What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 218 added, 164 removed, 791 unchanged (33% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

22 unchanged sentences

Per share information attributable to common stockholders:

Net income per share:

Net income attributable to common stockholders per share:

Basic $ 0.74 $ 0.39 $ 1.89 $ 1.00

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 36,456 $ 19,351 $ 92,380 $ 49,169

Other comprehensive (loss) / income

Other comprehensive income / (loss)

Foreign currency translation adjustment 678 ( 752 ) 375 76

Total other comprehensive (loss) / income ( 156 ) 658 ( 303 ) 828

Total other comprehensive income / (loss) 678 ( 752 ) 375 76

Comprehensive income 37,134 18,599 92,755 49,245

5 unchanged sentences

(in thousands, except share and per share data)

September 30,

2024 December 31,

1 unchanged sentence

Cash and cash equivalents $ 1,170,605 $ 696,983

Accounts receivable, net of allowance for credit losses of $ 3,766 and $ 3,864 , and net of allowance for product returns of $ 2,608 and $ 2,279 as of June 30, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for credit losses of $ 3,847 and $ 3,864 , and net of allowance for product returns of $ 2,547 and $ 2,279 as of September 30, 2024 and December 31, 2023, respectively

120,977 130,626

7 unchanged sentences

Operating lease right-of-use assets 54,109 24,242

Other assets, net of allowance for credit losses of $ 1 and $ 5 as of June 30, 2024 and December 31, 2023, respectively

Other assets, net of allowance for credit losses of $ 1 and $ 5 as of September 30, 2024 and December 31, 2023, respectively

38,900 39,500

16 unchanged sentences

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

no shares issued and outstanding as of June 30, 2024 and December 31, 2023

no shares issued and outstanding as of September 30, 2024 and December 31, 2023

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

52,469,598 and 51,888,838 shares issued;

and 49,183,838 and 49,868,175 shares outstanding as of June 30, 2024 and December 31, 2023, respectively

and 49,331,867 and 49,868,175 shares outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 514,320 531,734

Treasury stock, at cost;

3,137,731 and 2,020,663 shares as of June 30, 2024 and December 31, 2023, respectively

3,137,731 and 2,020,663 shares as of September 30, 2024 and December 31, 2023, respectively

( 186,291 ) ( 111,291 )

7 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

73 unchanged sentences

Balance as of June 30, 2024 $ 37,933 52,322 $ 523 $ 506,850 3,138 $ ( 186,291 ) $ 1,095 $ 323,292 $ 645,469

Common stock issued in connection with equity-based plans — 148 2 1,104 — — — — 1,106

Changes in excise tax related to previous stock repurchases — — — 51 — — — — 51

Stock-based compensation expense — — — 9,218 — — — — 9,218

Accretion adjustments of redeemable noncontrolling interests to redemption values 2,903 — — ( 2,903 ) — — — — ( 2,903 )

Net income / (loss) attributable to common stockholders ( 226 ) — — — — — — 36,682 36,682

Other comprehensive income — — — — — — 678 — 678

Balance as of September 30, 2024 $ 40,610 52,470 $ 525 $ 514,320 3,138 $ ( 186,291 ) $ 1,773 $ 359,974 $ 690,301

ALARM.COM HOLDINGS, INC.

18 unchanged sentences

Balance as of June 30, 2023 $ 27,868 51,525 $ 515 $ 518,249 1,667 $ ( 90,719 ) $ 828 $ 215,358 $ 644,231

Common stock issued in connection with equity-based plans — 163 2 1,614 — — — — 1,616

Purchase of treasury stock — — — — 105 ( 6,128 ) — — ( 6,128 )

Stock-based compensation expense — — — 11,854 — — — — 11,854

Accretion adjustments of redeemable noncontrolling interest to redemption value 2,647 — — ( 2,647 ) — — — — ( 2,647 )

Net income / (loss) attributable to common stockholders ( 173 ) — — — — — — 19,524 19,524

Other comprehensive loss — — — — — — ( 752 ) — ( 752 )

Balance as of September 30, 2023 $ 30,342 51,688 $ 517 $ 529,070 1,772 $ ( 96,847 ) $ 76 $ 234,882 $ 667,698

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements (Unaudited)

June 30, 2024 and 2023

September 30, 2024 and 2023

Alarm.com Holdings, Inc.

16 unchanged sentences

It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2024, 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, 2024 are not necessarily indicative of the results that can be expected for our entire fiscal year ending December 31, 2024, 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.

6 unchanged sentences

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, 2024 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, 2024 from those disclosed in our Annual Report.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Capped Call Transactions

11 unchanged sentences

Recent Accounting Pronouncements

During the three and six months ended June 30, 2024, we did not adopt any new accounting pronouncements.

During the three and nine months ended September 30, 2024, we did not adopt any new accounting pronouncements.

Not Yet Adopted

4 unchanged sentences

This amendment is required to be applied retrospectively to all prior periods presented.

We are currently assessing the impact this pronouncement will have on our consolidated financial statement disclosures.

We expect this amendment to increase the amount of disclosures we provide within Note 18 related to segment expenses in the annual reporting period ending December 31, 2024 and interim reporting periods thereafter.

On December 14, 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)," which requires additional annual disclosures regarding specific categories in the income tax rate reconciliation as well additional information for reconciling items that meet a quantitative threshold.

4 unchanged sentences

We are currently assessing the impact this pronouncement will have on our consolidated financial statement disclosures.

On November 5, 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)," which requires more detailed information about the types of expenses included in certain expense captions presented on the consolidated statements of operations, including purchases of inventory, employee compensation, depreciation, amortization and depletion.

Additionally, this amendment requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses and, on an annual basis, an entity's definition of selling expenses.

The amendment is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

This amendment should be applied either on a prospective basis or a retrospective basis to any or all prior periods presented.

We are currently assessing the impact this pronouncement will have on our consolidated financial statement disclosures.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Revenue from Contracts with Customers

Contract Assets

Our assets related to costs incurred to obtain a contract consist of capitalized commission costs and upfront payments made to customers.

The current portion of capitalized commission costs and upfront payments made to customers is included in other current assets within our condensed consolidated balance sheets.

The non-current portion of capitalized commission costs and upfront payments made to customers is reflected in other assets within our condensed consolidated balance sheets.

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,

2024 2023 2024 2023

1 unchanged sentence

Commission costs and upfront payments to a customer capitalized in period 2,355 1,808 7,702 5,028

Reimbursement of previously capitalized upfront payments to customers

— ( 6,774 ) — ( 6,774 )

Amortization of contract assets ( 1,822 ) ( 1,117 ) ( 5,363 ) ( 4,731 )

1 unchanged sentence

Contract Liabilities

Contract liabilities include payments received in advance of performance under the contract and are realized with the associated revenue recognized under the contract.

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

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

September 30,

2024 December 31,

3 unchanged sentences

Accounts receivable, net $ 120,977 $ 130,626

For the three and six months ended June 30, 2024, we recorded a provision for credit losses of $ 0.1 million and $ 0.4 million, respectively, as compared to $ 0.1 million and $ 0.6 million for the same periods in the prior year.

For the three and six months ended June 30, 2024, we recorded a reserve for product returns of $ 0.9 million and $ 2.0 million in our hardware and other revenue, respectively, as compared to $ 1.3 million and $ 2.5 million for the same periods in the prior year.

For the three and nine months ended September 30, 2024, we recorded a provision for credit losses of $ 0.1 million and $ 0.5 million, respectively, as compared to $ 0.8 million and $ 1.4 million for the same periods in the prior year.

For the three and nine months ended September 30, 2024, we recorded a reserve for product returns of $ 0.7 million and $ 2.7 million in our hardware and other revenue, respectively, as compared to $ 0.5 million and $ 3.0 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)

September 30, 2024 and 2023

Allowance for Credit Losses

5 unchanged sentences

For periods beyond the twelve-month reasonable and supportable forecast period, we revert to historical loss information immediately.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

The allowance for credit losses is measured on a pooled basis when similar risk characteristics exist.

1 unchanged sentence

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, 2024, we recorded credit loss expense for accounts receivable and notes receivable of $ 0.2 million and $ 4.2 million, respectively, in general and administrative expense in our condensed consolidated statements of operations.

For the three and six months ended June 30, 2023, we recorded credit loss expense for accounts receivable and notes receivable of less than $ 0.1 million and $ 0.5 million, respectively, in general and administrative expense in our condensed consolidated statements of operations.

For the three months ended September 30, 2024, we recorded a reduction to credit loss expense for accounts receivable and notes receivable of $ 0.1 million and for the nine months ended September 30, 2024, we recorded credit loss expense for accounts receivable and notes receivable of $ 4.1 million, in general and administrative expense in our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2023, we recorded credit loss expense for accounts receivable and notes receivable of $ 0.6 million and $ 1.1 million, respectively, 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.

4 unchanged sentences

(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, 2024, 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, 2024, as compared to historical periods.

There were no changes to our portfolio segments for our accounts receivable during the three and nine months ended September 30, 2024, 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, 2024, as compared to historical periods.

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

Three Months Ended

June 30, 2024 Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

September 30, 2024 Three Months Ended

September 30, 2023 Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023

Subsidiaries All Other

10 unchanged sentences

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

September 30,

2024 December 31,

3 unchanged sentences

Total inventory $ 75,037 $ 96,140

Inventory values are net of a write-down of $ 1.4 million during the year ended December 31, 2023, which is reflected in cost of hardware and other revenue within our condensed consolidated statements of operations.

The inventory write-down was the result of a lower of cost or net realizable value adjustment for finished goods.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

The inventory write-down was the result of a lower of cost or net realizable value adjustment for finished goods.

Asset Acquisition

3 unchanged sentences

In consideration for the purchase of the acquired assets, we paid $ 5.5 million in cash on April 21, 2023, after deducting $ 0.3 million related to the settlement of an outstanding loan issued to Vintra during March 2023 and $ 1.0 million related to an agreed holdback provision.

The holdback is expected to be paid by the third quarter of 2024, subject to offset for any indemnification obligations.

The holdback was paid during the third quarter of 2024.

Additionally, we incurred $ 0.4 million in direct transaction costs related to legal fees during 2023 that were capitalized as a component of the consideration transferred.

15 unchanged sentences

Foreign currency translation adjustment 171 — 171

Balance as of June 30, 2024 $ 154,356 $ — $ 154,356

Balance as of September 30, 2024 $ 154,669 $ — $ 154,669

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

6 unchanged sentences

Amortization ( 7,131 ) ( 5,956 ) ( 599 ) ( 140 ) — ( 13,826 )

Balance as of June 30, 2024 $ 34,457 $ 33,068 $ 803 $ 1,555 $ 45 $ 69,928

During the three and six months ended June 30, 2024, we paid less than $ 0.1 million for the purchase of domain names.

We recorded $ 4.7 million and $ 9.4 million of amortization related to our intangible assets for the three and six months ended June 30, 2024, respectively, as compared to $ 4.7 million and $ 9.3 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, 2024 and 2023.

During the six months ended June 30, 2024, $ 0.3 million of fully amortized developed technology intangible assets previously acquired were written-off in the Alarm.com segment as the technology was no longer in use.

Balance as of September 30, 2024 $ 32,163 $ 31,218 $ 618 $ 1,999 $ 46 $ 66,044

During the nine months ended September 30, 2024, we paid less than $ 0.1 million for the purchase of domain names.

We recorded $ 4.4 million and $ 13.8 million of amortization related to our intangible assets for the three and nine months ended September 30, 2024, respectively, as compared to $ 5.6 million and $ 14.9 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, 2024 and 2023.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

During the nine months ended September 30, 2024, $ 0.3 million of fully amortized developed technology intangible assets previously acquired were written-off in the Alarm.com segment as the technology was no longer in use.

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, 2024

September 30, 2024

Amount Accumulated

25 unchanged sentences

As of December 31, 2023, $ 4.5 million of the notes receivable balance related to the subordinated credit agreement was included in other assets in our condensed consolidated balance sheet.

For the three and six months ended June 30, 2024, we recognized $ 0.6 million and $ 1.3 million of revenue from the distribution partner associated with this loan, respectively, as compared to $ 0.8 million and $ 1.6 million for the same periods in the prior year.

For the three and nine months ended September 30, 2024, we recognized $ 0.7 million and $ 2.0 million of revenue from the distribution partner associated with this loan, respectively, as compared to $ 0.9 million and $ 2.5 million for the same periods in the prior year.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Loan to a Service Provider Partner

2 unchanged sentences

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

As of June 30, 2024 and December 31, 2023, $ 1.0 million of principal was outstanding from the service provider partner under the loan agreement.

For the three and six months ended June 30, 2024 and 2023, we recognized less than $ 0.1 million and $ 0.1 million, respectively, of revenue from the service provider partner associated with this loan.

As of September 30, 2024 and December 31, 2023, $ 1.0 million of principal was outstanding from the service provider partner under the loan agreement.

For the three and nine months ended September 30, 2024 and 2023, we recognized less than $ 0.1 million and $ 0.1 million, respectively, of revenue from the service provider partner associated with this loan.

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, 2024 and December 31, 2023, $ 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, 2024 and 2023, we did not record any revenue from the technology partner associated with this convertible promissory note.

As of September 30, 2024 and December 31, 2023, $ 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, 2024 and 2023, 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, 2024 and December 31, 2023, our investment in the hardware supplier was $ 5.6 million.

As of September 30, 2024 and December 31, 2023, our investment in the hardware supplier was $ 5.6 million.

Investments in Technology Partners

2 unchanged sentences

Under the measurement 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, 2024 and December 31, 2023, our investment in the technology partner was $ 5.7 million.

As of September 30, 2024 and December 31, 2023, our investment in the technology partner was $ 5.7 million.

In December 2022, we paid $ 5.1 million in cash to another technology partner to purchase 4,231,717 shares of its Series A Preferred Stock.

The $ 5.1 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, 2024 and December 31, 2023, our investment in the technology partner was $ 5.1 million.

As of September 30, 2024 and December 31, 2023, our investment in the technology partner was $ 5.1 million.

Allowance for Credit Losses - Notes Receivable

2 unchanged sentences

however, there has been no activity within that portfolio segment since 2022.

There were 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 during the three and six months ended June 30, 2024.

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.

4 unchanged sentences

We have elected not to measure an allowance for credit losses for accrued interest receivables .

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

We write-off any accrued interest on notes receivable

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

The accrued interest receivable as of June 30, 2024 and December 31, 2023 was $ 0.1 million, and is reflected in other current assets and other assets within our condensed consolidated balance sheets and excluded from the amortized cost basis of the notes receivable .

During the six months ended June 30, 2024, we recorded a reduction to our interest income of $ 0.5 million related to the reversal of payable in kind interest associated with a subordinated credit agreement with the Affiliate.

We did not write off any accrued interest receivable during the three months ended June 30, 2024 or the three and six months ended June 30, 2023.

There were no purchases or sales of financial assets during the three and six months ended June 30, 2024 and 2023.

During the three and six months ended June 30, 2024, we wrote off $ 4.0 million related to a note receivable that originated in 2017 with the Affiliate and reversed the previously recorded allowance for credit losses.

September 30, 2024 and 2023

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 September 30, 2024 and December 31, 2023 was $ 0.2 million and $ 0.1 million, respectively, and is reflected in other current assets and other assets within our condensed consolidated balance sheets and excluded from the amortized cost basis of the notes receivable .

During the nine months ended September 30, 2024, we recorded a reduction to our interest income of $ 0.5 million related to the reversal of payable in kind interest associated with a subordinated credit agreement with the Affiliate.

We did not write off any accrued interest receivable during the three months ended September 30, 2024 or the three and nine months ended September 30, 2023.

There were no purchases or sales of financial assets during the three and nine months ended September 30, 2024 and 2023.

During the nine months ended September 30, 2024, we wrote off $ 4.0 million related to a note receivable that originated in 2017 with the Affiliate and reversed the previously recorded allowance for credit losses.

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

Three Months Ended

June 30, 2024 Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

September 30, 2024 Three Months Ended

September 30, 2023 Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023

Beginning of period balance $ ( 1 ) $ ( 2 ) $ ( 5 ) $ ( 2 )

Recover of / (provision for) expected credit losses

Provision for expected credit losses

— — ( 3,996 ) —

3 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, 2024

September 30, 2024

Loan Receivables:

15 unchanged sentences

Total $ 150 $ 1,500 $ — $ 1,039 $ — $ 4,524 $ 7,213

There were no notes receivable placed on nonaccrual status as of June 30, 2024 and December 31, 2023.

During the three and six months ended June 30, 2024 and 2023, there was no interest income recognized related to notes receivable that were in nonaccrual status.

As of June 30, 2024 and December 31, 2023, there were no notes receivable placed in nonaccrual status for which there was not a related allowance for credit losses.

As of June 30, 2024 and December 31, 2023, there were no notes receivable that were 90 days or greater past due for which we continued to accrue interest income.

Prepaid Expenses

As of June 30, 2024 and December 31, 2023, $ 15.6 million and $ 14.6 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses, long lead-time parts related to our inventory and our office leases.

There were no notes receivable placed on nonaccrual status as of September 30, 2024 and December 31, 2023.

During the three and nine months ended September 30, 2024 and 2023, there was no interest income recognized related to notes receivable that were in nonaccrual status.

As of September 30, 2024 and December 31, 2023, there were no notes receivable placed in nonaccrual status for which there was not a related allowance for credit losses.

As of September 30, 2024 and December 31, 2023, there were no notes receivable that were 90 days or greater past due for which we continued to accrue interest income.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Prepaid Expenses

As of September 30, 2024 and December 31, 2023, $ 21.5 million and $ 14.6 million of prepaid expenses were included in other current assets, respectively, primarily related to software licenses, insurance, long lead-time parts related to our inventory and our office leases.

Fair Value Measurements

2 unchanged sentences

Level 1 Level 2 Level 3 Total

Money market accounts as of June 30, 2024

Money market accounts as of September 30, 2024

$ 1,164,218 $ — $ — $ 1,164,218

Equity securities with readily determinable fair value as of June 30, 2024

Equity securities with readily determinable fair value as of September 30, 2024

5,349 — — 5,349

1 unchanged sentence

679,734 — — 679,734

Contingent consideration liability from acquisition as of June 30, 2024

Contingent consideration liability from acquisition as of September 30, 2024

$ — $ — $ 2,166 $ 2,166

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

3 unchanged sentences

End of period balance $ 2,166 $ 2,016 $ 2,166 $ 2,016

As of June 30, 2024, $ 1.1 billion of our money market accounts was included in cash and cash equivalents, $ 5.2 million was included in other assets and $ 1.6 million was included in other current assets in our condensed consolidated balance sheets.

As of September 30, 2024, $ 1.16 billion of our money market accounts was included in cash and cash equivalents, $ 6.0 million was included in other assets and $ 1.9 million was included in other current assets in our condensed consolidated balance sheets.

As of December 31, 2023, $ 675.6 million of our money market accounts was included in cash and cash equivalents and $ 4.1 million was included in other assets in our condensed consolidated balance sheets.

1 unchanged sentence

Our equity securities with readily determinable fair value represent our investments in publicly traded companies, which are valued using quoted prices in active markets.

During the three and six months ended June 30, 2024, we recorded an unrealized loss on equity securities of less than $ 0.1 million.

During the three and nine months ended September 30, 2024, we recorded an unrealized loss on equity securities of $ 0.2 million.

Our investments in public entities are recorded at fair value within other current assets in our condensed consolidated balance sheets and changes in fair value of the investments are recorded within other expense, net within our condensed consolidated statements of operations.

See Note 12 for the carrying amounts and estimated fair values of our convertible senior notes as of June 30, 2024 and December 31, 2023.

See Note 12 for the carrying amounts and estimated fair values of our convertible senior notes as of September 30, 2024 and December 31, 2023.

The contingent consideration liability consists of the potential earn-out payment related to our acquisition of 100 % of the issued and outstanding capital stock of EBS on January 18, 2023.

6 unchanged sentences

Changes in fair value resulting from information that existed subsequent to the acquisition date are recorded in general and administrative expense in the condensed consolidated statements of operations.

During the three and six months ended June 30, 2024, the contingent consideration liability did not materially change from the acquisition date fair value of $ 2.0 million as there were minor changes in the expected probability of achievement for the performance targets.

The unobservable inputs used in the valuation as of June 30, 2024 included a weighted average expected achievement percentage of 89.5 %, weighted by the potential payout of the performance targets, including a range of 80.0 % to 99.0 %.

The valuation also included a weighted average discount rate of 6.1 %, weighted by the probability of achievement of the performance targets at various dates, including a range of 6.1 % to 6.2 %.

Selecting another probability of expected achievement or discount rate within an acceptable range would not result in a significant change to the fair value of the contingent consideration liability.

During the three and nine months ended September 30, 2024, the contingent consideration liability did not materially change from the acquisition date fair value of $ 2.0 million as there were minor changes in the expected probability of achievement for the performance targets.

The unobservable inputs used in the valuation as of September 30, 2024 included a weighted average expected achievement percentage of 89.5 %, weighted by the

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

potential payout of the performance targets, including a range of 80.0 % to 99.0 %.

The valuation also included a weighted average discount rate of 5.5 %, weighted by the probability of achievement of the performance targets at various dates, including a range of 5.3 % to 5.6 %.

Selecting another probability of expected achievement or discount rate within an acceptable range would not result in a significant change to the fair value of the contingent consideration liability.

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy.

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 into or out of Level 3 or reclassifications between levels of the fair value hierarchy during the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024, we leased office space, data centers and office equipment under non-cancelable operating leases with various expiration dates through 2030.

In August 2014, we signed a lease for office space in Tysons, Virginia, where we relocated our headquarters to in February 2016.

We have subsequently entered into amendments to this lease to provide us with additional office space.

The lease term ends in 2026, includes a five-year renewal option and a cumulative tenant improvement allowance of $ 12.1 million.

There were no transfers into or out of Level 3 or reclassifications between levels of the fair value hierarchy during the three and nine months ended September 30, 2024 and 2023.

As of September 30, 2024, we leased office space, data centers and office equipment under non-cancelable operating leases with various expiration dates through 2034.

In August 2014, we signed a lease for office space in Tysons, Virginia, where we relocated our corporate headquarters to in February 2016.

We have subsequently entered into amendments to this lease to provide us with additional office space as well as tenant improvement allowances.

In August 2024, we entered into an amendment to the lease for our corporate headquarters, which extends the term of our existing leased office space to 2034 and includes two successive five-year renewal options.

Additionally, the amendment provides for additional office space, parking spaces and tenant improvement allowances.

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,

2024 2023 2024 2023

2 unchanged sentences

Operating lease right-of-use assets obtained in exchange for new operating lease liabilities 34,434 1,214 37,349 5,329

September 30,

2024 December 31,

12 unchanged sentences

(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, 2024 or December 31, 2023.

We did no t have any finance leases or subleases as of September 30, 2024 or December 31, 2023.

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, 2024 and 2023.

Short-term lease costs were immaterial for the three and nine months ended September 30, 2024 and 2023.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

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

September 30,

2024 December 31,

7 unchanged sentences

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

September 30,

2024 December 31,

21 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

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.

9 unchanged sentences

The debt issuance costs are presented as a deduction from the outstanding principal balance of the 2026 Notes and are amortized to interest expense using the effective interest method over the contractual term of the 2026 Notes at a rate of 0.6 %.

As of June 30, 2024 and December 31, 2023, the fair value of our 2026 Notes was $ 457.0 million and $ 444.8 million, respectively.

As of September 30, 2024 and December 31, 2023, the fair value of our 2026 Notes was $ 466.7 million and $ 444.8 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 $ 63.54 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, 2024.

Based on the closing price of our common stock of $ 54.67 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, 2024.

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

September 30,

2024 December 31,

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

3 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Convertible Senior Notes - 2029 Notes

20 unchanged sentences

We used $ 63.1 million of the net proceeds from the 2029 Notes to pay the cost of the capped call transactions described below and used $ 75.0 million to repurchase 1,117,068 shares of our common stock concurrently with the pricing of the 2029 Notes, which was separately authorized by our board of directors.

We expect to use the remaining net proceeds from the issuance of the 2029 Notes for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies, other repurchases of our common stock, repurchases of our 2026 Notes and for working capital, operating expenses and capital expenditures.

We are using the remaining net proceeds from the issuance of the 2029 Notes for general corporate purposes, which may include acquisitions or strategic investments in complementary businesses or technologies, other repurchases of our common stock, repurchases of our 2026 Notes and for working capital, operating expenses and capital expenditures.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

We account for the 2029 Notes as a liability.

The debt issuance costs are presented as a deduction from the outstanding principal balance of the 2029 Notes and are amortized to interest expense using the effective interest method over the contractual term of the 2029 Notes at a rate of 2.9 %.

As of June 30, 2024, the fair value of our 2029 Notes was $ 491.4 million.

As of September 30, 2024, the fair value of our 2029 Notes was $ 477.9 million.

The fair value was determined based on the quoted price of the 2029 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 $ 63.54 on the last trading day of the quarter, the if-converted value of the 2029 Notes did not exceed the principal amount of $ 500.0 million as of June 30, 2024.

Based on the closing price of our common stock of $ 54.67 on the last trading day of the quarter, the if-converted value of the 2029 Notes did not exceed the principal amount of $ 500.0 million as of September 30, 2024.

The net carrying amount of the liability component of the 2029 Notes is as follows (in thousands):

September 30,

2024 December 31,

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

24 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Legal Proceedings

55 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

We may also be a party to litigation and subject to claims incident to the ordinary course of business.

7 unchanged sentences

On May 24, 2024, our board of directors authorized the repurchase of our common stock in connection with the issuance of the 2029 Notes, the cancellation of the balance under the stock repurchase program ending February 23, 2025 and also authorized a stock repurchase program, effective May 31, 2024, under which we are authorized to purchase up to an aggregate of $ 100.0 million of our outstanding common stock during the two-year period ending May 31, 2026.

The full repurchase balance for this program of $ 100.0 million was available as of June 30, 2024.

During the three and six months ended June 30, 2024, 1,117,068 shares were repurchased for $ 75.0 million under our stock repurchase program authorized in connection with the issuance of the 2029 Notes.

During the three and six months ended June 30, 2023, 134,255 shares of our common stock were repurchased for $ 6.7 million under our stock repurchase program that was subsequently cancelled effective May 31, 2024.

The full repurchase balance for this program of $ 100.0 million was available as of September 30, 2024.

No shares were repurchased under our stock repurchase program during the three months ended September 30, 2024.

During the nine months ended September 30, 2024, 1,117,068 shares were repurchased for $ 75.0 million under our stock repurchase program.

During the three and nine months ended September 30, 2023, 105,285 and 239,540 shares of our common stock were repurchased for $ 6.2 million and $ 12.9 million, respectively, under our stock repurchase program that was subsequently canceled effective May 31, 2024.

As of January 1, 2023, we are subject to a 1.0% excise tax on the value of net corporate stock repurchases under the Inflation Reduction Act of 2022.

3 unchanged sentences

These withheld shares are not issued or considered common stock repurchases under our stock repurchase program.

We paid $ 3.4 million of tax withholdings related to vesting of restricted stock units during the three and six months ended June 30, 2024.

No tax withholdings related to the vesting of restricted stock units were paid during the three and six months ended June 30, 2023.

No payments of tax withholdings were made related to vesting of restricted stock units during the three months ended September 30, 2024.

We paid $ 3.4 million of tax withholdings related to vesting of restricted stock units during the nine months ended September 30, 2024.

No tax withholdings related to the vesting of restricted stock units were paid during the three and nine months ended September 30, 2023.

We also utilized the sell-to-cover method in which shares of our restricted stock unit awards were sold into the market on behalf of the employee upon vesting to cover tax withholding liabilities.

2 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

$ ( 34 ) $ ( 111 ) $ 1,097 $ ( 802 )

We granted 93,500 and 99,500 stock options pursuant to our 2015 Equity Incentive Plan during the three and six months ended June 30, 2024, respectively, as compared to 172,000 and 193,400 stock options for the same periods in the prior year.

There were 14,467 and 142,993 stock options exercised during the three and six months ended June 30, 2024, respectively, as compared to 12,184 and 83,135 stock options for the same periods in the prior year.

There was an aggregate of 241,728 and 329,878 restricted stock units without performance conditions granted to certain of our employees and directors during the three and six months ended June 30, 2024, respectively, as compared to an aggregate of 103,522 and 186,397 restricted stock units without performance conditions for the same periods in the prior year.

There were no restricted stock units with performance conditions granted to our employees during the three and six months ended June 30, 2024 and 2023.

There were 209,087 and 290,783 restricted stock units without performance conditions that vested during the three and six months ended June 30, 2024, respectively, as compared to 226,865 and 393,950 restricted stock units without performance conditions vested during the same periods in the prior year.

There were 33,395 restricted stock units with performance conditions that vested during each of the three and six months ended June 30, 2024, as compared to 30,406 and 39,406 restricted stock units with performance conditions, respectively, vested for the same periods in the prior year.

We granted 34,000 and 133,500 stock options pursuant to our 2015 Equity Incentive Plan during the three and nine months ended September 30, 2024, respectively, as compared to 4,500 and 197,900 stock options for the same periods in the prior year.

There were 11,280 and 154,273 stock options exercised during the three and nine months ended September 30, 2024, respectively, as compared to 38,044 and 121,179 stock options for the same periods in the prior year.

There was an aggregate of 134,925 and 464,803 restricted stock units without performance conditions granted to certain of our employees and directors during the three and nine months ended September 30, 2024, respectively, as compared to an aggregate of 117,025 and 303,422 restricted stock units without performance conditions for the same periods in the prior year.

There were no restricted stock units with performance conditions granted to our employees during the three and nine months ended September 30, 2024 and 2023.

There were 121,087 and 411,870 restricted stock units without performance conditions that vested during the three and nine months ended September 30, 2024, respectively, as compared to 112,310 and 506,260 restricted stock units without performance conditions vested during the same periods in the prior year.

There were zero and 33,395 restricted stock units with performance conditions that vested during the three and nine months ended September 30, 2024, respectively, as compared to zero and 39,406 restricted stock units with performance conditions, respectively, vested for the same periods in the prior year.

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Earnings Per Share

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

2 unchanged sentences

Net income attributable to common stockholders - basic (A) 36,682 19,524 93,788 49,739

Add back interest expense, net of tax, attributable to convertible senior notes 1,473 591 2,067 1,181

Add back total interest expense, net of tax, attributable to convertible senior notes

3,234 593 5,301 1,774

Net income attributable to common stockholders - diluted (B) $ 39,916 $ 20,117 $ 99,089 $ 51,513

2 unchanged sentences

Weighted average common shares outstanding — diluted (D) 59,780,908 54,778,793 57,212,003 54,588,826

Net income per share:

Net income attributable to common stockholders per share:

Basic (A/C) $ 0.74 $ 0.39 $ 1.89 $ 1.00

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

4 unchanged sentences

We use the if-converted method when calculating the dilutive impact of the 2026 Notes and 2029 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 each of the three and six months ended June 30, 2024 and 2023.

We included 1,951,484 and 975,742 shares related to the 2029 Notes within the weighted average shares outstanding when calculating the diluted net income per share for each of the three and six months ended June 30, 2024, respectively.

Additionally, we included $ 1.5 million and $ 2.1 million of interest expense and 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, 2024, respectively, as compared to $ 0.6 million and $ 1.2 million for the same periods in the prior year.

We included 5,728,550 and 2,571,575 shares related to the 2029 Notes within the weighted average shares outstanding when calculating the diluted net income per share for each of the three and nine months ended September 30, 2024, respectively.

Additionally, we included $ 3.2 million and $ 5.3 million of interest expense and 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, 2024, respectively, as compared to $ 0.6 million and $ 1.8 million for the same periods in the prior year.

The denominator for diluted net income per share does not include any effect from the capped call transactions we entered into concurrently with the issuance of the 2029 Notes, as this effect would be anti-dilutive.

3 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

Significant Service Providers and Distributors

During each of the three and six months ended June 30, 2024, our 10 largest revenue service provider partners or distributors accounted for 47 % of our consolidated revenue as compared to 50 % 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 six months ended June 30, 2024 and 2023.

One service provider partner in the Alarm.com segment represented more than 10% of accounts receivable as of June 30, 2024 and December 31, 2023.

During the three and nine months ended September 30, 2024, our 10 largest revenue service provider partners or distributors accounted for 46 % and 47 % of our consolidated revenue, respectively, as compared to 49 % and 50 % 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, 2024 and 2023.

One service provider partner in the Alarm.com segment represented more than 10% of accounts receivable as of September 30, 2024 and December 31, 2023.

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, 2024, we recorded a provision for income taxes of $ 0.9 million and $ 3.6 million, respectively, resulting in an effective income tax rate of 2.6 % and 6.1 % for those periods.

For the three and six months ended June 30, 2023, we recorded a provision for income taxes of $ 6.5 million and $ 5.3 million, respectively, resulting in an effective income tax rate of 29.4 % and 15.1 % for those periods.

For the three months ended June 30, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to a favorable true-up adjustment of our 2023 income tax provision estimate associated with research and development tax credits, 2024 research and development tax credits claimed, the foreign derived intangible income deduction and tax windfall benefits from employee stock-based compensation.

For the six months ended June 30, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to a favorable true-up adjustment of our 2023 income tax provision estimate associated with research and development tax credits, 2024 research and development tax credits claimed, the foreign derived intangible income deduction, the release of an unrecognized tax benefit liability due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax examination and tax windfall benefits from employee stock-based compensation, partially offset by the impact of state taxes, federal estimated tax payment interest expense and other nondeductible expenses.

For the three months ended June 30, 2023, our effective tax rate was above the 21.0% statutory rate primarily due to an unfavorable true-up adjustment of our 2022 income tax provision estimate associated with research and development tax credits, an increase in foreign withholding taxes and a stock-based compensation tax shortfall.

For the six months ended June 30, 2023, our effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed and the foreign derived intangible income deduction, partially offset by an unfavorable true-up adjustment of our 2022 income tax provision estimate associated with research and development tax credits, the impact of state taxes, foreign withholding taxes and a stock-based compensation tax shortfall.

For the three and nine months ended September 30, 2024, we recorded a provision for income taxes of $ 6.7 million and $ 10.3 million, respectively, resulting in an effective income tax rate of 15.6 % and 10.1 % for those periods.

For the three and nine months ended September 30, 2023, we recorded a provision for income taxes of $ 4.0 million and $ 9.3 million, respectively, resulting in an effective income tax rate of 17.0 % and 15.8 % for those periods.

For the three months ended September 30, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to 2024 research and development tax credits claimed, the foreign derived intangible income deduction and a favorable true-up adjustment of our 2023 income tax provision estimate and amended prior year state income tax returns, partially offset by the impact of state taxes, foreign withholding taxes and other nondeductible expenses.

For the nine months ended September 30, 2024, our effective tax rate was below the 21.0% statutory rate primarily due to a favorable true-up adjustment of our 2023 income tax provision estimate, the foreign derived intangible income deduction, 2024 research and development tax credits claimed, the release of an unrecognized tax benefit liability due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax examination and tax windfall benefits from employee stock-based compensation, partially offset by the impact of state taxes, federal estimated tax payment interest expense and other nondeductible expenses.

For the three months ended September 30, 2023, our effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed, the foreign derived intangible income deduction and a favorable true-up adjustment of our 2022 income tax provision estimate, partially offset by the impact of state taxes, foreign withholding taxes and a stock-based compensation tax shortfall.

For the nine months ended September 30, 2023, our effective tax rate was below the 21.0% statutory rate primarily due to research and development tax credits claimed and the foreign derived intangible income deduction, partially offset by an unfavorable true-up adjustment of our 2022 income tax provision estimate associated with research and development tax credits, the impact of state taxes, foreign withholding taxes, other nondeductible expenses and a stock-based compensation tax shortfall.

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.

Our valuation allowance for state research and development tax credit carryforwards and net deferred tax assets of our EBS subsidiary was $ 3.8 million as of December 31, 2023 and June 30, 2024.

Our valuation allowance for state research and development tax credit carryforwards and net deferred tax assets of our EBS subsidiary was $ 3.8 million as of December 31, 2023 and increased to $ 4.2 million as of September 30, 2024.

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 a net decrease to the unrecognized tax benefits liability of $ 0.4 million primarily due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax return examination, partially offset by a liability for research and development tax credits claimed during the six months ended June 30, 2024.

We recorded a net increase to the unrecognized tax benefits liability of $ 0.8 million primarily for research and development tax credits claimed during the six months ended June 30, 2023.

Our condensed consolidated balance sheets included an accrual for total interest expense related to unrecognized tax benefits of $ 0.8 million and $ 0.7 million as of December 31, 2023 and June 30, 2024, respectively.

We recorded a net increase to the unrecognized tax benefits liability of less than $ 0.1 million primarily due to a liability for research and development tax credits claimed, partially offset by the closure of the 2018 and 2019 Internal Revenue Service federal income tax return examination and the release of a state unrecognized tax benefit liability due to the statute of limitations expiration during the nine months ended September 30, 2024.

We recorded a net increase to the unrecognized tax benefits liability of $ 1.1 million primarily for research and development tax credits claimed during the nine months ended September 30, 2023.

Our condensed consolidated balance sheets included an accrual for total interest expense related to unrecognized tax benefits of $ 0.8 million as of December 31, 2023 and September 30, 2024.

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

3 unchanged sentences

On January 25, 2024, the Internal Revenue Service notified us that the income tax examination of our 2018 and 2019 federal income tax returns has been closed.

As a result, we paid $ 0.6 million in additional federal taxes, including interest, during the three months ended June 30, 2024, and recognized a net income tax benefit of $ 1.7 million during the three months ended March 31, 2024.

As a result, we paid $ 0.6 million in additional federal taxes, including interest,

ALARM.COM HOLDINGS, INC.

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

June 30, 2024 and 2023

As of June 30, 2024, we did not have material undistributed foreign earnings.

September 30, 2024 and 2023

during the three months ended June 30, 2024, and recognized a net income tax benefit of $ 1.7 million during the three months ended March 31, 2024.

As of September 30, 2024, we did not have material undistributed foreign earnings.

We have not recorded a deferred tax liability on the undistributed earnings from our foreign subsidiaries, as such earnings are considered to be indefinitely reinvested.

8 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 93 % of our revenue, net of intersegment eliminations, for each of the three and six months ended June 30, 2024, as compared to 94 % 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 92 % and 93 % of our revenue, net of intersegment eliminations, for the three and nine months ended September 30, 2024, respectively, as compared to 93 % and 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.

2 unchanged sentences

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

June 30, 2024 and 2023

September 30, 2024 and 2023

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, 2024

Three Months Ended September 30, 2024

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

6 unchanged sentences

34,546 ( 1,277 ) ( 107 ) 32 33,194

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

6 unchanged sentences

18,929 ( 3,270 ) 406 106 16,171

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Alarm.com Other Intersegment Alarm.com Intersegment Other Total

6 unchanged sentences

88,807 ( 10,870 ) ( 329 ) 85 77,693

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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, 2024 $ 1,907,486 $ 55,017 $ ( 107,239 ) $ ( 17 ) $ 1,855,247

Assets as of September 30, 2024 $ 2,018,782 $ 53,902 $ ( 101,676 ) $ ( 10 ) $ 1,970,998

Assets as of December 31, 2023 1,477,674 73,621 ( 111,725 ) ( 7 ) 1,439,563

Our SaaS and license revenue for the Alarm.com segment included software license revenue of $ 5.2 million and $ 10.4 million for the three and six months ended June 30, 2024, respectively, as compared to $ 5.9 million and $ 12.1 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, 2024 and 2023.

Amortization and depreciation expense was $ 6.8 million and $ 13.9 million for the Alarm.com segment for the three and six months ended June 30, 2024, respectively, as compared to $ 7.6 million and $ 15.0 million for the same periods in the prior year.

Amortization and depreciation expense was $ 0.3 million and $ 0.5 million for the Other segment for the three and six months ended June 30, 2024, respectively, as compared to $ 0.3 million and $ 0.6 million for the same periods in the prior year.

Additions to property and equipment were $ 1.9 million and $ 5.8 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 $ 5.0 million and $ 15.4 million for the three and nine months ended September 30, 2024, respectively, as compared to $ 5.7 million and $ 17.8 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, 2024 and 2023.

Amortization and depreciation expense was $ 7.4 million and $ 21.3 million for the Alarm.com segment for the three and nine months ended September 30, 2024, respectively, as compared to $ 7.7 million and $ 22.7 million for the same periods in the prior year.

Amortization and depreciation expense was $ 0.2 million and $ 0.7 million for the Other segment for the three and nine months ended September 30, 2024, respectively, as compared to $ 0.2 million and $ 0.8 million for the same periods in the prior year.

Additions to property and equipment were $ 12.6 million and $ 18.4 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, 2024 and 2023

June 30, 2024, respectively, as compared to $ 2.8 million and $ 5.8 million 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, 2024, 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, 2024 and 2023.

Substantially all of our long-lived assets were in North America as of June 30, 2024 and December 31, 2023.

September 30, 2024 and 2023

months ended September 30, 2024, respectively, as compared to $ 2.1 million and $ 7.9 million 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 nine months ended September 30, 2024, respectively, as compared to $ 0.1 million and $ 0.2 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, 2024 and 2023.

Substantially all of our long-lived assets were in North America as of September 30, 2024 and December 31, 2023.

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