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The Alarm.com platform enables our service provider partners to deploy our interactive security, video monitoring, intelligent automation, access control, energy management and wellness solutions as stand-alone offerings or as combined solutions to address the needs of a broad range of customers.
−Removed: Highlights of Second Quarter Results
+Added: Highlights of Third Quarter Results
We primarily generate SaaS and license revenue, our largest source of revenue, through our service provider partners who resell our services and pay us monthly fees.
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on a per customer basis.
−Removed: SaaS and license revenue represented 67% of our revenue during each of the three and six months ended June 30, 2024, as compared to 63% and 64% in the same periods in the prior year.
+Added: SaaS and license revenue represented 66% and 67% of our revenue during the three and nine months ended September 30, 2024, respectively, as compared to 65% and 64% in the same periods in the prior year.
We also generate SaaS and license revenue from monthly fees charged to service providers on a per subscriber basis for access to our non-hosted software platform, or Software platform.
The non-hosted software for interactive security, automation and related solutions is typically deployed and operated by the service provider in its own network operations center.
−Removed: Software license revenue represented 2% of our revenue during each of the three and six months ended June 30, 2024, as compared to 3% in the same periods in the prior year.
+Added: Software license revenue represented 2% of our revenue during each of the three and nine months ended September 30, 2024, as compared to 3% in the same periods in the prior year.
We also generate revenue from the sale of many types of hardware, including video cameras, video recorders, cellular radio modules, smart thermostats, image sensors, gunshot detection sensors and other peripherals, that enable our solutions.
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Additionally, our hardware and other revenue includes our revenue from the sale of licenses that provide our customers the right to use our gunshot detection solution in exchange for license fees.
−Removed: Hardware and other revenue represented 33% of our revenue during each of the three and six months ended June 30, 2024, as compared to 37% and 36% in the same periods in the prior year.
+Added: Hardware and other revenue represented 34% and 33% of our revenue during the three and nine months ended September 30, 2024, respectively, as compared to 35% and 36% in the same periods in the prior year.
We typically expect hardware and other revenue to fluctuate as a percentage of total revenue.
Highlights of our financial performance for the periods covered in this Quarterly Report include:
−Removed: • SaaS and license revenue increased 11% to $155.9 million during the three months ended June 30, 2024 from $140.4 million during the three months ended June 30, 2023.
−Removed: SaaS and license revenue increased 11% to $306.3 million in the six months ended June 30, 2024 from $275.8 million in the six months ended June 30, 2023.
−Removed: Included in SaaS and license revenue was software license revenue, which decreased to $5.2 million during the three months ended June 30, 2024 from $5.9 million during the three months ended June 30, 2023.
−Removed: Software license revenue decreased to $10.4 million in the six months ended June 30, 2024 from $12.1 million in the six months ended June 30, 2023.
−Removed: • Total revenue increased 4% to $233.8 million during the three months ended June 30, 2024 from $223.9 million during the three months ended June 30, 2023.
−Removed: Total revenue increased 5% to $457.1 million in the six months ended June 30, 2024 from $433.6 million in the six months ended June 30, 2023.
−Removed: • Net income increased to $32.5 million during the three months ended June 30, 2024, as compared to $15.6 million during the three months ended June 30, 2023.
−Removed: Net income increased to $55.9 million in the six months ended June 30, 2024, as compared to $29.8 million in the six months ended June 30, 2023.
−Removed: Net income attributable to common stockholders increased to $33.5 million during the three months ended June 30, 2024, as compared to $15.8 million during the three months ended June 30, 2023.
−Removed: Net income attributable to common stockholders increased to $57.1 million in the six months ended June 30, 2024, as compared to $30.2 million in the six months ended June 30, 2023.
−Removed: • Non-GAAP adjusted EBITDA, a non-GAAP measurement of operating performance, increased to $42.8 million during the three months ended June 30, 2024 from $36.4 million during the three months ended June 30, 2023.
−Removed: Non-GAAP adjusted EBITDA increased to $79.9 million in the six months ended June 30, 2024 from $66.9 million in the six months ended June 30, 2023.
−Removed: Please see Non-GAAP Measures below in this section of this Quarterly Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable measurement in accordance with accounting principles generally accepted in the United States, or GAAP, for the three and six months ended June 30, 2024 and 2023.
+Added: • SaaS and license revenue increased 10% to $159.3 million during the three months ended September 30, 2024 from $145.0 million during the three months ended September 30, 2023.
+Added: SaaS and license revenue increased 11% to $465.5 million in the nine months ended September 30, 2024 from $420.9 million in the nine months ended September 30, 2023.
+Added: Included in SaaS and license revenue was software license revenue, which decreased to $5.0 million during the three months ended September 30, 2024 from $5.7 million during the three months ended September 30, 2023.
+Added: Software license revenue decreased to $15.4 million in the nine months ended September 30, 2024 from $17.8 million in the nine months ended September 30, 2023.
+Added: • Total revenue increased 8% to $240.5 million during the three months ended September 30, 2024 from $221.9 million during the three months ended September 30, 2023.
+Added: Total revenue increased 6% to $697.6 million in the nine months ended September 30, 2024 from $655.4 million in the nine months ended September 30, 2023.
+Added: • Net income increased to $36.5 million during the three months ended September 30, 2024, as compared to $19.4 million during the three months ended September 30, 2023.
+Added: Net income increased to $92.4 million in the nine months ended September 30, 2024, as compared to $49.2 million in the nine months ended September 30, 2023.
+Added: Net income attributable to common stockholders increased to $36.7 million during the three months ended September 30, 2024, as compared to $19.5 million during the three months ended September 30, 2023.
+Added: Net income attributable to common stockholders increased to $93.8 million in the nine months ended September 30, 2024, as compared to $49.7 million in the nine months ended September 30, 2023.
+Added: • Non-GAAP adjusted EBITDA, a non-GAAP measurement of operating performance, increased to $50.0 million during the three months ended September 30, 2024 from $41.4 million during the three months ended September 30, 2023.
+Added: Non-GAAP adjusted EBITDA increased to $129.9 million in the nine months ended September 30, 2024 from $108.4 million in the nine months ended September 30, 2023.
+Added: Please see Non-GAAP Measures below in this section of this Quarterly Report for a discussion of the limitations of non-GAAP adjusted EBITDA (a non-GAAP measure) and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable measurement in accordance with accounting principles generally accepted in the United States, or GAAP, for the three and nine months ended September 30, 2024 and 2023.
Recent Developments
−Removed: On May 31, 2024, we issued $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029 in a private placement to qualified institutional buyers, or the 2029 Notes.
−Removed: The terms of the 2029 Notes are governed by an Indenture, or the 2029 Indenture, by and between Alarm.com Holdings, Inc.
−Removed: Bank Trust Company, National Association, as trustee.
−Removed: The 2029 Notes are senior unsecured obligations that bear interest at a rate of 2.25% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2024, and the principal amount of the 2029 Notes will not accrete.
−Removed: We received proceeds from the issuance of the 2029 Notes of $485.2 million, net of $14.8 million of transaction fees and other debt issuance costs.
−Removed: We used $63.1 million of the net proceeds from the 2029 Notes to pay the cost of the capped call transactions 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.
−Removed: 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.
+Added: 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.
+Added: Additionally, the amendment provides for additional office space, parking spaces and tenant improvement allowances.
The global economy, credit markets and financial markets have and may continue to experience significant volatility as a result of the Macroeconomic Conditions.
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It remains difficult to assess or predict the ultimate duration and economic impact of the Macroeconomic Conditions.
−Removed: 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.
+Added: 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 uncertainty with respect to the Macroeconomic Conditions 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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Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2024 2023 2024 2023
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Twelve Months Ended
+Added: September 30,
SaaS and license revenue renewal rate 95 % 93 %
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amortization of debt issuance costs for the January 20, 2021 issuance of $500.0 million aggregate principal amount of 0% convertible senior notes due January 15, 2026, or the 2026 Notes, included in interest expense;
−Removed: amortization of debt issuance costs for the 2029 Notes included in interest expense;
+Added: amortization of debt issuance costs for the May 31, 2024 issuance of $500.0 million aggregate principal amount of 2.25% convertible senior notes due June 1, 2029, or the 2029 Notes, included in interest expense;
and stock-based compensation expense related to restricted stock units and other forms of equity compensation, including, but not limited to, the sale of common stock.
20 unchanged sentences
Non-GAAP adjusted EBITDA is not a measure calculated in accordance with GAAP and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
−Removed: Please see Non-GAAP Measures in this section for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the three and six months ended June 30, 2024 and 2023.
+Added: Please see Non-GAAP Measures in this section for a discussion of the limitations of non-GAAP adjusted EBITDA and a reconciliation of non-GAAP adjusted EBITDA from net income, the most directly comparable GAAP measurement, for the three and nine months ended September 30, 2024 and 2023.
SaaS and License Revenue Renewal Rate
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Our cost of SaaS and license revenue also includes our cost of software license revenue, which primarily includes the payroll and payroll-related costs of the department dedicated to providing service exclusively to those service providers that host the Software platform.
−Removed: As of June 30, 2024 and 2023, we had 79 and 104 employees who manufacture hardware for our suite of IoT solutions, respectively .
+Added: As of September 30, 2024 and 2023, we had 76 and 77 employees who manufacture hardware for our suite of IoT solutions, respectively .
Our cost of hardware and other revenue primarily includes cost of raw materials, tooling, freight shipments and amounts paid to our third-party manufacturer for production and fulfillment of our cellular radio modules and image sensors, and procurement costs for our video cameras, video recorders, smart thermostats and gunshot detection sensors, which we purchase from an original equipment manufacturer, and other devices.
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The amount of the import tariff and the number of products subject to tariffs have changed numerous times based on action by the U.S.
−Removed: Approximately one-fifth to one-half of the hardware products that we sell to our service provider partners are imported from China and could be subject to increased tariffs.
+Added: Less than one-third of the hardware products that we sell to our service provider partners are imported from China and could be subject to increased tariffs.
While the additional import duties resulted in an increase to our cost of hardware revenue, these import duties had a modest impact on hardware revenue margins.
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We include stock-based compensation expense in connection with the grant of restricted stock units and other forms of equity compensation, including equity compensation with performance conditions, in the applicable operating expense category based on the respective equity award recipient’s function (sales and marketing, general and administrative or research and development).
−Removed: We grew from 1,909 employees as of June 30, 2023 to 2,033 employees as of June 30, 2024 , and grew from 2,002 employees as of March 31, 2024.
+Added: We grew from 1,986 employees as of September 30, 2023 to 2,055 employees as of September 30, 2024 , and grew from 2,033 employees as of June 30, 2024.
We expect to continue to hire new employees to support the projected future growth of our business.
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Our sales and marketing teams engage in sales, account management, service provider partner support, advertising, promotion of our products and services and marketing.
−Removed: The number of employees in sales and marketing functions increased from 553 as of June 30, 2023 to 576 as of June 30, 2024 and increased from 564 as of March 31, 2024.
+Added: The number of employees in sales and marketing functions increased from 566 as of September 30, 2023 to 583 as of September 30, 2024 and increased from 576 as of June 30, 2024.
We expect to continue to invest in our sales and marketing activities to expand our business both domestically and internationally and we expect to increase our marketing expense in 2024 as compared to 2023.
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Additional expenses included in this category are legal costs, including those that are incurred to defend and license our intellectual property, as well as non-personnel costs, such as travel related expenses, rent, subcontracting and professional fees, audit fees, tax services, and insurance expenses.
−Removed: Also included in general
−Removed: and administrative expenses are credit losses and acquisition-related expenses, which consist primarily of legal, accounting and professional service fees directly related to acquisitions and valuation gains or losses on acquisition-related contingent liabilities.
−Removed: The number of employees in general and administrative functions increased from 199 as of June 30, 2023 to 223 as of June 30, 2024 and decreased from 224 as of March 31, 2024.
+Added: Also included in general and administrative expenses are credit losses and acquisition-related expenses, which consist primarily of legal, accounting and professional service fees directly related to acquisitions and valuation gains or losses on acquisition-related contingent liabilities.
+Added: The number of employees in general and administrative functions increased from 227 as of September 30, 2023 to 232 as of September 30, 2024 and increased from 223 as of June 30, 2024.
Excluding intellectual property litigation and acquisition-related expense, we expect general and administrative costs to increase prospectively as our business grows.
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Also included are non-personnel costs such as consulting and professional fees paid to third-party development resources.
−Removed: The number of employees in research and development functions increased from 1,053 as of June 30, 2023 to 1,155 as of June 30, 2024 and increased from 1,139 as of March 31, 2024.
+Added: The number of employees in research and development functions increased from 1,116 as of September 30, 2023 to 1,164 as of September 30, 2024 and increased from 1,155 as of June 30, 2024.
Our research and development efforts are focused on innovating new features and enhancing the functionality of our platforms and the solutions we offer to our service provider partners and subscribers.
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As a result, we recognize tax liabilities based on estimates of whether additional taxes will be due.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
We recognize stock-based compensation tax shortfalls and excess tax windfall benefits on a discrete basis during the quarter in which they occur, and we anticipate our effective tax rate will vary from quarter to quarter depending on our stock price as well as the vesting and exercises of various forms of equity compensation under our equity incentive plans each period, including restricted stock units and stock options.
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Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2024 2023 2024 2023
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Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
Stock-based compensation expense data:
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Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2024 2023 2024 2023
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Total cost of revenue as a percentage of total revenue 35 % 37 % 35 % 37 %
−Removed: Comparison of the Three and Six Months Ended June 30, 2024 to June 30, 2023
−Removed: The following tables in this section set forth our selected condensed consolidated statements of operations (in thousands), data for the percentage change and data as a percentage of revenue for the three and six months ended June 30, 2024 and June 30, 2023.
+Added: Comparison of the Three and Nine Months Ended September 30, 2024 to September 30, 2023
+Added: The following tables in this section set forth our selected condensed consolidated statements of operations (in thousands), data for the percentage change and data as a percentage of revenue for the three and nine months ended September 30, 2024 and September 30, 2023.
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
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Total revenue $ 240,497 $ 221,854 8 % $ 697,587 $ 655,445 6 %
−Removed: The $9.9 million increase in total revenue for the three months ended June 30, 2024 as compared to the same period in the prior year was primarily the result of a $15.5 million, or 11%, increase in our SaaS and license revenue, partially offset by a $5.6 million, or 7%, decrease in our hardware and other revenue.
−Removed: Our software license revenue included within SaaS and license revenue decreased $0.7 million to $5.2 million during the three months ended June 30, 2024 as compared to $5.9 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
−Removed: The SaaS and license revenue for the Alarm.com segment increased $13.1 million for the three months ended June 30, 2024 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023.
−Removed: The SaaS and license revenue for our Other segment increased $2.4 million for the three months ended June 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.
−Removed: The decrease in hardware and other revenue for the three months ended June 30, 2024 as compared to the same period in the prior year was primarily from the $5.1 million decrease in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from a decrease in the volume of cameras sold.
−Removed: Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $0.5 million for the three months ended June 30, 2024 as compared to the same period in the prior year primarily due to decreased sales related to our property management solution.
−Removed: The $23.5 million increase in total revenue for the six months ended June 30, 2024 as compared to the same period in the prior year was primarily the result of a $30.4 million, or 11%, increase in our SaaS and license revenue, partially offset by a $6.9 million, or 4%, decrease in our hardware and other revenue.
−Removed: Our software license revenue included within SaaS and license revenue decreased $1.7 million to $10.4 million during the six months ended June 30, 2024, as compared to $12.1 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
−Removed: The SaaS and license revenue for the Alarm.com segment increased $25.3 million for the six months ended June 30, 2024 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023.
−Removed: The SaaS and license revenue for our Other segment increased $5.1 million for the six months ended June 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.
−Removed: The decrease in hardware and other revenue for the six months ended June 30, 2024 as compared to the same period in the prior year was primarily from the $6.2 million decrease in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from a decrease in the volume of cameras and thermostats sold.
−Removed: Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $0.7 million for the six months ended June 30, 2024 as compared to the same period in the prior year, primarily due to decreased sales related to our property management and Heating, Ventilation and Air Conditioning solutions.
+Added: The $18.6 million increase in total revenue for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily the result of a $14.2 million, or 10%, increase in our SaaS and license revenue, and a $4.4 million, or 6%, increase in our hardware and other revenue.
+Added: Our software license revenue included within SaaS and license revenue decreased $0.7 million to $5.0 million during the three months ended September 30, 2024 as compared to $5.7 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
+Added: The SaaS and license revenue for the Alarm.com segment increased $10.6 million for the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023.
+Added: The SaaS and license revenue for our Other segment increased $3.6 million for the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.
+Added: The increase in hardware and other revenue for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily from the $4.5 million increase in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from an increase in the volume of commercial video devices sold.
+Added: Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $0.1 million for the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to decreased sales related to our property management solution.
+Added: The $42.1 million increase in total revenue for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily the result of a $44.7 million, or 11%, increase in our SaaS and license revenue, partially offset by a $2.6 million, or 1%, decrease in our hardware and other revenue.
+Added: Our software license revenue included within SaaS and license revenue decreased $2.4 million to $15.4 million during the nine months ended September 30, 2024, as compared to $17.8 million during the same period in the prior year primarily due to the result of the continuing transition of customers from non-hosted software to our cloud based hosted platform.
+Added: The SaaS and license revenue for the Alarm.com segment increased $35.9 million for the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to growth in our subscriber base, including the revenue impact from subscribers we added in 2023, as well as an increase in our license revenue.
+Added: The SaaS and license revenue for our Other segment increased $8.8 million for the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions as well as our property management solution.
+Added: The decrease in hardware and other revenue for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily from the $1.7 million decrease in hardware and other revenue, net of intersegment eliminations, in the Alarm.com segment arising from a decrease in the volume of cameras sold.
+Added: Hardware and other revenue, net of intersegment eliminations, in our Other segment decreased $0.9 million for the nine months ended September 30, 2024 as compared to the same period in the prior year, primarily due to decreased sales related to our property management solution.
Cost of Revenue
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
6 unchanged sentences
(1) Excludes amortization and depreciation shown in operating expenses.
−Removed: The $5.1 million decrease in cost of revenue for the three months ended June 30, 2024 as compared to the same period in the prior year was the result of a $5.6 million, or 9%, decrease in cost of hardware and other revenue, partially offset by a $0.5 million, or 2%, increase in cost of SaaS and license revenue.
−Removed: Our cost of software license revenue included within cost of SaaS and license revenue was $0.1 million for each of the three months ended June 30, 2024 and 2023.
−Removed: The cost of hardware and other revenue for the Alarm.com segment decreased $5.3 million during the three months ended June 30, 2024 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped and a decrease in costs for freight shipments.
−Removed: The cost of hardware and other revenue for the Other segment decreased $0.3 million during the three months ended June 30, 2024 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped and a decrease in costs for freight shipments.
−Removed: The cost of SaaS and license revenue for the Alarm.com segment during the three months ended June 30, 2024 remained relatively consistent with the same period in the prior year.
−Removed: The cost of SaaS and license revenue for the Other segment increased $0.5 million during the three months ended June 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.
−Removed: Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for the three months ended June 30, 2024 and 78% for the same period in the prior year.
−Removed: The decrease in cost of hardware and other revenue as a percentage of hardware and other revenue for the three months ended June 30, 2024 as compared to the same period in the prior year is primarily a reflection of the mix of product sales during the periods.
−Removed: Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% for three months ended June 30, 2024 and 15% for the same period in the prior year.
−Removed: Cost of software license revenue as a percentage of software license revenue was 3% for the three months ended June 30, 2024 and 2% for the same period in the prior year.
−Removed: The $4.7 million decrease in cost of revenue for the six months ended June 30, 2024 as compared to the same period in the prior year was the result of a $6.1 million, or 5%, decrease in cost of hardware and other revenue, partially offset by a $1.4 million, or 3%, increase in cost of SaaS and license revenue.
−Removed: Our cost of software license revenue included within cost of SaaS and license revenue was $0.3 million for each of the six months ended June 30, 2024 and 2023.
−Removed: The cost of hardware and other revenue for the Alarm.com segment decreased $5.6 million during the six months ended June 30, 2024 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped and a decrease in costs for freight shipments.
−Removed: The cost of hardware and other revenue for the Other segment decreased $0.5 million during the three months ended June 30, 2024 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped and a decrease in costs for freight shipments.
−Removed: The cost of SaaS and license revenue for the Alarm.com segment during the six months ended June 30, 2024 remained relatively consistent with the same period in the prior year.
−Removed: The cost of SaaS and license revenue for the Other segment increased $1.3 million during the six months ended June 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.
−Removed: Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for the six months ended June 30, 2024 and 77% for the same period in the prior year.
−Removed: The decrease in cost of hardware and other revenue as a percentage of hardware and other revenue for the six months ended June 30, 2024 as compared to the same period in the prior year is primarily a reflection of the mix of product sales during the periods.
−Removed: Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% for the six months ended June 30, 2024 and 15% for the same period in the prior year.
−Removed: Cost of software license revenue as a percentage of software license revenue was 3% for the six months ended June 30, 2024 and 2% for the same period in the prior year.
+Added: The $3.3 million increase in cost of revenue for the three months ended September 30, 2024 as compared to the same period in the prior year was the result of a $2.1 million, or 4%, increase in cost of hardware and other revenue, and a $1.2 million, or 5%, increase in cost of SaaS and license revenue.
+Added: Our cost of software license revenue included within cost of SaaS and license revenue was $0.2 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively.
+Added: The cost of hardware and other revenue for the Alarm.com segment increased $2.3 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to a change in the mix of product sales to more hardware with higher costs as well as an increase in the number of hardware units shipped.
+Added: The cost of hardware and other revenue for the Other segment decreased $0.2 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to a change in the mix of product sales.
+Added: The cost of SaaS and license revenue for the Alarm.com segment increased $0.4 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
+Added: The cost of SaaS and license revenue for the Other segment increased $0.8 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.
+Added: Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for the three months ended September 30, 2024 and 77% for the same period in the prior year.
+Added: The decrease in cost of hardware and other revenue as a percentage of hardware and other revenue for the three months ended September 30, 2024 as compared to the same period in the prior year is primarily a reflection of the mix of product sales during the periods.
+Added: Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 15% for each of three months ended September 30, 2024 and 2023.
+Added: Cost of software license revenue as a percentage of software license revenue was 3% for the three months ended September 30, 2024 and 2% for the same period in the prior year.
+Added: The $1.4 million decrease in cost of revenue for the nine months ended September 30, 2024 as compared to the same period in the prior year was the result of a $3.9 million, or 2%, decrease in cost of hardware and other revenue, partially offset by a $2.5 million, or 4%, increase in cost of SaaS and license revenue.
+Added: Our cost of software license revenue included within cost of SaaS and license revenue was $0.5 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively.
+Added: The cost of hardware and other revenue for the Alarm.com segment decreased $3.2 million during the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped.
+Added: The cost of hardware and other revenue for the Other segment decreased $0.7 million during the three months ended September 30, 2024 as compared to the same period in the prior year primarily due to a decrease in the number of hardware units shipped.
+Added: The cost of SaaS and license revenue for the Alarm.com segment increased $0.5 million during the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to the growth in our subscriber base, which drove a corresponding increase in amounts paid to wireless network providers.
+Added: The cost of SaaS and license revenue for the Other segment increased $2.0 million during the nine months ended September 30, 2024 as compared to the same period in the prior year primarily due to an increase in sales of our energy management and demand response solutions, which drove a corresponding increase in amounts paid to distributed energy resource providers.
+Added: Cost of hardware and other revenue as a percentage of hardware and other revenue was 76% for the nine months ended September 30, 2024 and 77% for the same period in the prior year.
+Added: The decrease in cost of hardware and other revenue as a percentage of hardware and other revenue for the nine months ended September 30, 2024 as compared to the same period in the prior year is primarily a reflection of the mix of product sales during the periods.
+Added: Cost of SaaS and license revenue as a percentage of SaaS and license revenue was 14% for the nine months ended September 30, 2024 and 15% for the same period in the prior year.
+Added: Cost of software license revenue as a percentage of software license revenue was 3% for the nine months ended September 30, 2024 and 2% for the same period in the prior year.
Sales and Marketing Expense
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
1 unchanged sentence
% of total revenue 11 % 11 % 11 % 11 %
−Removed: The $4.1 million increase in sales and marketing expense for the three months ended June 30, 2024 as compared to the same period in the prior year was primarily due to a $1.9 million increase in marketing expense and a $1.8 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth.
+Added: The $3.1 million increase in sales and marketing expense for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $1.7 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $0.5 million increase in marketing expense for our Alarm.com segment.
Personnel and related costs includes salary, benefits, stock-based compensation and travel expenses.
−Removed: These increases in sales and marketing expense for our Alarm.com segment were partially offset by a $0.5 million decrease in our expenses for external consultants for the three months ended June 30, 2024 as compared to the same period in the prior year.
−Removed: Sales and marketing expense from our Other segment increased $1.2 million for the three months ended June 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.
−Removed: The $2.9 million increase in sales and marketing expense for the six months ended June 30, 2024 as compared to the same period in the prior year was primarily due to a $2.0 million increase in sales and marketing expense from our Other segment, primarily due to an increase in personnel and related costs for our Other segment, attributable in part to increases in the headcount for our sales team to support our growth.
−Removed: Sales and marketing expense from our Alarm.com segment increased $0.9 million for the six months ended June 30, 2024, as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.
−Removed: The number of employees in sales and marketing functions increased from 553 as of June 30, 2023 to 576 as of June 30, 2024.
+Added: These increases in sales and marketing expense for our Alarm.com segment were partially offset by a $0.2 million decrease in our expenses for external consultants for the three months ended September 30, 2024 as compared to the same period in the prior year.
+Added: Sales and marketing expense from our Other segment increased $1.0 million for the three months ended September 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.
+Added: The $6.0 million increase in sales and marketing expense for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $2.7 million increase in personnel and related costs for our Alarm.com segment, attributable in part to increases in the headcount for our sales team to support our growth, and a $1.0 million increase in marketing expense for our Alarm.com segment.
+Added: These increases in sales and marketing expense for our Alarm.com segment were partially offset by a $0.5 million decrease in our expenses for external consultants and recruiting for the nine months ended September 30, 2024 as compared to the same period in the prior year.
+Added: Sales and marketing expense from our Other segment increased $3.0 million for the three months ended September 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs, attributable in part to increases in the headcount for our sales team.
+Added: The number of employees in sales and marketing functions increased from 566 as of September 30, 2023 to 583 as of September 30, 2024.
General and Administrative Expense
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
1 unchanged sentence
% of total revenue 11 % 14 % 12 % 14 %
−Removed: The $2.7 million decrease in general and administrative expense for the three months ended June 30, 2024 as compared to the same period in the prior year was primarily due to a $4.6 million decrease in legal costs for our Alarm.com segment related to intellectual property litigation, partially offset by a $0.5 million increase in consulting and recruiting costs for our Alarm.com segment.
−Removed: General and administrative expenses from our Other segment increased by $0.4 million for the three months ended June 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs.
−Removed: The $1.9 million decrease in general and administrative expense for the six months ended June 30, 2024 as compared to the same period in the prior year was primarily due to a $7.6 million decrease in legal costs for our Alarm.com segment related to intellectual property litigation.
−Removed: This decrease in general and administrative expense was partially offset by $4.0 million increase in the provision for credit losses related to a loan we previously provided to an affiliated entity of one of our distribution partners and a $0.4 million increase in recruiting costs for the six months ended June 30, 2024 as compared to the same period in the prior year.
−Removed: General and administrative expenses from our Other segment increased primarily due to a $0.4 million increase in personnel and related costs for the six months ended June 30, 2024 as compared to the same period in the prior year.
−Removed: The overall number of employees in general and administrative functions increased from 199 as of June 30, 2023 to 223 as of June 30, 2024.
+Added: The $5.7 million decrease in general and administrative expense for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $6.9 million decrease in legal costs for our Alarm.com segment related to intellectual property litigation.
+Added: This decrease in general and administrative expense was partially offset by a $0.7 million increase in personnel and related costs, a $0.5 million increase in consulting and recruiting costs and a $0.3 million increase in rent expense for our Alarm.com segment.
+Added: General and administrative expenses from our Other segment decreased by $0.4 million for the three months ended September 30, 2024 as compared to the same period in the prior year, primarily due to a decrease in the provision for credit losses.
+Added: The $7.6 million decrease in general and administrative expense for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $14.5 million decrease in legal costs for our Alarm.com segment related to intellectual property litigation.
+Added: This decrease in general and administrative expense was partially offset by a $4.0 million increase in the provision for credit losses related to a loan we previously provided to an affiliated entity of one of our distribution partners, a $0.5 million increase in rent expense, a $0.4 million increase in recruiting costs and a $0.4 million increase in personnel and related costs for the nine months ended September 30, 2024 as compared to the same period in the prior year.
+Added: General and administrative expenses from our Other segment decreased $0.4 million primarily due to a decrease in the provision for credit losses for the nine months ended September 30, 2024 as compared to the same period in the prior year.
+Added: The overall number of employees in general and administrative functions increased from 227 as of September 30, 2023 to 232
+Added: as of September 30, 2024.
Research and Development Expense
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
1 unchanged sentence
% of total revenue 26 % 27 % 28 % 28 %
−Removed: The $4.8 million increase in research and development expense for the three months ended June 30, 2024 as compared to the same period in the prior year was primarily due to a $3.6 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $0.6 million increase in our expenses for external consultants.
−Removed: Research and development expense from our Other segment increased by $1.2 million for the three months ended June 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs.
−Removed: The $8.9 million increase in research and development expense for the six months ended June 30, 2024 as compared to the same period in the prior year was primarily due to a $6.1 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $1.4 million increase in our expenses for external consultants.
−Removed: Research and development expense from our Other segment increased by $2.2 million for the six months ended June 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs.
−Removed: The overall number of employees in research and development functions increased from 1,053 as of June 30, 2023 to 1,155 as of June 30, 2024.
+Added: The $1.2 million increase in research and development expense for the three months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $0.5 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $0.4 million increase in our expenses for external consultants.
+Added: Research and development expense from our Other segment increased by $0.5 million for the three months ended September 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs.
+Added: The $10.1 million increase in research and development expense for the nine months ended September 30, 2024 as compared to the same period in the prior year was primarily due to a $6.5 million increase in personnel and related costs for our Alarm.com segment, attributable in part to an increase in headcount of employees in research and development functions as well as a $1.7 million increase in our expenses for external consultants.
+Added: Research and development expense from our Other segment increased by $2.8 million for the nine months ended September 30, 2024 as compared to the same period in the prior year, primarily due to an increase in personnel and related costs.
+Added: The overall number of employees in research and development functions increased from 1,116 as of September 30, 2023 to 1,164 as of September 30, 2024.
Amortization and Depreciation
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
1 unchanged sentence
% of total revenue 3 % 4 % 3 % 4 %
−Removed: Amortization and depreciation decreased $0.8 million and $1.1 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to changes in amortization expense related to the intangible assets we previously acquired.
+Added: Amortization and depreciation decreased $0.3 million and $1.5 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to changes in amortization expense related to the intangible assets we previously acquired.
Interest Expense
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
1 unchanged sentence
% of total revenue (2) % — % (1) % — %
−Removed: Interest expense increased $1.1 million for each of the three and six months ended June 30, 2024, as compared to the same periods in the prior year, primarily due to the interest expense and amortization of the debt issuance costs related to the 2029 Notes.
+Added: Interest expense increased $3.4 million and $4.5 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to the interest expense and amortization of the debt issuance costs related to the 2029 Notes.
Interest Income
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
1 unchanged sentence
% of total revenue 6 % 4 % 5 % 3 %
−Removed: Interest income increased $3.4 million and $6.8 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to an increase in interest income earned on cash and cash equivalents from higher amounts of cash and cash equivalents and higher interest rates.
−Removed: The increase in interest income was partially offset by a $0.5 million reduction to interest income for the reversal of payable in kind interest associated with a subordinated credit agreement with an affiliated entity of one of our distribution partners during the six months ended June 30, 2024, which did not occur during the six months ended June 30, 2023.
+Added: Interest income increased $5.9 million and $12.7 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to an increase in interest income earned on cash and cash equivalents from higher amounts of cash and cash equivalents and higher average interest rates during the nine months ended September 30, 2024 as compared to the same period in the prior year.
+Added: The increase in interest income was partially offset by a $0.5 million reduction to interest income for the reversal of payable in kind interest associated with a subordinated credit agreement with an affiliated entity of one of our distribution partners during the nine months ended September 30, 2024, which did not occur during the nine months ended September 30, 2023.
Other Expense, Net
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
1 unchanged sentence
% of total revenue — % — % — % — %
−Removed: Other expense, net increased $0.6 million and $0.8 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in the prior year, primarily due to an increase in non-operating and miscellaneous expenses.
+Added: Other expense, net decreased $0.3 million for the three months ended September 30, 2024 and increased $0.5 million for the nine months ended September 30, 2024, as compared to the same periods in the prior year, primarily due to changes in non-operating and miscellaneous expenses.
Provision for Income Taxes
Three Months Ended
−Removed: Change Six Months Ended
+Added: September 30, %
+Added: Change Nine Months Ended
+Added: September 30, %
2024 2023 2024 2023
1 unchanged sentence
% of total revenue 3 % 2 % 2 % 1 %
−Removed: The provision for income taxes decreased by $5.6 million and $1.7 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in the prior year.
−Removed: Our effective tax rate was 2.6% and 6.1% for the three
−Removed: and six months ended June 30, 2024, respectively, as compared to 29.4% and 15.1% for the same periods in the prior year.
−Removed: The decrease in the provision for income taxes for the three and six months ended June 30, 2024 as compared to the same periods in the prior year was primarily due to a favorable true-up adjustment of our 2023 income tax provision estimate associated with research and development tax credits during the three months ended June 30, 2024 as well as the unfavorable true-up adjustment of our 2022 income tax provision estimate associated with research and development tax credits during the three months ended June 30, 2023.
−Removed: The decrease in the provision for income taxes for the six months ended June 30, 2024 as compared to the same period in the prior year was also due to the release of an unrecognized tax benefit liability due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax examination during the six months ended June 30, 2024, which did not occur during the six months ended June 30, 2023.
+Added: The provision for income taxes increased by $2.7 million and $1.1 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in the prior year.
+Added: Our effective tax rate was 15.6% and 10.1% for the three and nine months ended September 30, 2024, respectively, as compared to 17.0% and 15.8% for the same periods in the prior year.
+Added: The increase in the provision for income taxes for the three months ended September 30, 2024 as compared to the same periods in the prior year was primarily due to the increase in income before income taxes.
+Added: The increase in the provision for income taxes for the nine months ended September 30, 2024 as compared to the same period in the prior year was also due to the increase in income before income taxes, partially offset by a favorable true-up adjustment of our 2023 income tax provision estimate as compared to an unfavorable true-up adjustment of our 2022 income tax provision estimate and the release of an unrecognized tax benefit liability due to the closure of the 2018 and 2019 Internal Revenue Service federal income tax examination during the nine months ended September 30, 2024, which did not occur during the nine months ended September 30, 2023.
Segment Information
1 unchanged sentence
Alarm.com and Other.
−Removed: Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that c ontributed 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.
+Added: Our Alarm.com segment represents our cloud-based and Software platforms for the intelligently connected property and related solutions that c ontributed 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.
The consolidated subsidiaries that make up our Other segment are in the investment stage and have incurred significant operating expenses relative to their revenue.
−Removed: Our Alarm.com segment increased from 1,712 employees as of June 30, 2023 to 1,801 employees as of June 30, 2024 and increased from 1,780 employees as of March 31, 2024.
−Removed: Our Other segment increased from 197 employees as of June 30, 2023 to 232 employees as of June 30, 2024 and increased from 222 employees as of March 31, 2024 .
+Added: Our Alarm.com segment increased from 1,778 employees as of September 30, 2023 to 1,815 employees as of September 30, 2024 and increased from 1,801 employees as of June 30, 2024.
+Added: Our Other segment increased from 208 employees as of September 30, 2023 to 240 employees as of September 30, 2024 and increased from 232 employees as of June 30, 2024.
Inter-segment revenue includes sales of hardware between our segments.
1 unchanged sentence
Three Months Ended
+Added: September 30,
SaaS and license revenue Hardware and other revenue
6 unchanged sentences
Total $ 159,276 $ 81,221 $ 122,555 $ 145,027 $ 76,827 $ 124,278
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
SaaS and license revenue Hardware and other revenue
6 unchanged sentences
Total $ 465,547 $ 232,040 $ 377,349 $ 420,853 $ 234,592 $ 370,352
−Removed: 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.
−Removed: There was no software license revenue recorded for the Other segment during the three and six months ended June 30, 2024 and 2023.
+Added: 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.
+Added: There was no software license revenue recorded for the Other segment during the three and nine months ended September 30, 2024 and 2023.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP.
−Removed: The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and
−Removed: liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue, costs and expenses during the reported period.
+Added: The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue, costs and expenses during the reported period.
In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances.
7 unchanged sentences
The following table summarizes our cash and cash equivalents, accounts receivable, net and working capital, for the periods indicated (in thousands):
−Removed: June 30, 2024 December 31, 2023
+Added: September 30, 2024 December 31, 2023
Cash and cash equivalents $ 1,170,605 $ 696,983
2 unchanged sentences
We define working capital as current assets minus current liabilities.
−Removed: Our cash and cash equivalents as of June 30, 2024 are available for working capital purposes.
+Added: Our cash and cash equivalents as of September 30, 2024 are available for working capital purposes.
Our investment policy defines allowable investments and establishes guidelines relating to credit quality, diversification and maturities of our investments to preserve capital, maintain liquidity and limit the amount of credit risk exposure.
−Removed: As of June 30, 2024, our cash and cash equivalents were primarily held in money market accounts.
+Added: As of September 30, 2024, our cash and cash equivalents were primarily held in money market accounts.
Liquidity and Capital Resources
−Removed: As of June 30, 2024, we had $1.1 billion in cash and cash equivalents.
+Added: As of September 30, 2024, we had $1.17 billion in cash and cash equivalents.
We consider all highly liquid instruments purchased with an original maturity from the date of purchase of three months or less to be cash equivalents.
To date, we have principally financed our operations through cash generated by operating activities and through private and public equity and debt financings.
−Removed: We mitigate the risk of loss for our cash and cash equivalents by depositing funds with a number of reputable financial institutions and monitoring risk profiles and investment strategies of money market funds.
+Added: We mitigate the risk of loss for our cash and cash equivalents by depositing funds with a number of reputable financial institutions and monitoring both the risk profiles and investment strategies of money market funds.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 amended Internal Revenue Code Section 174, or Section 174, to eliminate the option to immediately deduct research and development expenditures in the year incurred, requiring these expenditures to be capitalized and amortized over five years for domestic expenditures and over 15 years for foreign expenditures.
14 unchanged sentences
We believe our existing cash and cash equivalents and our future cash flows from operating activities will be sufficient to meet our anticipated operating cash needs for at least the next 12 months.
−Removed: Over the final six months of fiscal year 2024, we expect our capital expenditure requirements to be between $3.0 million and $5.0 million, primarily related to the continued build out of our leased and owned office space as well as purchases of computer software and equipment.
−Removed: Maturities of lease liabilities for our various office, data center and equipment leases as of June 30, 2024 are as follows:
+Added: Over the final three months of fiscal year 2024, we expect our capital expenditure requirements to be between $1.0 million and $3.0 million, primarily related to the continued build out of our leased and owned office space as well as purchases of computer software and equipment.
+Added: Maturities of lease liabilities for our various office, data center and equipment leases as of September 30, 2024 are as follows:
$3.3 million for the remainder of 2024, $12.7 million in 2025, $11.3 million in 2026, $11.6 million in 2027, $11.3 million in 2028 and $54.5 million in 2029 and thereafter.
Our future working capital, capital expenditure and cash requirements will depend on many factors, including the impact of the Macroeconomic Conditions on the economy and our operations, the rate of our revenue growth, the amount and timing of our investments in human resources and capital equipment, future acquisitions and investments, and the timing and extent of our introduction of new solutions and platform and solution enhancements.
−Removed: As the impact of the Macroeconomic Conditions on the economy and our operations evolves, we will continue to assess our liquidity needs.
+Added: As the impact of the Macroeconomic Conditions on the
+Added: economy and our operations evolves, we will continue to assess our liquidity needs.
To the extent our cash and cash equivalents and cash flows from operating activities are insufficient to fund our future activities, we may need to borrow additional funds or raise funds from public or private equity or debt financings.
2 unchanged sentences
Material Cash Requirements
−Removed: As of June 30, 2024, there were no material changes in our cash requirements from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report, other than the $500.0 million issuance of the 2029 Notes on May 31, 2024.
−Removed: See “Convertible Senior Notes – 2029 Notes” below for further details on our 2029 Notes.
+Added: As of September 30, 2024, there were no material changes in our cash requirements from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report, other than the $500.0 million issuance of the 2029 Notes on May 31, 2024, and the additional rent payments from the amendment to the lease for our corporate headquarters executed in August 2024.
+Added: See “Convertible Senior Notes – 2029 Notes” below for further details on our 2029 Notes and see "Liquidity and Capital Resources" above for the maturities of lease liabilities.
Convertible Senior Notes - 2029 Notes
18 unchanged sentences
If we undergo a fundamental change (as defined in the 2029 Indenture), subject to certain exceptions and except as described in the 2029 Indenture, holders may require us to repurchase for cash all or any portion of their 2029 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.
−Removed: The 2029 Indenture includes customary covenants and sets forth certain events of default after which the 2029 Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the 2029 Notes become automatically due and payable.
+Added: The 2029 Indenture includes customary covenants and sets forth certain events of default after which the 2029 Notes may
+Added: be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving us after which the 2029 Notes become automatically due and payable.
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.
−Removed: 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.
+Added: 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.
Capped Call – 2029 Notes
8 unchanged sentences
The 2029 Notes are discussed in more detail above under "Convertible Senior Notes - 2029 Notes."
−Removed: We did not declare or pay dividends during the three and six months ended June 30, 2024 or 2023.
+Added: We did not declare or pay dividends during the three and nine months ended September 30, 2024 or 2023.
We cannot provide any assurance that we will declare or pay cash dividends on our common stock in the future.
4 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.
−Removed: The full repurchase balance for this program of $100.0 million was available as of June 30, 2024.
−Removed: 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.
−Removed: 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.
+Added: The full repurchase balance for this program of $100.0 million was available as of September 30, 2024.
+Added: No shares were repurchased under our stock repurchase program during the three months ended September 30, 2024.
+Added: During the nine months ended September 30, 2024, 1,117,068 shares were repurchased for $75.0 million under our stock repurchase program.
+Added: 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 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.
−Removed: When applicable, the excise tax will be included as part of the cost basis of shares acquired and is presented within stockholders’ equity in the condensed consolidated balance sheets.
+Added: When applicable, the excise tax will be included as part of the cost basis of shares acquired and
+Added: is presented within stockholders’ equity in the condensed consolidated balance sheets.
Shares Withheld
1 unchanged sentence
These withheld shares are not issued or considered common stock repurchases under our stock repurchase program.
−Removed: 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.
−Removed: No tax withholdings related to the vesting of restricted stock units were paid during the three and six months ended June 30, 2023.
+Added: No payments of tax withholdings were made related to vesting of restricted stock units during the three months ended September 30, 2024.
+Added: We paid $3.4 million of tax withholdings related to vesting of restricted stock units during the nine months ended September 30, 2024.
+Added: 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
The following table sets forth our cash flows for the periods indicated (in thousands):
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Cash flows from operating activities $ 150,153 $ 96,093
3 unchanged sentences
Cash flows from operating activities have typically been generated from our net income and by changes in our operating assets and liabilities, particularly from accounts receivable and inventory, adjusted for non-cash expense items such as amortization and depreciation, deferred income taxes and stock-based compensation.
−Removed: For the six months ended June 30, 2024, cash flows from operating activities were $72.8 million, compared to $33.3 million for the same period in the prior year.
+Added: For the nine months ended September 30, 2024, cash flows from operating activities were $150.2 million, compared to $96.1 million for the same period in the prior year.
This $54.1 million increase in cash flows from operating activities was due to a $43.2 million increase in net income, a $7.1 million increase in non-cash and other reconciling items and a $3.8 million increase in cash from operating assets and liabilities.
The $7.1 million increase in non-cash and other reconciling items was primarily due to a $9.9 million change in deferred income taxes, which was primarily driven by the capitalization and amortization of research and development expenditures under Section 174, as well as a $4.0 million increase in the provision for credit losses on notes receivable related to a loan we provided to an affiliated entity of one of our distribution partners.
−Removed: These increases in non-cash and other reconciling items were partially offset by a $2.1 million decrease in stock-based compensation during the six months ended June 30, 2024 as compared to the same period in the prior year as well as a $1.2 million inventory write-down during the six months ended June 30, 2023 that did not occur during the six months ended June 30, 2024.
−Removed: The $2.3 million increase in cash from operating assets and liabilities was primarily due to a $17.0 million change in inventory resulting from a decrease in purchased inventory during the six months ended June 30, 2024 as compared to the same period in the prior year, partially offset by differences in the timing of disbursements and the collection of receipts.
+Added: These increases in non-cash and other reconciling items were partially offset by a $4.7 million decrease in stock-based compensation during the nine months ended September 30, 2024 as compared to the same period in the prior year as well as a $1.2 million inventory write-down during the nine months ended September 30, 2023 that did not occur during the nine months ended September 30, 2024.
+Added: The $3.8 million increase in cash from operating assets and liabilities was primarily due to a $18.4 million change in inventory resulting from a decrease in purchased inventory during the nine months ended September 30, 2024 as compared to the same period in the prior year, partially offset by a $6.9 million reimbursement of previously capitalized upfront payments to a customer received during the nine months ended September 30, 2023 that did not occur during the nine months ended September 30, 2024, as well as differences in the timing of disbursements.
Investing Activities
1 unchanged sentence
Our capital expenditures have primarily been for general business use, including leasehold improvements as we have expanded our office space to accommodate our growth in headcount, computer equipment used internally and expansion of our network operations centers.
−Removed: For the six months ended June 30, 2024, cash flows used in investing activities were $9.2 million, compared to $19.6 million for the same period in the prior year.
−Removed: The $10.4 million decrease in cash flows used in investing activities was primarily due to $9.7 million paid to purchase 100% of the issued and outstanding shares of capital stock of EBS, net of cash acquired, and the $5.9 million paid to purchase certain assets from Vintra, including direct transaction costs, during the six months ended June 30, 2023, which did not occur during the six months ended June 30, 2024.
−Removed: The decrease in cash flows used in investing activities was partially offset by a $2.8 million increase in purchases of investments in unconsolidated entities, a $1.7 million increase in purchases of equipment as well as a $0.5 million increase in payments related to capitalized software development costs during the six months ended June 30, 2024 as compared to the same period in the prior year.
+Added: For the nine months ended September 30, 2024, cash flows used in investing activities were $16.6 million, compared to $21.7 million for the same period in the prior year.
+Added: The $5.1 million decrease in cash flows used in investing activities was primarily due to the $9.7 million paid to purchase 100% of the issued and outstanding shares of capital stock of EBS Spółka z ograniczoną odpowiedzialnością, or EBS, net of cash acquired, and the $5.9 million paid to purchase certain assets from Vintra, Inc., or Vintra, including direct transaction costs, during the nine months ended September 30, 2023, which did not occur during the nine months ended September 30, 2024.
+Added: The decrease in cash flows used in investing activities was partially offset by a $6.9 million increase in purchases of investments in unconsolidated entities, a $2.5 million increase in purchases of equipment as well
+Added: as a $0.8 million increase in payments related to capitalized software development costs during the nine months ended September 30, 2024 as compared to the same period in the prior year.
Financing Activities
1 unchanged sentence
Cash used in financing activities includes repurchases of common stock, repayments of debt, payments of debt issuance costs and purchases of capped calls related to the 2029 Notes.
−Removed: For the six months ended June 30, 2024, cash flows from financing activities were $346.8 million, compared to cash flows used in financing activities of $8.1 million for the same period in the prior year.
−Removed: The $354.9 million increase in cash flows from financing activities was primarily due to $486.1 million in proceeds from the issuance of the 2029 Notes, net of issuances costs paid during the six months ended June 30, 2024, as compared to the same period in the prior year.
−Removed: These increases in cash flows from financing activities were partially offset by a $68.3 million increase in purchases of shares of our common stock and $63.1 million purchases of capped calls related to the 2029 Notes during the six months ended June 30, 2024, which did not occur during the six months ended June 30, 2023.
+Added: For the nine months ended September 30, 2024, cash flows from financing activities were $344.3 million, compared to cash flows used in financing activities of $15.2 million for the same period in the prior year.
+Added: The $359.5 million increase in cash flows from financing activities was primarily due to $485.2 million in proceeds from the issuance of the 2029 Notes, net of issuances costs paid during the nine months ended September 30, 2024, which did not occur during the nine months ended September 30, 2023.
+Added: These increases in cash flows from financing activities were partially offset by a $62.1 million increase in purchases of shares of our common stock and $63.1 million purchases of capped calls related to the 2029 Notes during the nine months ended September 30, 2024, which did not occur during the nine months ended September 30, 2023.
Non-GAAP Measures
15 unchanged sentences
(d) non-GAAP adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
−Removed: and (e) other
−Removed: companies, including companies in our industry, may calculate non-GAAP adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.
+Added: and (e) other companies, including companies in our industry, may calculate non-GAAP adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.
Because of these and other limitations, you should consider non-GAAP adjusted EBITDA alongside our other GAAP-based financial performance measures, net income and our other GAAP financial results.
1 unchanged sentence
Three Months Ended
−Removed: June 30, Six Months Ended
+Added: September 30, Nine Months Ended
+Added: September 30,
2024 2023 2024 2023
10 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.