees paid by service provider partners for our marketing services.

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The portion of these activation fees included in current and long-term deferred revenue as of our balance sheet date represents the amounts that will be recognized ratably as revenue over the following twelve months , or longer as appropriate, until the ten-year expected term is complete.

The balance of deferred revenue for activation fees was $ 5.6 million and $ 6.0 million as of June 30, 2022 and December 31, 2021, respectively, which combines current and long-term balances.

The balance of deferred revenue for activation fees was $ 5.5 million and $ 6.0 million as of September 30, 2022 and December 31, 2021, respectively, which combines current and long-term balances.

SaaS and license revenue associated with our contracts is invoiced and revenue is recognized at an amount that corresponds directly with the value of the performance completed to date.

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Based on the policy above, we capitalize a portion of our commission costs as an incremental cost of obtaining a contract.

When calculating the incremental cost of obtaining a contract, we exclude any commission costs related to metrics that could be satisfied without obtaining a contract, including training-related metrics.

When calculating the incremental cost of obtaining a contract, we exclude any commission costs related to metrics that could be satisfied without obtaining a contract,

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

including training-related metrics.

We amortize our commission costs over a period of three years , which is consistent with the period over which the products and services related to the commission are transferred to the customer.

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Impairment exists if the carrying amount of the asset recognized from contract costs exceeds the remaining amount of consideration we expect to receive in exchange for providing the goods and services to which such asset relates, less the costs that relate directly to providing those good and services and that have not been recognized as an expense.

We did no t record an impairment loss on our contract assets during the three and six months ended June 30, 2022 and 2021.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

We did no t record an impairment loss on our contract assets during the three and nine months ended September 30, 2022 and 2021.

The changes in our contract assets are as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Beginning of period balance $ 17,241 $ 15,019 $ 14,837 $ 12,529

Revenue deferred in period 5,387 3,648 9,377 7,449

Revenue deferred and acquired in period 4,373 3,682 13,750 11,131

Revenue recognized from amounts included in contract liabilities ( 3,179 ) ( 2,624 ) ( 10,152 ) ( 7,583 )

1 unchanged sentence

The revenue recognized from amounts included in contract liabilities primarily relates to prepayment contracts with customers as well as payments of activation fees.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

Accounts Receivable, Net

The components of accounts receivable, net are as follows (in thousands):

September 30,

2022 December 31,

3 unchanged sentences

Accounts receivable, net $ 118,833 $ 105,548

For the three and six months ended June 30, 2022, we recorded a provision for credit losses of $ 0.4 million and $ 0.5 million on our accounts receivable, respectively.

For the three and six months ended June 30, 2021, we recorded a provision for credit losses of $ 0.1 million and $ 0.2 million on our accounts receivable, respectively.

For the three and six months ended June 30, 2022, we recorded a reserve for product returns of $ 0.9 million and $ 1.7 million, respectively, as compared to $ 0.5 million and $ 1.1 million for the same periods in the prior year.

For the three and nine months ended September 30, 2022, we recorded a provision for credit losses of $ 1.1 million and $ 1.6 million on our accounts receivable, respectively.

For the three and nine months ended September 30, 2021, we recorded a reduction to the provision for credit losses of $ 0.4 million and $ 0.2 million on our accounts receivable, respectively.

For the three and nine months ended September 30, 2022, we recorded a reserve for product returns of $ 2.0 million and $ 3.7 million, respectively, as compared to $ 0.5 million and $ 1.6 million for the same periods in the prior year.

Historically, we have not experienced write-offs for uncollectible accounts or sales returns that have differed significantly from our estimates.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

Allowance for Credit Losses - Accounts Receivable

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(i) outstanding accounts receivable balances within Alarm.com and certain subsidiaries and (ii) outstanding accounts receivable balances within all other subsidiaries.

There were no changes to our portfolio segments for our accounts receivable during the three and six months ended June 30, 2022, and no changes to our policies or practices that influenced our estimate of expected credit losses for accounts receivable.

Additionally, there were no significant changes in the amount of accounts receivable write-offs during the three and six months ended June 30, 2022, as compared to historical periods other than a partial write-off of $ 0.7 million related to one of our distribution partners' outstanding balance during the six months ended June 30, 2021, upon the distributor being acquired by a third party.

There were no changes to our portfolio segments for our accounts receivable during the three and nine months ended September 30, 2022, and no changes to our policies or practices that influenced our estimate of expected credit losses for accounts receivable.

Additionally, there were no significant changes in the amount of accounts receivable write-offs during the three and nine months ended September 30, 2022, as compared to historical periods other than a partial write-off of $ 0.7 million related to one of our distribution partners' outstanding balance during the nine months ended September 30, 2021, upon the distributor being acquired by a third party.

Expected credit losses are estimated over the contractual term of the financial assets and we adjust the term for expected prepayments when appropriate.

For the three and six months ended June 30, 2022, we recorded credit loss expense for accounts receivable and notes receivable of $ 0.4 million and $ 0.3 million, respectively, in general and administrative expense in our condensed consolidated statements of operations.

For the three and six months ended June 30, 2021, we recorded credit loss expense of $ 0.1 million and less than $ 0.1 million, respectively, in general and administrative expense in our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2022, we recorded credit loss expense for accounts receivable and notes receivable of $ 1.0 million and $ 1.3 million, respectively, in general and administrative expense in our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2021, we recorded a reduction of credit loss expense of $ 0.4 million, in general and administrative expense in our condensed consolidated statements of operations.

The contractual term excludes expected extensions, renewals and modifications because extension and renewal options are unconditionally cancelable by us.

1 unchanged sentence

Any subsequent recoveries of previously written off balances are recorded as a reduction to credit loss expense.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

The changes in our allowance for credit losses for accounts receivable are as follows (in thousands):

Three Months Ended

June 30, 2022 Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2022 Six Months Ended

June 30, 2021

September 30, 2022 Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2022 Nine Months Ended

September 30, 2021

Subsidiaries All Other

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The components of inventory are as follows (in thousands):

September 30,

2022 December 31,

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Total inventory $ 112,319 $ 75,276

Acquisition of a Business - Noonlight

On September 23, 2022, Alarm.com Incorporated, one of our wholly-owned subsidiaries, acquired 85 % of the issued and outstanding shares of capital stock of Noonlight.

Noonlight provides a connected safety and event management software and services platform that enables new applications and provides enhanced emergency response capabilities.

We believe the acquisition of Noonlight will enhance our comprehensive suite of interactive cloud-based services and allow us to expand markets for emergency response services as well as accelerate innovation in those services.

In consideration for the purchase of 85 % of the issued and outstanding shares of capital stock of Noonlight, we paid $ 31.9 million in cash on September 23, 2022, after deducting $ 1.5 million related to an outstanding loan issued to Noonlight during May of 2022 and $ 4.9 million related to agreed holdback provisions.

See Note 8 for further details on the loan to Noonlight, including the settlement of the outstanding principal and interest.

Pursuant to the terms of the stock purchase agreement, following the preliminary determination of the working capital of Noonlight as of the closing date, the purchase price decreased by $ 0.2 million.

The working capital adjustment is expected to be finalized by the first quarter of 2023 and $ 0.1 million of the holdback is expected to be paid to the stockholders of Noonlight at that time.

The remaining amount of the holdback of $ 4.6 million is expected to be paid to the stockholders of Noonlight by the end of the first quarter of 2024, subject to off set for any indemnification obligations.

As a result of the acquisition of Noonlight, we recorded approximately $ 0.7 million in acquisition-related costs for each of the three and nine months ended September 30, 2022.

These costs include expenses directly related to acquiring Noonlight, are expensed as incurred and are included in general and administrative expense in our condensed consolidated statements of operations.

The purchase price allocation was not finalized as of the filing date of this Quarterly Report on Form 10-Q and is pending the final determination of the working capital adjustment as well as tax adjustments, including the assessment of any net operating losses acquired and the related limitations on any identified net operating losses.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

The table below sets forth the purchase consideration and the preliminary allocation used to estimate the fair value of the tangible and intangible net assets acquired (in thousands):

September 23, 2022

Calculation of Purchase Consideration:

Cash paid, net of working capital adjustment $ 31,674

Outstanding principal and interest of loan provided to Noonlight 1,537

Holdback consideration 4,910

Total consideration $ 38,121

Estimated Tangible and Intangible Net Assets:

Accounts receivable 291

Other current and non-current assets 180

Property and equipment 45

Developed technology 9,335

Trade names 150

Accounts payable ( 433 )

Accrued expenses and other current liabilities ( 352 )

Deferred tax liability ( 2,353 )

Deferred revenue ( 67 )

Redeemable noncontrolling interest ( 6,770 )

Goodwill 37,907

Total estimated tangible and intangible net assets $ 38,121

Goodwill of $ 37.9 million reflects the value of acquired workforce and synergies we expect to achieve from integrating Noonlight's suite of emergency response cloud-managed application program interfaces into our existing comprehensive suite of interactive cloud-based services.

None of the goodwill recognized is expected to be deductible for income tax purposes in future periods.

We allocate goodwill to reporting units based on expected benefit from synergies and have allocated the goodwill to the Alarm.com segment.

Fair Value of Net Assets Acquired and Intangibles

The acquired activities and assets in the purchase of Noonlight constituted a business and with the exception of contract liabilities accounted for under Topic 606, in accordance with accounting standards codification, or ASC 805, the assets and liabilities were recorded at their respective fair values as of September 23, 2022.

We developed our estimate of the fair value of intangible net assets using a multi-period excess earnings method for developed technology and the relief from royalty method for the trade name.

Developed Technology

Developed technology primarily consists of intellectual property of proprietary software that is marketed for sale.

We valued the developed technology using the multi-period excess earnings method, an income approach.

The significant assumptions used in the income approach include estimates about future expected cash flows from the developed technology, the obsolescence factor and the discount rate.

We are amortizing the Noonlight developed technology, valued at $ 9.3 million, on an attribution method based on the discounted cash flows of the model over an estimated useful life of seven years .

We valued the trade names acquired using a relief from royalty method.

The significant assumptions used in the income approach include future expected cash flows from the trade name, the royalty rate and the discount rate.

We are amortizing the trade names, valued at $ 0.2 million, on an attribution basis derived from the discounted cash flows of the model over an estimated useful life of five years .

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

Redeemable Noncontrolling Interests

Our redeemable noncontrolling interest relates to our 85 % equity ownership interest in Noonlight.

The Noonlight stockholder agreement contains a put option that gives the minority Noonlight stockholders the right to sell their remaining 15 % equity ownership interest to us based on the fair value of the shares and also contains a call option that gives us the right to purchase the remaining Noonlight shares from the minority Noonlight stockholders based on the fair value of the shares.

The put and call options can each be exercised beginning in the first quarter of 2026.

The redeemable noncontrolling interest was recorded at fair value on September 23, 2022, by applying the income approach using unobservable inputs for projected cash flows, including projected financial results and a discount rate, which are considered Level 3 inputs.

This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the condensed consolidated balance sheets.

The redemption value of the Noonlight noncontrolling interest was $ 6.8 million as of September 23, 2022 and September 30, 2022.

Business Combinations in Operations - Noonlight

The operations of the Noonlight business combination discussed above were included in the condensed consolidated financial statements as of the acquisition date.

The pro forma information as well as the revenue and net losses of the business combination were not material to the condensed consolidated financial statements for the three and nine months ended September 30, 2022.

Asset Acquisition

On December 16, 2021, EnergyHub, Inc., one of our wholly-owned subsidiaries, acquired certain assets of an unrelated third party.

10 unchanged sentences

Goodwill acquired 37,907 — 37,907

Balance as of June 30, 2022 $ 112,901 $ — $ 112,901

There were no impairments of goodwill during the three and six months ended June 30, 2022 and 2021.

Balance as of September 30, 2022 $ 150,808 $ — $ 150,808

On September 23, 2022, we acquired 85 % of the issued and outstanding shares of capital stock of Noonlight and recorded $ 37.9 million of goodwill in the Alarm.com segment.

There were no impairments of goodwill during the three and nine months ended September 30, 2022 and 2021.

The following table reflects changes in the net carrying amount of the components of intangible assets (in thousands):

3 unchanged sentences

$ 59,426 $ 30,157 $ 1,823 $ 91,406

Intangible assets acquired — 9,335 150 9,485

Amortization ( 8,928 ) ( 4,349 ) ( 443 ) ( 13,720 )

Balance as of June 30, 2022 $ 53,474 $ 27,265 $ 1,525 $ 82,264

We recorded $ 4.5 million and $ 9.1 million of amortization related to our intangible assets for the three and six months ended June 30, 2022, respectively, as compared to $ 4.3 million and $ 8.5 million for the same periods in the prior year.

There were no impairments of long-lived intangible assets during the three and six months ended June 30, 2022 and 2021.

During the six months ended June 30, 2022, we wrote-off $ 0.7 million in fully amortized intangible assets in the Alarm.com segment that were acquired in 2014 related to customer relationships, developed technology, trade name and other intangible assets that no longer existed as of January 1, 2022.

Balance as of September 30, 2022 $ 50,498 $ 35,143 $ 1,530 $ 87,171

We recorded $ 4.6 million and $ 13.7 million of amortization related to our intangible assets for the three and nine months ended September 30, 2022, respectively, as compared to $ 4.3 million and $ 12.8 million for the same periods in the prior year.

There were no impairments of long-lived intangible assets during the three and nine months ended September 30, 2022 and 2021.

During the nine months ended September 30, 2022, we wrote-off $ 0.7 million in fully amortized intangible assets in the

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

Alarm.com segment that were acquired in 2014 related to customer relationships, developed technology, trade name and other intangible assets that no longer existed as of January 1, 2022.

The following tables reflect the weighted average remaining life and carrying value of finite-lived intangible assets (in thousands, except weighted-average remaining life):

June 30, 2022

September 30, 2022

Amount Accumulated

7 unchanged sentences

December 31, 2021

Amount Impairment of Intangible Assets Accumulated

Amount Impairment of

Intangible Assets Accumulated

Amortization Net

8 unchanged sentences

From time to time, we enter into agreements to purchase patents or patent licenses.

The carrying value, net of amortization, of our purchased patents and patent licenses was $ 1.9 million and $ 2.2 million as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022 and December 31, 2021, $ 0.5 million and $ 0.6 million of patent costs were included in other current assets and $ 1.4 million and $ 1.6 million of patent costs were included in other assets, respectively.

We have $ 7.0 million of historical cost in purchased patents and patent licenses as of June 30, 2022.

The carrying value, net of amortization, of our purchased patents and patent licenses was $ 1.7 million and $ 2.2 million as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022 and December 31, 2021, $ 0.5 million and $ 0.6 million of patent costs were included in other current assets and $ 1.2 million and $ 1.6 million of patent costs were included in other assets, respectively.

We have $ 7.0 million of historical cost in purchased patents and patent licenses as of September 30, 2022.

We are amortizing the patent costs over the estimated useful lives of the patents, which range from three years to 18 years.

Patent amortization cost of $ 0.1 million and $ 0.2 million was included in cost of SaaS and license revenue in our condensed consolidated statements of operations for each of the three and six months ended June 30, 2022 and 2021, respectively.

Patent amortization cost of $ 0.1 million was included in amortization and depreciation in our condensed consolidated statements of operations for each of the three and six months ended June 30, 2022 and 2021.

Patent amortization cost of $ 0.1 million and $ 0.3 million was included in cost of SaaS and license revenue in our condensed consolidated statements of operations for each of the three and nine months ended September 30, 2022 and 2021, respectively.

Patent amortization cost of $ 0.1 million and $ 0.2 million was included in amortization and depreciation in our condensed consolidated statements of operations for each of the three and nine months ended September 30, 2022 and 2021, respectively.

Loan to a Distribution Partner

2 unchanged sentences

Under the amended terms, the distribution partner paid us $ 2.0 million in principal for the term loan on June 9, 2020 and the remaining $ 1.0 million was transferred to the amended subordinated credit agreement with the affiliated entity of the distribution partner.

As of June 30, 2022 and December 31, 2021, there was no remaining amount outstanding related to the amended term loan.

As of September 30, 2022 and December 31, 2021, there was no remaining amount outstanding related to the amended term loan.

The amended subordinated credit agreement with the affiliated entity of the distribution partner matures on September 9, 2025 and interest on the outstanding principal balance accrues at a rate of 9.0 % per annum and is payable in kind.

As of June 30, 2022 and December 31, 2021, $ 4.8 million and $ 4.6 million of the notes receivable balance related to the subordinated credit agreement was included in other assets in our condensed consolidated balance sheets, respectively.

For the three and six months ended June 30, 2022, we recognized $ 0.9 million and $ 1.5 million of revenue from the distribution partner associated with these loans, respectively, as compared to $ 0.9 million and $ 1.6 million for the same periods in the prior year.

As of September 30, 2022 and December 31, 2021, $ 4.9 million and $ 4.6 million of the notes receivable balance related to the subordinated credit agreement was included in other assets in our condensed consolidated balance sheets, respectively.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

For the three and nine months ended September 30, 2022, we recognized $ 0.8 million and $ 2.3 million of revenue from the distribution partner associated with these loans, respectively, as compared to $ 0.8 million and $ 2.4 million for the same periods in the prior year.

Loan to a Service Provider Partner

2 unchanged sentences

The maturity date of the loan is July 24, 2025.

As of June 30, 2022 and December 31, 2021, $ 1.1 million and $ 1.2 million of principal was outstanding from the service provider partner under the loan agreement, respectively.

For three and six months ended June 30, 2022 and 2021, we recognized less than $ 0.1 million and $ 0.1 million of revenue, respectively, from the service provider partner associated with this loan.

Loan to a Technology Company

In May 2022, we entered into a loan agreement with a technology company, under which we agreed to loan the technology company $ 1.5 million, collateralized by the assets of the technology company.

Interest on the outstanding principal accrues at a rate per annum equal to 7.0 % and interest and principal payments are due on the maturity date of the loan, which is expected to be during the third quarter of 2022.

As of June 30, 2022, $ 1.5 million of principal was outstanding from the technology company under the loan agreement.

For the three and six months ended June 30, 2022 and 2021, we did not record any revenue from the technology company associated with this loan.

As of September 30, 2022 and December 31, 2021, $ 1.1 million and $ 1.2 million of principal was outstanding from the service provider partner under the loan agreement, respectively.

For three and nine months ended September 30, 2022, we recognized less than $ 0.1 million and $ 0.1 million of revenue from the service provider partner associated with this loan, respectively, as compared to $ 0.1 million for the same periods in the prior year.

Loan to Noonlight

In May 2022, we entered into an agreement with Noonlight, under which we agreed to loan $ 1.5 million, collateralized by the assets of Noonlight.

Interest on the outstanding principal accrued at a rate per annum equal to 7.0 %.

The outstanding interest and principal balances were previously included in other current assets in our condensed consolidated balance sheet and were used to reduce the payment we made on September 23, 2022 to acquire 85 % of the issued and outstanding shares of capital stock of Noonlight.

As of September 30, 2022, no principal or interest was outstanding from Noonlight under the loan agreement.

Prior to the acquisition of Noonlight on September 23, 2022, for the three and nine months ended September 30, 2022 and 2021, we did not record any revenue from Noonlight.

Loan to a Technology Partner

2 unchanged sentences

Interest and principal payments are due on the maturity date of the loan, which is June 27, 2029, unless the loan is converted prior to the maturity date, which may occur upon a qualified financing event, as defined in the convertible promissory note, upon a sale of the technology partner or upon our election on the maturity date of the loan.

As of June 30, 2022, $ 1.5 million of principal was outstanding from the technology partner under the convertible promissory note.

For the three and six months ended June 30, 2022 and 2021, we did not record any revenue from the technology partner associated with this convertible promissory note.

As of September 30, 2022, $ 1.5 million of principal was outstanding from the technology partner under the convertible promissory note.

For the three and nine months ended September 30, 2022 and 2021, we did not record any revenue from the technology partner associated with this convertible promissory note.

Investment in a Hardware Supplier

3 unchanged sentences

Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted for observable price changes from orderly transactions for identical or similar investments.

As of June 30, 2022 and December 31, 2021, our investment in the hardware supplier was $ 5.6 million.

As of September 30, 2022 and December 31, 2021, our investment in the hardware supplier was $ 5.6 million.

Investment in a Technology Partner

2 unchanged sentences

At the time of conversion, we determined there was no value related to the Series A-1 Preferred Stock.

Based on observable price changes from orderly transactions for similar investments, we increased the amount of our investment by $ 0.7 million and recorded a gain within other income / (expense), net , in our consolidate d statements of operations during the year ended December 31, 2020.

Based on observable price changes from orderly transactions for similar investments, we increased the amount of our investment by $ 0.7 million and recorded a gain within other (expense) / income, net , in our consolidate d statements of operations during the year ended December 31, 2020.

In February 2021, we paid $ 5.0 million in cash to purchase 1,000,000 shares of Series B-2 Preferred Stock from the same technology partner as part of a financing round that included other investors.

The $ 5.0 million equity investment, which is included in the Alarm.com segment, does not meet the criteria for consolidation and is accounted for using the measurement alternative.

As of June 30, 2022 and December 31, 2021, our investment in the technology partner was $ 5.7 million.

Under the alternative, we measure investments without readily determinable fair values at cost, less impairment,

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

adjusted for observable price changes from orderly transactions for identical or similar investments.

As of September 30, 2022 and December 31, 2021, our investment in the technology partner was $ 5.7 million.

Allowance for Credit Losses - Notes Receivable

1 unchanged sentence

(i) loan receivables and (ii) hardware financing receivables.

There were no changes to our portfolio segments for our notes receivable during the three and six months ended June 30, 2022, and no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses for notes receivable.

There were no hardware financing receivables outstanding as of June 30, 2022.

There were no changes to our portfolio segments for our notes receivable during the three and nine months ended September 30, 2022, and no changes to our policies or practices involving the issuance of notes receivable, customer acquisitions or any other factors that influenced our estimate of expected credit losses for notes receivable.

There were no hardware financing receivables outstanding as of September 30, 2022.

We do not accrue interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms.

5 unchanged sentences

We write-off any accrued interest on notes receivable that are considered impaired or are 90 days or greater past due based on their contractual payment terms by reversing interest income.

The accrued interest receivable as of June 30, 2022 and December 31, 2021 was less than $ 0.1 million, and is reflected in other current assets within our condensed consolidated balance sheets and excluded from the amortized cost basis of the notes receivable .

We did not write-off any accrued interest receivable during the three and six months ended June 30, 2022 and 2021.

There were no purchases or sales of financial assets during the three and six months ended June 30, 2022 and 2021.

There were no significant changes in the amount of note receivable write-offs during the three and six months ended June 30, 2022, as compared to historical periods.

The accrued interest receivable as of September 30, 2022 and December 31, 2021 was less than $ 0.1 million, and is reflected in other current assets within our condensed consolidated balance sheets and excluded from the amortized cost basis of the notes receivable .

We did not write-off any accrued interest receivable during the three and nine months ended September 30, 2022 and 2021.

There were no purchases or sales of financial assets during the three and nine months ended September 30, 2022 and 2021.

There were no significant changes in the amount of note receivable write-offs during the three and nine months ended September 30, 2022, as compared to historical periods.

The changes in our allowance for credit losses for notes receivable are as follows (in thousands):

Three Months Ended

June 30, 2022 Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2022 Six Months Ended

June 30, 2021

September 30, 2022 Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2022 Nine Months Ended

September 30, 2021

Receivables Hardware

11 unchanged sentences

The following tables reflect the current and delinquent notes receivable by class of financing receivables and by year of origination (in thousands):

June 30, 2022

September 30, 2022

Loan Receivables:

8 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

December 31, 2021

14 unchanged sentences

Total $ — $ — $ 21 $ — $ — $ — $ 21

There were no notes receivables placed on nonaccrual status as of June 30, 2022 and December 31, 2021.

During the three and six months ended June 30, 2022 and 2021, there was no interest income recognized related to notes receivables that were in nonaccrual status.

As of June 30, 2022 and December 31, 2021, there were no notes receivables placed in nonaccrual status for which there was not a related allowance for credit losses.

As of June 30, 2022 and December 31, 2021, there were no notes receivables that were 90 days or greater past due for which we continued to accrue interest income.

There were no notes receivables placed on nonaccrual status as of September 30, 2022 and December 31, 2021.

During the three and nine months ended September 30, 2022 and 2021, there was no interest income recognized related to notes receivables that were in nonaccrual status.

As of September 30, 2022 and December 31, 2021, there were no notes receivables placed in nonaccrual status for which there was not a related allowance for credit losses.

As of September 30, 2022 and December 31, 2021, there were no notes receivables that were 90 days or greater past due for which we continued to accrue interest income.

Prepaid Expenses

As of June 30, 2022 and December 31, 2021, $ 17.9 million and $ 17.7 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses and long lead-time parts related to our inventory.

As of September 30, 2022 and December 31, 2021, $ 17.1 million and $ 17.7 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses, insurance and long lead-time parts related to our inventory.

Fair Value Measurements

2 unchanged sentences

Level 1 Level 2 Level 3 Total

Money market accounts as of June 30, 2022

Money market accounts as of September 30, 2022

$ 553,498 $ — $ — $ 553,498

1 unchanged sentence

679,278 — — 679,278

Subsidiary long-term incentive plan as of June 30, 2022

Subsidiary long-term incentive plan as of September 30, 2022

$ — $ — $ — $ —

3 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

The following table summarizes the change in fair value of the Level 3 liabilities for the subsidiary long-term incentive plan with significant unobservable inputs (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

End of period balance $ — $ 816 $ — $ 816

As of June 30, 2022, $ 609.1 million of our money market accounts was included in cash and cash equivalents and $ 0.5 million was included in other assets in our condensed consolidated balance sheets.

As of September 30, 2022, $ 552.9 million of our money market accounts was included in cash and cash equivalents, less than $ 0.1 million was included in other current assets and $ 0.6 million was included in other assets in our condensed consolidated balance sheets.

As of December 31, 2021, $ 679.3 million was included in cash and cash equivalents in our condensed consolidated balance sheets.

Our money market assets are valued using quoted prices in active markets.

See Note 12 for the carrying amount and estimated fair value of our convertible senior notes as of June 30, 2022.

See Note 12 for the carrying amount and estimated fair value of our convertible senior notes as of September 30, 2022 and December 31, 2021.

The liability for the subsidiary long-term incentive plan consisted of the potential cash payment contingent upon meeting certain financial milestones related to the agreement established with certain employees of one of our subsidiaries.

14 unchanged sentences

Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another.

There were no transfers in or out of Level 3 during the three and six months ended June 30, 2022 and 2021.

There were no transfers in or out of Level 3 during the three and nine months ended September 30, 2022 and 2021.

We also monitor the value of the investments for other-than-temporary impairment on a quarterly basis.

No other-than-temporary impairments occurred during the three and six months ended June 30, 2022 and 2021.

No other-than-temporary impairments occurred during the three and nine months ended September 30, 2022 and 2021.

We lease office space, data centers and office equipment under non-cancelable operating leases with various expiration dates through 2027.

4 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

Supplemental information related to leases is presented in the table below (in thousands, except weighted-average term and discount rate):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

Operating lease right-of-use assets obtained in exchange for new operating lease liabilities 1,415 1,431 7,127 2,446

September 30,

2022 December 31,

9 unchanged sentences

_______________

(1) Operating lease payments exclude $ 6.4 million of legally binding minimum lease payments for leases executed but not yet commenced and includes $ 1.0 million for options to extend lease terms that were reasonably certain of being exercised.

(1) Operating lease payments exclude $ 6.3 million of legally binding minimum lease payments for leases executed but not yet commenced and include $ 1.0 million for options to extend lease terms that were reasonably certain of being exercised.

(2) Imputed interest was calculated using the incremental borrowing rate applicable for each lease.

We did no t have any finance leases or subleases as of June 30, 2022 or December 31, 2021.

We did no t have any finance leases or subleases as of September 30, 2022 or December 31, 2021.

Our lease agreements do not contain any material residual value guarantees, restrictive covenants or variable lease payments.

Short-term lease costs were immaterial for the three and six months ended June 30, 2022 and 2021.

Short-term lease costs were immaterial for the three and nine months ended September 30, 2022 and 2021.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

The components of accounts payable, accrued expenses and other current liabilities are as follows (in thousands):

September 30,

2022 December 31,

5 unchanged sentences

The components of other liabilities are as follows (in thousands):

September 30,

2022 December 31,

Holdback liability from asset acquisition $ — $ 850

Holdback liability from asset acquisition and business combination $ 4,560 $ 850

Subsidiary long-term incentive plan — 3,351

21 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

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.

21 unchanged sentences

Upon adoption of ASU 2020-06 on January 1, 2022, we also removed the temporary difference between the book and tax treatment of the debt discount and adjusted the temporary difference between the book and tax treatment of the debt issuance costs of the 2026 Notes.

As of June 30, 2022 and December 31, 2021, the fair value of our 2026 Notes was $ 402.5 million and $ 452.5 million, respectively.

As of September 30, 2022 and December 31, 2021, the fair value of our 2026 Notes was $ 412.8 million and $ 452.5 million, respectively.

The fair value was determined based on the quoted price of the 2026 Notes in an inactive market on the last traded day of the quarter and has been classified as Level 2 in the fair value hierarchy.

Based on the closing price of our common stock of $ 61.86 on the last trading day of the quarter, the if-converted value of the 2026 Notes did not exceed the principal amount of $ 500.0 million as of June 30, 2022.

Based on the closing price of our common stock of $ 64.86 on the last trading day of the quarter, the if-converted value of the 2026 Notes did not exceed the principal amount of $ 500.0 million as of September 30, 2022.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

The net carrying amount of the liability component of the 2026 Notes is as follows (in thousands):

September 30,

2022 December 31,

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

10 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.

The 2017 Facility was terminated on January 20, 2021 and 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.

The 2017 Facility was terminated on January 20, 2021 and we recognized an extinguishment loss of $ 0.2 million in other (expense) / income, 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 %.

The carrying value of the 2017 Facility was zero as of June 30, 2022 and December 31, 2021.

The carrying value of the 2017 Facility was zero as of September 30, 2022 and December 31, 2021.

Commitments and Contingencies

5 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

Legal Proceedings

10 unchanged sentences

both motions are pending decision.

Vivint has also moved to assert previously abandoned claims from two of the patents in a new proceeding.

We have opposed the motion.

No trial date has been set.

3 unchanged sentences

Based on currently available information, we have determined a loss is not probable or reasonably estimable at this time.

Further related to Vivint, on October 27, 2022, we filed a demand for arbitration of a dispute arising under the Patent Cross License agreement between Alarm.com and Vivint executed in November 2013.

Vivint notified us it will stop paying license fees to Alarm.com under the agreement.

Vivint has paid the required license fees to Alarm.com since the agreement was executed in November 2013.

Alarm.com disputes Vivint's refusal of payment and is seeking continued payments of license fees in the arbitration, as well as interest and declaratory relief.

There can be no assurance that Alarm.com will be successful in the arbitration proceedings.

As a result of Vivint’s refusal to pay license fees under the agreement, beginning with the fourth quarter of 2022, Alarm.com believes that quarterly SaaS and license revenue and total revenue will be impacted by approximately $ 6.0 million.

Alarm.com also believes that quarterly earnings and cash flow will be impacted by the aforementioned $ 6.0 million, plus additional legal fees.

On January 10, 2022, EcoFactor, Inc., or EcoFactor, filed a lawsuit against us in U.S.

28 unchanged sentences

The target date for completion of the investigation is March 16, 2023.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

Should Causam prevail in an ITC investigation, Alarm.com thermostats manufactured abroad could be excluded from importation into the United States.

5 unchanged sentences

On February 25, 2021, Vivint filed a lawsuit against ADT LLC a/k/a ADT LLC of Delaware d/b/a ADT Security Services in U.S.

District Court, District of Utah, alleging that ADT Pulse, Control, and Blue each infringe one or more patents owned by

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

District Court, District of Utah, alleging that ADT Pulse, Control, and Blue each infringe one or more patents owned by Vivint.

Vivint is seeking damages and attorneys’ fees.

1 unchanged sentence

ADT answered the second amended complaint on March 22, 2022, asserted defenses based on non-infringement and invalidity of all five asserted patents and counterclaimed for declaratory judgement of invalidity of all five asserted patents.

Two of the asserted patents are under inter partes review at the PTAB, and ADT has filed petitions for inter partes review for the three other asserted patents for which decisions on institution are pending.

Two of the asserted patents are under inter partes review at the PTAB.

On June 17, 2022, the court entered an order staying the case in view of the pending proceedings before the PTAB, with the exception of certain discovery of source code.

A joint status report is due to be filed by October 21, 2022 .

Should Vivint prevail on the claims that one or more elements of ADT’s products infringe, we could be required to indemnify ADT for damages in the form of a reasonable royalty or ADT could be enjoined from making, using and selling our solution if a license or other right to continue selling our technology is not made available or we are unable to design around such patents, and required to pay ongoing royalties and comply with unfavorable terms if such a license is made available to us.

10 unchanged sentences

On December 3, 2020, our board of directors authorized a stock repurchase program, under which we are authorized to purchase up to an aggregate of $ 100.0 million of our outstanding common stock during the three-year period ending December 3, 2023.

During the three and six months ended June 30, 2022, we repurchased 480,531 and 834,654 shares of our common stock under this program for $ 28.2 million and $ 51.5 million, respectively, which includes applicable commissions and fees.

No shares of our common stock were repurchased under this program during the three and six months ended June 30, 2021.

During the three and nine months ended September 30, 2022, we repurchased 5,595 and 840,249 shares of our common stock under this program for $ 0.4 million and $ 51.9 million, respectively, which includes applicable commissions and fees.

No shares of our common stock were repurchased under this program during the three and nine months ended September 30, 2021.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Tax windfall benefit from stock-based awards $ 916 $ 1,100 $ 1,949 $ 6,780

We granted 87,000 and 182,000 stock options pursuant to our 2015 Plan during each of the three and nine months ended September 30, 2022 as compared to an aggregate of 7,500 and 141,200 stock options for the same periods in the prior year.

There were 62,324 and 101,586 stock options exercised during the three and nine months ended September 30, 2022, respectively, as compared to 74,932 and 211,190 stock options for the same periods in the prior year.

There was an aggregate of 229,400 and 819,824 restricted stock units without performance conditions granted to certain of our employees and directors, during the three and nine months ended September 30, 2022, respectively, as compared to an aggregate of 173,005 and 608,101 restricted stock units without performance conditions for the same periods in the prior year.

There was an aggregate of 96,289 and 168,223 restricted stock units with performance conditions granted to certain of our employees during the three and nine months ended September 30, 2022, respectively, as compared to zero and 120,314 restricted stock units with performance conditions for the same periods in the prior year.

There were 75,452 and 312,947 restricted stock units without performance conditions that vested during the three and nine months ended September 30, 2022, respectively, as compared to 49,263 and 292,186 restricted stock units without performance conditions vested during the same periods in the prior year.

There were zero restricted stock units with performance conditions that vested during the three and nine months ended September 30, 2022 as compared to zero and 20,000 restricted stock units with performance conditions for the same periods in the prior year.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

We granted 95,000 stock options pursuant to our 2015 Plan during each of the three and six months ended June 30, 2022 as compared to an aggregate of 133,700 stock options for the same periods in the prior year.

There were 25,242 and 39,262 stock options exercised during the three and six months ended June 30, 2022, respectively, as compared to 63,083 and 136,258 stock options for the same periods in the prior year.

There was an aggregate of 433,881 and 590,424 restricted stock units without performance conditions granted to certain of our employees and directors, during the three and six months ended June 30, 2022, respectively, as compared to an aggregate of 307,880 and 435,096 restricted stock units without performance conditions for the same periods in the prior year.

There were zero and an aggregate of 71,934 restricted stock units with performance conditions granted to certain of our employees during the three and six months ended June 30, 2022, respectively, as compared to 120,314 restricted stock units with performance conditions for the same periods in the prior year.

There were 179,998 and 237,495 restricted stock units without performance conditions that vested during the three and six months ended June 30, 2022, respectively, as compared to 173,553 and 242,923 restricted stock units without performance conditions vested during the same periods in the prior year.

There were no restricted stock units with performance conditions that vested during both the three and six months ended June 30, 2022 as compared to zero and 20,000 restricted stock units with performance conditions for the same periods in the prior year.

September 30, 2022 and 2021

Earnings Per Share

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income $ 18,110 $ 13,294 $ 37,841 $ 42,334

Net loss attributable to redeemable noncontrolling interest 14 255 190 535

Net loss attributable to redeemable noncontrolling interests 222 244 412 779

Net income attributable to common stockholders - basic (A) 18,332 13,538 38,253 43,113

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

1 unchanged sentence

Restricted stock units 128,675 11,630 248,792 71,258

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

Our redeemable noncontrolling interest relates to our 85 % equity ownership interest in OpenEye.

The OpenEye stockholder agreement contains a put option that gives the minority OpenEye stockholders the right to sell their OpenEye shares to us based on the fair value of the shares.

The OpenEye stockholder agreement also contains a call option that gives us the right to purchase the remaining OpenEye shares from the minority OpenEye stockholders based on the fair value of the shares.

The put and call options can each be exercised beginning in the first quarter of 2023.

This redeemable noncontrolling interest is considered temporary equity and we report it between liabilities and stockholders’ equity in the condensed consolidated balance sheets.

The amount of the net income or loss attributable to redeemable noncontrolling interests is recorded in the condensed consolidated statements of operations.

Our redeemable noncontrolling interests are related to our 85 % equity ownership interests in OpenEye and Noonlight.

See Notes 2 and 6 for details on the put options and call options contained in the OpenEye and Noonlight stockholder agreements.

Prior to the adoption of ASU 2020-06, since we expected to settle the principal amount on our outstanding 2026 Notes in cash and any excess in cash or shares of our common stock, we used the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable.

The conversion spread had a dilutive impact on diluted net income per share of common stock when the average market price of our common stock for a given period exceeded the conversion price of $ 147.19 per share for the 2026 Notes.

Based on the initial conversion price and the average market price of our common stock for the three and six months ended June 30, 2021, there was no dilutive effect of the 2026 Notes on our earnings per share during the three and six months ended June 30, 2021.

Based on the initial conversion price and the average market price of our common stock for the three and nine months ended September 30, 2021, there was no dilutive effect of the 2026 Notes on our earnings per share during the three and nine months ended September 30, 2021.

Upon adoption of ASU 2020-06 on January 1, 2022, we began using the if-converted method when calculating the dilutive impact of the 2026 Notes on net income per share.

As a result, we included 3,396,950 shares related to the 2026 Notes within the weighted average shares outstanding when calculating the diluted net income per share for the three and six months ended June 30, 2022.

Additionally, we included $ 0.6 million and $ 1.2 million of debt issuance cost amortization, net of tax, within the numerator of the diluted net income per share for the three and six months ended June 30, 2022, respectively .

Additionally, we included $ 0.6 million and $ 1.8 million of debt issuance cost amortization, net of tax, within the numerator of the diluted net income per share for the three and nine months ended September 30, 2022, respectively .

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

Significant Service Providers

During the three and six months ended June 30, 2022 and 2021 our 10 largest revenue service provider partners accounted for 48 % and 49 % of our consolidated revenue, respectively.

One of our service provider partners within the Alarm.com segment individually represented greater than 15 % but not more than 20 % of our revenue for each of the three and six months ended June 30, 2022.

One of our service provider partners within the Alarm.com segment individually represented greater than 10 % but not more than 15 % of our revenue for each of the three and six months ended June 30, 2021.

One service provider partner in the Alarm.com segment represented more than 10% of accounts receivable as of June 30, 2022 and December 31, 2021.

During the three and nine months ended September 30, 2022 our 10 largest revenue service provider partners accounted for 52 % and 49 % of our consolidated revenue, respectively, as compared to 48 % and 49 % for the same periods in the prior year.

One of our service provider partners within the Alarm.com segment individually represented greater than 15 % but not more than 20 % of our revenue for each of the three and nine months ended September 30, 2022 and 2021.

Two service provider partners in the Alarm.com segment each represented more than 10% of accounts receivable as of September 30, 2022.

One service provider partner in the Alarm.com segment represented greater than 10% of accounts receivable as of December 31, 2021.

For purposes of interim reporting, our annual effective income tax rate is estimated in accordance with ASC 740-270, "Interim Reporting." This rate is applied to the pre-tax book income of the entities expected to be benefited during the year.

Discrete items that impact the tax provision are recorded in the period incurred.

For the three and six months ended June 30, 2022, we recorded a provision for income taxes of $ 0.8 million and $ 0.2 million, respectively, resulting in an effective income tax rate of 7.2 % and 1.1 % for those periods.

For the three and six months ended June 30, 2021, we recorded a benefit from income taxes of $ 1.7 million and $ 4.7 million, respectively, resulting in an effective income tax rate of ( 13.6 )% and ( 19.1 )% for those periods.

For the three and nine months ended September 30, 2022, we recorded a provision for income taxes of $ 0.2 million and $ 0.5 million, respectively, resulting in an effective income tax rate of 1.3 % and 1.2 % for those periods.

For the three and nine months ended September 30, 2021, we recorded a provision for income taxes of $ 1.8 million and a benefit from income taxes of $ 2.9 million, respectively, resulting in an effective income tax rate of 11.8 % and ( 7.3 )% for those periods.

Our effective tax rates were below the 21.0% statutory rate primarily due to research and development tax credits claimed, tax windfall benefits from employee stock-based payment transactions and foreign derived intangible income deductions, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses.

We recognize a valuation allowance if, based on the weight of available evidence, both positive and negative, it is more likely than not that some portion, or all, of net deferred tax assets will not be realized.

Due to the uncertainty of realization of certain deferred tax assets acquired in 2017 related to our Canadian net operating losses and research and development tax credits, we established a valuation allowance of $ 0.3 million during the second quarter of 2019, which remained at $ 0.3 million as of December 31, 2021 and decreased to $ 0.2 million as of June 30, 2022.

During 2020, we established a valuation allowance of $ 1.3 million for state research and development tax credit carryforwards, which increased to $ 1.9 million as of December 31, 2021 and remained at $ 1.9 million as of June 30, 2022.

We apply guidance for uncertainty in income taxes that requires the application of a more likely than not threshold to the recognition and de-recognition of uncertain tax positions.

If the recognition threshold is met, this guidance permits us to recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is more likely than not to be realized upon settlement.

We recorded an increase to the unrecognized tax benefits liability of $ 1.1 million primarily for research and development tax credits claimed during the six months ended June 30, 2022.

We recorded an increase to the unrecognized tax benefits liability of $ 1.5 million for research and development tax credits claimed during the six months ended June 30, 2021.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

We recorded an increase to the unrecognized tax benefits liability of $ 2.1 million primarily for research and development tax credits claimed during the nine months ended September 30, 2022.

We recorded an increase to the unrecognized tax benefits liability of $ 2.1 million for research and development tax credits claimed during the nine months ended September 30, 2021.

Our tax returns are subject to on-going review and examination by various tax authorities.

1 unchanged sentence

On October 13, 2021, the Internal Revenue Service commenced an examination of our federal income tax return for 2018, which is ongoing.

The anticipated completion date of the Internal Revenue Service examination cannot be estimated at this time.

As of June 30, 2022 and December 31, 2021, we accrued $ 0.2 million of total interest expense related to unrecognized tax benefits.

On August 12, 2022, the Internal Revenue Service expanded the examination to include our federal income tax return for 2019, which is ongoing.

The anticipated completion date of the Internal Revenue Service examinations cannot be estimated at this time.

As of September 30, 2022 and December 31, 2021, we accrued $ 0.2 million of total interest expense related to unrecognized tax benefits.

We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense.

In August 2022, the Inflation Reduction Act of 2022 was enacted in the United States which, among other provisions, includes a minimum 15.0% tax on companies that have a three-year average annual adjusted financial statement income of more than $1.0 billion and a 1.0% excise tax on the value of net corporate stock repurchases.

Both provisions are effective for tax years beginning after December 31, 2022.

We do not currently believe the 15.0% corporate minimum tax or the 1.0% tax on net corporate stock repurchases will have a material impact on our financial condition or results of operations.

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

September 30, 2022 and 2021

Segment Information

5 unchanged sentences

Management bases strategic goals and decisions on these segments and the data presented below is used to measure financial results.

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 six months ended June 30, 2022, respectively, as compared to 95 % for the same periods in the prior year.

Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that contributed 94 % of our revenue, net of intersegment eliminations, for each of the three and nine months ended September 30, 2022, as compared to 94 % and 95 % 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.

2 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

September 30, 2022 and 2021

Management evaluates the performance of its segments and allocates resources to them based on operating income / (loss) as compared to prior periods and current performance levels.

The reportable segment operational data is presented in the tables below (in thousands):

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

6 unchanged sentences

20,874 ( 4,738 ) 105 75 16,316

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

6 unchanged sentences

19,968 ( 1,021 ) 244 ( 107 ) 19,084

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

6 unchanged sentences

50,545 ( 14,467 ) 459 28 36,565

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

7 unchanged sentences

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

Assets as of June 30, 2022 $ 1,295,908 $ 39,651 $ ( 80,061 ) $ 43 $ 1,255,541

Assets as of September 30, 2022 $ 1,350,821 $ 40,088 $ ( 81,251 ) $ 115 $ 1,309,773

Assets as of December 31, 2021 1,264,416 37,198 ( 69,595 ) ( 4 ) 1,232,015

Our SaaS and license revenue for the Alarm.com segment included software license revenue of $ 6.9 million and $ 14.0 million for the three and six months ended June 30, 2022, respectively, as compared to $ 8.3 million and $ 17.0 million for the same periods in the prior year.

There was no software license revenue recorded for the Other segment during the three and six months ended June 30, 2022 and 2021.

Depreciation and amortization expense was $ 7.5 million and $ 14.9 million for the Alarm.com segment for the three and six months ended June 30, 2022, respectively, as compared to $ 7.4 million and $ 14.7 million for the same periods in the prior year.

Depreciation and amortization expense was $ 0.3 million and $ 0.6 million for the Other segment for the three and six months ended June 30, 2022, respectively, as compared to $ 0.1 million and $ 0.2 million for the same periods in the prior year.

Additions to property and equipment were $ 24.1 million and $ 25.7 million for the Alarm.com segment for the three and six months ended

Our SaaS and license revenue for the Alarm.com segment included software license revenue of $ 6.5 million and $ 20.5 million for the three and nine months ended September 30, 2022, respectively, as compared to $ 7.9 million and $ 24.9 million for the same periods in the prior year.

There was no software license revenue recorded for the Other segment during the three and nine months ended September 30, 2022 and 2021.

Depreciation and amortization expense was $ 7.3 million and $ 22.2 million for the Alarm.com segment for the three and nine months ended September 30, 2022, respectively, as compared to $ 7.3 million and $ 22.0 million for the same periods in the prior year.

Depreciation and amortization expense was $ 0.3 million and $ 0.9 million for the Other segment for the three and nine months ended September 30, 2022, respectively, as compared to $ 0.1 million and $ 0.3 million for the same periods in the prior year.

Additions to property and equipment were $ 1.9 million and $ 27.6 million for the Alarm.com segment for the three and nine

ALARM.COM HOLDINGS, INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited) — (Continued)

June 30, 2022 and 2021

June 30, 2022, respectively, as compared to $ 2.7 million and $ 6.2 million for the same periods in the prior year.

Additions to property and equipment were less than $ 0.1 million and $ 0.1 million for the Other segment for the three and six months ended June 30, 2022, respectively, as compared to $ 0.1 million for the same periods in the prior year.

We derived substantially all revenue from North America for the three and six months ended June 30, 2022 and 2021.

Substantially all of our long-lived assets were in North America as of June 30, 2022 and December 31, 2021.

Related Party Transactions

Installation Partner

Our installation partner in which we had a 48.2 % ownership interest performed installation services for security service providers and also provided installation services for us and certain of our subsidiaries.

We accounted for this investment using the equity method.

In June 2022, our installation partner ceased operations and we recorded a gain of $ 0.1 million in other income / (expense), net in our condensed consolidated statements of operations during the three months ended June 30, 2022 related to proceeds received from our initial investment.

As of June 30, 2022 and December 31, 2021, our investment balance in our installation partner was zero .

During the three and six months ended June 30, 2022, we recorded zero and less than $ 0.1 million, respectively, of cost of hardware and other revenue in connection with this installation partner, as compared to $ 0.1 million and $ 0.2 million for the same periods in the prior year.

As of June 30, 2022 and December 31, 2021, the accounts payable balance to our installation partner was zero and less than $ 0.1 million, respectively.

September 30, 2022 and 2021

months ended September 30, 2022, respectively, as compared to $ 1.2 million and $ 7.4 million for the same periods in the prior year.

Additions to property and equipment were less than $ 0.1 million and $ 0.2 million for the Other segment for the three and nine months ended September 30, 2022, respectively, as compared to $ 0.2 million and $ 0.3 million for the same periods in the prior year.

We derived substantially all revenue from North America for the three and nine months ended September 30, 2022 and 2021.

Substantially all of our long-lived assets were in North America as of September 30, 2022 and December 31, 2021.

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.

What changed 10-Q

Item 1. Financial Statements